Case Document 8-6 Filed 04/01/10 Page SUPERIOR COURT OF WASHINGTON IN AND FOR KING COUNTY 8 SEATTLE CITY RETIREMENT SYSTEM, an agency of the 9 City of Seattle, No. 10-2-10235?3 SEA 10 Plaintiff, DECLARATION OF CECELIA M. v. CARTER IN SUPPORT OF MOTION ll FOR TEMPORARY RESTRAINING EPSILON GLOBAL ACTIVE VALUE FUND ORDER AND ORDER TO SHOW 12 II, LTD., a British Virgin Islands corporation, CAUSE WHY A PRELIMINARY EPSILON GLOBAL MASTER FUND 11, LP, INJUNCTION SHOULD NOT ISSUE 13 a limited partnership formed under the laws of the Cayman Islands, EPSILON INVESTMENT 14 MANAGEMENT, LLC, a Delaware limited liability company, EPSILON GLOBAL 15 ASSET MANAGEMENT LTD., a corporation formed under the laws of the Cayman Islands, 16 and STEVEN G. STEVANOVICH, a resident of Florida, 17 Defendants. 18 19 CECELIA M. CARTER declareslegal age, have personal knowledge of the facts stated herein, and am 21 competent to testify to them. 22 2. I am the Executive Director 'of Seattle City Employees? Retirement System 23 an agency of the City of Seattle that provides retirement, disability and survivors? 24 bene?ts to the City of Seattle?s employees. SCERS currently manages pension investments for 25 over 15,000 current, former and retired City of Seattle employees and surviving bene?ciaries. 26 As Executive Director, I am familiar with the contracts at issue in this dispute, as well as the DECLARATION OF CECELIA M. CARTER IN SUPPORT FOSTER PEPPER PLLC OF MOTION FOR TEMPORARY RESTRAINING ORDER - 1 1111mm) 3400 51058569. 1 WASHINGTON 98101-3299 PHONE (206) 447?4400 FAX (206) 447-9700 Case Document 8-6 Filed 04/01/10 Page 2 of 190 documents attached to this Declaration, and participated in the communications with Defendants described herein. 3. In or about May 2003, Epsilon Investment Management, LLC (?Epsilon Management?) solicited SCERS to invest in Epsilon II (and through it, invest in the Epsilon Global Master Fund II, L.P. (?Epsilon Master Fund?)). Between May 2003 and December 2003, Epsilon Management provided an offering memorandum, dated January 2003, to SCERS for investment in Epsilon II. Revised offering memorandums were issued in 2004 and 2009. True and correct copies of the various offering memorandums are attached as Exhibits general practice to require an in?person presentation by the principal(s) of a fund before SCERS will consider investing in that fund. SCERS records indicate that Epsilon Management visited Seattle in 2003 to solicit SCERS to invest in Epsilon 11. Because of general practice requiring that principals attend and participate in presentations such as that made by Epsilon Management, it is highly likely that Steven Stevanovich participated in?person at the Seattle presentation. 5. In or about December 2003, SCERS accepted the terms offered in the offering memorandum and executed a Subscription Agreement and Standing Proxy, by which it purchased shares in Epsilon II. SCERS purchased additional shares in Epsilon II in or about December 2004. In total, SCERS has invested approximately $20 million in Epsilon 11. True and correct copies of the 2003 and 2004 subscription agreements and standing proxies are attached as Exhibits and E. 6. Epsilon II was required to provide the 2008 annual report and 2008 audited ?nancial statement by May 1, 2009. Neither the annual report nor the audited ?nancial statement was provided by that date. When SCERS inquired as to their whereabouts, Epsilon Management explained that it had yet to complete Epsilon audited ?nancials for 2008, but assured SCERS that the annual report and audited ?nancials would be forthcoming. To date, the required reports have not been provided. DECLARATION OF CECELIA M. CARTER IN SUPPORT FOSTER PEPPER PLLC OF MOTION FOR TEMPORARY RESTRAINING ORDER - 2 5mm SEATTLE, WASHINGTON 98101-3299 PHONE (206) 447?4400 FAX (206) 4474700 51058569.] Case Document 8-6 Filed 04/01/10 Page 3 of 190 7. On or about January 28, 2010, still not having received the 2008 annual report or 2008 audited ?nancial statement, SCERS requested redemption of its Epsilon II shares. A true and correct copy of redemption request form is attached as Exhibit F. 8. On February 4, 2010, Steven Stevanovich delivered a memorandum to SCERS, indicating that no redemptions would be honored because: (1) an associated fund, Westford I, was under investigation by the Securities and Exchange Commission (2) there were liquidity problems with Westford and (3) in light of the SEC investigation of Westford I, PricewaterhouseCoopers had not released audited ?nancial statements for 2008. A true and correct copy of Stevanovich?s February 4, 2010 memorandum is attached as Exhibit G. 9. Troubled by Steven Stevanovich?s response, on February 12, 2010, SCERS requested that Epsilon II consider redeeming. 85% of position within the subscription documents? timeline and hold back 15% pending completion of the 2008 audit, or other event? driven circumstances, at which point it could provide a full release of held-back monies. SCERS requested a response by February 23,2010. A true and correct copy of my February 12, 2010 email to Epsilon Management is attached as Exhibit H. 10. Epsilon Management did not reSpond to my February 12 email other than to provide an ?Investor Statement? on February 19, 2010, stating that closing position as of December 31, 2009 was $24,865,756.33. However, no supporting data was supplied and the statement did not appear to be audited. A true and correct copy of the February 19, 2010 Investor Statement is attached as Ex. I. 11. On March 8, 2010, I requested additional information regarding position in Epsilon II, explaining that none of the reasons supplied in Steven Stevanovich?s February 4, 2010 memorandum justi?ed withholding from SCERS the audited ?nancial statements of Epsilon II or associated records if the audited ?nancial statements were not available. As to request for redemption, I pointed out that Steven Stevanovich?s February 4 memorandum did not justify refusing to redeem shares in Epsilon II. In DECLARATION OF CECELIA M. CARTER IN SUPPORT FOSTER PEPPER PLLC OF MOTION FOR TEMPORARY RESTRAINING ORDER - 3 SUITE 3400 SEATTLE, WASHINGTON 98101-3299 PHONE (206) 447-4400 FAX (206) 447-9700 51058569.] Case Document 8-6 Filed 04/01/10 Page 4 of 190 this correspondence, I requested a meeting with Epsilon Management on March 15, 2010 'at which meeting] requested that Epsilon Management produce: (1) the 2008 audited ?nancial statement, if it existed; (2) all underlying documents provided to Epsilon auditor, PricewaterhouseCOOpers, for the purposes of preparing the 2008 audited ?nancial statement; and (3) an accounting of December 31, 2009 holdings as a percentage of Epsilon H. A true and correct copy of my March 8, 2010 email to Epsilon Management is attached as Exhibit J. 12. On Friday, March 12, George Rudman of Epsilon Management contacted me and told me that Epsilon Management would not meet with SCERS staff on March 15 and that Epsilon II would not provide the requested documents by March 15. 13. Defendants? lack of transparency and refusal to provide basic ?nancial information regarding Epsilon II has put SCERS in an untenable situation. As a public pension plan, SCERS is required by Financial Accounting Standards Board Statement No. 157 to report asset value at market value. Although the February 19, 2010 Investor Statement from Epsilon Management stated that closing position as of December .31, 2009 was $24,865,756.33, no supporting data was supplied and the statement did not appear to be audited. 14. The February 19, 20l0 Investor Statement is also troubling because, according to the 2007 Directors? Report and Financial Statement, the net asset value to holders of redeemable shares in Epsilon II was $24,222,406.00. SCERS fears that it may be the only shareholder remaining in Epsilon II. Moreover, Epsilon II has suffered very signi?cant losses in the past in very short periods of time, and there is a possibility that investment could quickly erode. A true and correct copy of the 2007 Directors? Report and Financial Statement is attached as Exhibit K. i DECLARATION OF CECELIA M. CARTER IN SUPPORT FOSTER PEPPER PLLC OF MOTION FOR RESTRAINING ORDER - 4 SEATTLE, WASHINGTON 93101-3299 PHONE (206} 447-4400 FAX (206) 447-9700 51058569.] LUJM Case Document 8-6 Filed 04/01/10 Page 5 of 190 I declare under penalty of perjury under the laws of the State of Washington the foregoing is true and correct to the best of my knowledge, information, and belief. Executed this 14th day of March, 2010 in Seattle, Washington. @1214. Ce?elia M. Carter DECLARATION OF CECELIA M. CARTER SUPPORT OF MOTION FOR TEMPORARY RESTRAINING ORDER - 5 FOSTER PEPPER PLLC 1111 Tnmo AVENUE, Some. 3400 SEATTLE, WASHINGTON 98101-3299 PHONE (206) 447-4400 FAX (206) 447-9700 Case Document 8-6 Filed 04/01/10 Page 6 _of 190 EPSILON GLOBAL ACTIVE VALUE FUND II LTD. Maximum Capitalization: 10,000,000 shares Minimum Investment: US $2,000,000 CONFIDENTIAL OFFERING MEMORANDUM THE DIRECT OR INDIRECT OFFER SALE OF SHARES OF EPSILON GLOBAL ACTIVE VALUE FUND II LTD. T0 CITIZENS NATIONAL OR RESIDENTS OF, OR INSTITUTIONS OR OTHER ENTITIES ORGANIZED, CHARTERED OR RESIDENT IN, THE UNITED STATES OF AMERICA, WITH THE EXCEPTION OF CERTAIN QUALIFIED TAX EXEMPT ENTITIES IS EXPRESSLY PROHIBITED The date of this offering memorandum is 1 January 2003 I - .EXHIBITA Case Document 8-6 Filed 04/01/10 Page 7 Of 190 TABLE OF CONTENTS Egg INVESTOR NOTICES MUTUAL FUNDS DISCLOSURE ANTI-MONEY IAUNDERING vi DIRECTORY vi i SUMMARY OFTHE CONFIDENTIAL OPPERING MEMORANDUM 1 The Fund 1 Terms of Investment 2 THE FUND 5 INVESTMENT OBJECTIVES 5 PRINCIPLES 5 MANAGEMENT OF THE FUND, THE INVESTMENT MANAGER I AND OTHER RELATIONSHIPS 6 CERTAIN RISK FACTORS 8 ADMINISTRATION THE FUND SHARE CAPITAL 12 SUBSCRIPTION PROCEDURE 12 DETERMINATION OF NET ASSET VALUE I 16 FEES, COMPENSATION AND EXPENSES 17 DIVIDEND POLICY 18 TAXATION 1 8 20 Appendix A: Subscription Documents- Subscription Agreement and Standing Proxy 21 for Non-U. S. Investors ii . Case Document 8-6 Filed 04/01/10 Page 8 Of190 INVESTOR NOTICES I MEMORANDUM AN OFFER ONLY TO THE PERSON WHOSE NAME APPEARS IN THE SPACE PROVIDED ON THE COVER PAGE. DELIVERY OF THIS MEMORANDUM TO ANYONE OTHER THAN THE PERSON NAMED OR HIS DESIGNATED REPRESENTATIVE IS UNAUTHORIZED, AND ANY REPRODUCTION OF THIS MEMORANDUM, IN WHOLE OR IN PART, WITHOUT THE PRIOR WRITTEN CONSENT OF THE ADMINISTRATOR 0F TI-E FUND, IS PROHIBITED. THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, SHARES IN THE FUND IN ANY IURISDICTION WHERE SUCH OFFER, SOLICITATION, PURCHASE OR SALE WOULD BE PROHIBITED BY LAW, OR TO ANY FIRM OR INDIVIDUAL TO WHOM IT WOULD BE UNLAWFUL TO MAKE SUCH AN OFFER, SOLICITATION, PURCHASE OR SALE. THIS MEMORANDUM CONTAINS A SUMNIARY OF THE MATERIAL PROVISIONS OF THE DOCUMENTS REFERRED TO HEREIN. STATEMENTS MADE WITH RESPECT TO THE PROVISIONS OF THOSE - 7 DOCUMENTS ARE NOT NECESSARILY COMPLETE, AND REFERENCE IS MADE TO THE ACTUAL DOCUIVIENT FOR COMPLETE INFORMATION AS TO THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO. SHARES ARE AVAILABLE ONLY TO PERSONS WILLING AND ABLE TO BEAR THE ECONOMIC RISKS OF THIS INVESTMENT. THE SHARES AND INVOLVE A HIGH DEGREE OF RISK. INVESTMENT IN THE FUND IS DESIGNED ONLY FOR SOPHISTICATED PERSONS WHO ARE ABLE TO BEAR THE LOSS OF THEIRINVESTMENT. NO OFFERING LITERATURE SHALL BE EMPLOYED IN THE OFFERING OF THE SHARES EXCEPT AS PROVIDED BY THE FUND, TOGETHER WITH THIS MEMORANDUM. NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY REPRESENTATIONS OR PROVIDE ANY INFORMATION WITH RESPECT TO THE SHARES EXCEPT SUCH INFORMATION AS IS CONTAINED IN THIS MEMORANDUM. NEITHER THE DELIVERY OF THIS MEMORANDUM NOR ANY SALES MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN UVIPLICATION THAT THERE HAS BEEN NO CHANGE IN THE MATTERS DISCUSSED HEREIN SINCE THE DATE HEREOF. EACH INVESTOR AND HIS OR HER ADVISORS MAY INQUIRE ABOUT ANY ASPECT OF THE OFFERING. NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY REPRESENTATION WITH RESPECT TO THE FUND, ITS INVESTMENT MANAGER, OR THIS OFFERING OTHER THAN THAT WHICH IS CONTAINED IN THIS MEMORANDUM. ANY REPRESENTATION NOT CONTAINED HEREIN MUST NOT BE RELIED UPON. NO REPRESENTATION IS BEING MADE HEREBY WITH RESPECT TO TI-E POTENTIAL RETURN TO BE DERIVED BY AN INVESTOR ANY INFORMATION CONTAINED IN THE PROMOTIONAL MATERIALS SHALL BE SUPERSEDED BY THE MEMORANDUM TO THE EXTENT SUCH MATERIALS ARE INCONSISTENT THEREWITH. Case Document 8-6 Filed 04/01/10 Page 9 of 190 EACH INVESTOR IN THE SHARES OFFERED HEREBY MUST ACQUIRE SUCH SHARES SOLELY FOR SUCH OWN ACCOUNT AND NOT WITH AN NTENTION OF DISTRIBUTION, TRANSFER, OR- RESALE, EITHER IN WHOLE OR IN PART. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST ON THEIR OWN EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THIS OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY U.S. FEDERAL OR STATE SECURITIES COMIVIISSION OR REGULATORY AUTHORITY. THERE IS NO ESTABLISHED MARKET FOR THESE SECURITIES AND NONE WILL DEVELOP. THE FUND IS SUBJECT TO CONFLICTS OF INTEREST. iv Case Document 8-6 filed 04/01/10 Page 10_of 190 MUTUAL FUNDS DISCLOSURE The British Virgin Islands Mutual Funds Act (the "Act") came into force on January 2nd 1998 with the aim of regulating open?ended Mutual Funds, and the Managers and Administrators of open-ended mutual funds. Three types of ?mds, namely Private, Professional and Public Funds (each as de?ned in the Act) are regulated by the Act It is intended that Epsilon Global (Euro) Ltd. (the ?Fund"), be recognized under the Act as a Professional Fund. A Professional Fund is de?ned as a mutual fund: a. the shares of which are made available only to professional investors and the initial investment in which, in respect of the majority of each such investors, is not less than one hundred thousand dollars in US currency or its equivalent in any other currency; or b. is designated as a professional fund by regulations. A ?Professional Investor" is de?ned as a person whose ordinary business involves, whether for his own account or the account of others, the acquisition or disposal of property of the same kind as the property, or a substantial part of the property, of the fund or a person who has signed a declaration that he, whether individually or jointly with his spouse, has a net worth in excess of $1 million in United States currency or its equivalent in any other currency and that he consents to being treated as a professional investor. The Act provides for a Professional Fund to be able to manage or administer its affairs in or from within the Territory for up to fomteen days before being recognized. A recognized Professional Fund is required by the Act to pay an annual fee of Recognition under the Act should not be taken to imply that the Fund has been approved by any regulatory authority to any country such as the United States, the United Kingdom or any other jurisdiction other than the BVI and it is intended that any potential shareholders of the Fund, participate on the basis that they can a?'ord to lose all or a substantial portion of their investment. Case Document 8-6 Filed 04/01/10 Page 11 of 1190 AN TI-MONEY LAUNDERING In order to comply with regulations aimed at the prevention of money laundering, the Fund will require veri?cation of identity from all prospective investors (unless in any case the Fund is satis?ed that an exemption under the Money Laundering Regulations 2000 of the Cayman Islands (the ?Regulations?) applies). Depending on the circumstances of each subscription, it may not be necessary to obtain full documentary evidence of identity where: . the prospective investor makes the payment for his investment from an account held in the prospective investor?s name at a recognised ?nancial institution; the prospective investor is regulated by a recognised regulatory authority and is based or incurporated in, or formed under the law of, a recognised jurisdiction; or the subscription is made by an intermediary acting on behalf of the prospective investor and such intermediary IS regulated by a recognised regulatory authority and rs based or incorporated in, or formed under the law of, a recognised jurisdiction. For the purposes of these exceptions, recognition of a ?nancial institution, regulatory authority or jurisdiction will be determined in accordance with the Regulations by reference to those jurisdictions recognised by the Cayman Islands as having suf?cient anti-money laundering regulations. The Fund reserves the right to request such information as is necessary to verify the identity of a prospective investor. The Fund also reserves the right to request such identi?cation evidence in respect of a transferee of Shares. In the event of delay or failure by the prospective investor?or transferee to produce any information required for veri?cation purposes, the Fund may refuse to accept the application or (as the case may be) to register the relevant transfer and (in the case of a subscription of Shares) any ?lnds received will be returned Without interest to the account from which the monies were originally debited The Fund also reserves the right to refuse to make any redemption payment to a Shareholder if any of the Directors of the Fund or the Administrator suspects or is advised that the payment of any redemption moneys to such Shareholder might result in a breach or violation of any applicable anti-money laundering or other laws or regulations by any person in any relevant jurisdiction, or such refusal is considered necessary or appropriate to ensure the compliance by the Fund, its Directors or the Administrator with any such laws or regulations in any relevant jurisdiction If, as a result of any information or other matter which comes to his attention, any person resident in the Cayman Islands (including the Fund, its Directors and the Administrator) knows or suspects that another person is engaged in money laundering, such person is required to report such information or other matter pursuant to the Proceeds of Criminal Conduct Law (2001 Revision) of the Cayman Islands and such report shall not be treated as a breach of any restriction upon the disclosure of information imposed by law or otherwise. Case 2:10-cv-00555-RA1 Document 8-6 Filed 04/01/10 Page 12 of_190 FUND REGISTERED OFFICE Epsilon Global Active Value Fund II Ltd. Craigmuir Chambers PO. Box 71 - Road Town, Tortola, British Virgin Islands INVESTMENT MANAGER Epsilon Global Asset Management Ugland House, South Church Street PO. Box 309 George Town, Grand Cayman Cayman Islands British West Indies All notices to the Investment Manager must be sent as follows: Epsilon Global Asset Management Ltd. c/o Epsilon Investment Management L.L.C. 7280 W. Palmetto Park Road, Suite 310 Boca Raton, Florida 33433 U.S.A. Phone: 561?237-0330 Fax: 561-237-0329 DIRECTORY vii ADMINISTRATOR Fund Services (Cayman) Ltd. UBS House 227, Elgin Avenue, PO. Box 852 George Town, Grand Cayman Cayman Islands PRIME BROKER AND CUSTODLAN Goldman Sachs Co. One New York Plaza New York, New York 10004 U.S.A. PricewaterhouseCoopers Hofplein 19? 3032 AC Rotterdam The Netherlands COUNSEL Monahan Biagi, P.L.L.C. 701 Fifth Avenue, Suite 2800 Seattle, Washington 98104 USA. Case Document 8-6 Filed 04/01/10 Page 13 of 190 SUMMARY OF THE CONFIDENTIAL OFFERING MEMORANDUM THE FOLLOWING IS A SUMMARY OF THIS CONFIDENTIAL OFFERING NEMORANDUM (THE THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION APPEARING ELSEWHERE HEREIN, AND THE DESCRIPTION OF ANY DOCUMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH DOCUIVIENT. AN INVESTMENT IN THE FUND IS SPECULATIVE AND INVOLVES SUBSTANTIAL RISKS. EACH SHAREHOLDER MAY LOSE HIS ENTIRE INVESTMENT (INCLUDING ANY PROFITS, WHETHER OR NOT DISTRIBUTED). SEE The Fund Epsilon Global Active Value Fund'll Ltd. (the "Fund") is a corporation formed under the laws of the British Virgin Islands. All assets of the Fund are, and the proceeds from the sale of additional shares of Common Stock in the Fund will be, invested through a "master-feeder" ?md structure in Epsilon Global Master Fund 11, LR, a limited. partnership formed under the laws of the Cayman Islands (?Master Fund?). The General Partner of the Master Fund is Epsilon Global Asset Management Ltd., a corporation formed under the laws of the Cayman Islands and is responsible for all investment decisions relating to the Master Fund. Epsilon Global Active Value Fund II, L.P., a US. partnership organized for US. investors, also invests all of its assets in the Master Fund and other investment vehicles may be formed in the future to invest in the Master Fund. Each such investment vehicle will invest in the Master Fund on substantially the same terms and conditions as the Fund and therefore will generally be allocated a proportionate share of the Master Fund's gains, losses and expenses based on their interest in the -Master Fund, adjusted for any' differences in fees. It is also noted that the Fund is authorized to invest outside of the Master Fund, although it does not currently anticipate that it will do so. Investment Objective The Fund's investment objective is capital appreciation with risk control. (References to the "Fund" in this Memorandum include both the Fund and the Master Fund.) The Fund seeks to achieve a superior absolute return by employing various investment strategies. Investment Manager The Investment Manager of the Fund 18 Epsilon Global Asset Management Ltd. (the "Investment Manager" or "Epsilon"), a Cayman Islands corporation. Epsilon is solely responsible for the trading and investment decisions of the Fund. Directors The Directors of the Fund are Mr. Steve Stevanovich and Mr. Alberto Clodoaldo DE PAULO Administrator - UBS Fund Services (Cayman) Ltd. serves as the Fund's Administrator, and will communicate with the Fund's shareholders. Auditors The Fund's books of account will be audited each year by the Fund's independent auditors, PricewaterhouseCoopers. Prime Broker Custodian The Fund's principal prime broker and custodian is Goldman Sachs Co., New York. Indemni?cation - Neither the Administrator, the Investment Manager, nor any of their respective of?Cers, directors, employees or agents ("Indemni?ed Parties"), shall be liable, in damages or otherwise, to the Fund or the Shareholders for any act or omission performed or omitted by any of them unless such act or omission results from willful misconduct, fraud or bad faith. The Fund will indemnify and hold harmless all Indemni?ed Parties ?om and against any and all claims or liabilities of any nature whatsoever, including attorneys' fees, arising out of or in connection with any action taken or 1 . Case Document 8-6 Filed 04/01/10 ?Page 14 of 190 a omitted by any Indemni?ed Party, unless such act or omission results ?om willful misconduct, fraud or bad faith. - Fees and Expenses Payable by the Fund The Fund pays or causes to be paid its own fees and expenses, including all legal and accounting- expenses, and all normal trading, operating, conununication and administrative expenses. To the extent that fees and expenses are paid by the Master Fund with regard to investments made into the Master Fund, such fees and expenses will not be charged to investors at the Investor Fund level. - Management Fee The Investment Manager will receive, in consideration for their services to the Fund, a quarterly management fee in an amount equal to one half of one percent per annum) of the Fund's net assets, determined as of the close of each calendar quarter (the ?Management Fee?). In the discretion of the Investment Manager, certain shareholders may be assessed a Management Fee in a different amount To the extent that such Management Fee .is paid by the Master Fund for investments made by the Fund into the Master Fund, such Management Fee amounts will not charged to investors at the Investor Fund level. Performance Fee - The Investment Manager will receive a contingent performance fee for each ?scal year or otherwise determined upon the redemption of any Common Stock, with respect to such redeemed Common Stock, respectively, (each a ?Performance Period") equal to 20% of the amount, if any, of the net appreciation of the Fund?s net assets during that Performance Period. The Investment Manager may elect to defer all or part of this 20% amount for two years, 10 years, or any period in betWeen. If the Investment Manager elects to defer all or part of the 20% amount, that deferred amount is treated as if it Were invested in newly issued common stock of the Fund as of the last day of the Performance Period._ The deferred amount then rises and falls with the value of the Fund's common shares during the intervening period of between two and ten years. To the extent that the Performance Fee is paid by the Master Fund with regard to investments made into the Master Fund by the Fund, such Performance Fee amounts will not be charged to investors at the Fund level. . If the Fund incurs a net loss during a ?scal year, the Investment Manager may not receive any contingent fees ?from the Fund in a subsequent ?scal year unless and until the amount of such net loss applicable to each and every Share which experienced such net loss (and which remains outstanding at the time the subsequent pro?t occurs) has been recouped in full. Reports Within 120 days following the conclusion of each ?scal year, each Shareholder will receive an annual report (together with an annual audited ?nancial statement) describing the results of the Fund's trading activities for that ?scal year. The annual report will be audited by the Fund?s independent public accountants. Each Shareholder will also receive a quarterly investment report, describing the Fund's activities in such detail, as the Investment Manager, in its sole discretion, shall determine. The Fund reports its results in U.S. dollars. Fiscal Year . . The ?scal year of the Fund shall end on December 31 of each year, and the ?scal quarters of the Fund shall end on March 31, June 30, September 30-and December 31 of each year; provided, however that the Fund's initial ?scal year shall begin on the date the Fund commences operations and shall end on the following December 31. . Terms of Investment Shares The Fund will issue shares of common stock ("Shares"). Each of the Shares is entitled to participate ratably, on a share for share basis, with all outstanding Shares, in the Fund?s earnings and assets. Purchasers of Shares are referred to herein as Shareholders. With the exception of certain pension and pro?t sharing trusts, charities and other entities which are generally tax- exempt under U.S. Federal income tax laws tax-exempt entities"), ownership of Shares will 2 Case Document 8-6 Filed 04/01/10 Page 15 of 190 be restricted to persons other than "United States persons." "United States persons" are de?ned to include a citizen or resident of the United States; (ii) a corporation, partnership, trust, or other entity organized or created under the laws of the United States; or any organization or entity controlled, directly or indirectly, by a person or persons described in or or in which such persons are known to be the owners, directly or indirectly, of a majority of the bene?cial interests therein. Minimum Subscription The minimum subscription for Shares is subject to the Investment Manager?s discretion to accept lesser amounts. - Subscription Procedure . The Fund offers its shares on a continuous basis at a price per Share equal to the Net Asset Value (the per Share as of datevof issuance, plus any applicable subscription charges. A deposit to a Performance Fee Reserve may be required in certain circumstances, and further adjustments to the number of Shares may be required in accordance with an Equalization Credit (See ?Equalization Adjustments? for a more detailed description of Equalization Accounting). Subscriptions received during any period will ordinarily be accepted as of the ?rst day of the following period, subscriptions received between March 1 and March 31 will be accepted as of April I. The Fund may, in its discretion, accept subscriptions on a day other than the ?rst day of a month. The Fund will issue number of shares by dividing subscription amount by per share price rounded to 2 decimal places. All persons desiring to subscribe for and purchase Shares should complete, execute and deliver a Subscription Agreement to the Fund~ Subscription Instructions are attached to this Memorandum as Exhibit A?l. The Subscription Agreement is attached to this Memorandum as Exhibit Shares will generally be issued on the ?rst day of the month following the acceptance of a subscription (the "Closing Date"). The subscriber?s payment for his or her Shares must be made at least one Business Day prior to the Closing Date. Payments should be made by wire transfer of immediately available funds to the Fund's account as follows: To: UBS AG, Stamford Branch ABA edwire: 0260-0799-3 SWIFT: For account of: UBS Fund Services (Cayman) Ltd.- Account#: 101-WA-359025-000 For ?rrther credit to: Epsilon Global Active Value Fund II Ltd. Account#: . 72162 All subscriptions for Shares are irrevocable by the subscriber upon acceptance by the Fund. The Fund or Investment Manager may reject any subscription for any reason. Potential investors, by accepting delivery of this Memorandum, agree to return this Memorandum, including Exhibits hereto, if such potential investor does not subscribe for Shares, (ii) such potential investor's subscription is not accepted, or the offering is terminated before the sale to such potential investor is consummated. There are no underwriting arrangements with respect to. the shares. All solicitations by subscriptionswill be made directly by the Fund or through the issuance of unaf?liated placement Case Document 8-6 Filed 04/01/10 Page 16 of 190 agents or money managers Such unaf?liated placement agents may charge their clients a fee or share the fees paid to the Managers. Solicitation of Subscriptions There are no underwriting arrangements with reSpect to the offering of Shares. All solicitations of subscriptions will be made directly by the Company or through the assistance of una?iliated placement agents and money managers. Such unaf?liated placement agents and money managers may charge their clients a placement fee of up to 5% of the total aniount of the subscription for Shares sold with their assistance, and/or share in the fees earned by Epsilon Global Asset Management Ltd, as Investment Manager. The unaf?liated placement agents and money managers may rebate all or a portion of such fees to their clients. Limited Transferability Each potential investor must represent that they will acquire the Shares only for investment purposes and not with a view to resale or distribution. No Shareholder may transfer Shares without the prior written consent of the Investment Manager and on terms acceptable to Administrator. Redemption Procedure Upon 45 days' prior Written notice to the Fund, each Shareholder may request that the Fund redeem all or part of such Shareholder?s Shares as of the close of business on the last day of the calendar quarter. With respect to any partial redemption, a Shareholder may not make a partial redemption of less than and may not reduce such Shareholders unredeemed Shares to an amount less than the minimum investment then required of new Shareholders. Also, in order to be considered "a partial redemption, the redemption cannot exceed 90% of a Shareholder?s total capital account. In any case, the redemption price shall be the NAV of the redeemed Shares, as calculated at the end of the applicable measurement period. The Investment Manager also has the right to force the complete redemption of any Shareholder at any time at the Investment Manager 3 sole discretion. Case Document 8-6 Filed 04/01/10 Page 17 of.190 THE FUND Epsilon Global Active Value Fund II Ltd. (The ?Fund?) incorporated in the territory of the British Virgin Islands (the as an international business company. The registered of?ce of the Fund is located in Tortola, British Virgin Islands. . . Shareholders have the right to purchase additional shares on a basis (see ?Offering of the Shares?) and to redeem shares as of the last day of end of ?scal quarter on at least 45-days notice (see ?Redemption Procedure?). INVESTMENT OBJECTIVES The Fund's investment objective is capital appreciation with risk control. The Investment Manager seeks superior absolute returns while reducing the risk of permanent impairment to capital. To accomplish this objective, the investment Manager employs global opportunistic, distressed and event?driven value investing across a variety of security types and asset classes. 1- INVESTMENT PRINCIPLES . The Investment Manager seeks investment opportunities and deploys capital on a global basis. The Fund's opportunistic investment style may lead to investments in capital structure restructuring, the equity or high yield debt of distressed or mismanaged companies which may be in default or in bankruptcy, private corporate debt such as bank debt or trade claims, sovereign debt, convertible securities and special situations including turnarounds, mergers, spinoffs, restructurings, recapitalizations and exchange offers. The Fund may also invest in privately negotiated and structured securities of public and private companies. Analy?cal Methodology. The Investment Manager believes that the market price of the various components of a capital structure are ultimately determined by enterprise value. Therefore, when evaluating the securities of distressed or mismanaged companies, the Investment Manager attempts to determine the enterprise or "going concern" value of the company and then compares that value to the current market value of the company's securities. This analysis and comparison enables the Investment Manager to determine which securities are incorrectly priced, and subsequently, offer the best risk/return. Factors considered by the Investment Manager in assessing enterprise value are, among other things: historical and discounted future levels of operating and free cash ?ow, (ii) current and likely future ?nancing needs and alternatives, balance sheet structure including off balance sheet items, (iv) revenue and expense recognition policies, industry standing, (vi) diversity of operations and (vii) background, operational experience and track record of management. - - The application of the above analytical methodology not only enables the Investment Manager to identify which securities it believes are undervalued, but also which securities are overpriced. Once identi?ed, these overpriced securities may be sold short in anticipation of a future price decline. Global Investments. In non-US. markets, the Investment Manager may purchase US. dollar and non-US. currency denominated equity and debt securities of non?US. corporations, as well as the sovereign debt of various governments and the debt of their respective agencies or departments, which may be trading at distressed levels. The Investment Manager may also purchase newly or recently privatized equity or debt securities of former state owned entities in private or Open market transactions. When purchasing non-US. currency denominated securities, the Investment Manager may hedge currency ?uctuation risk, thereby minimizing the impact of negative currency movements. Special Situations. The Investment Manager focuses on corporate dislocations and discrete events such as a restructuring or a reorganization, the spinoif of a division or subsidiary, a recapitalization, an acquisition or merger, a tender offer, an- asset sale or a regulatory shift. For example, in a restructuring, a company may sell, Spino?? or close unpro?table or non-strategic portions of its business, thereby leaving a more focused core business. Additionally, the company may restructure its balance sheet by eXchanging high interest rate debt for lower rated debt or equity or some combination thereof. The Investment Manager seeks restructuring situations in an effort to identify companies whose core business or who se remaining or newly created securities are incorrectly priced by the market. ?3.16 18_ QT. 190 Risk Control. The Investment Manager. may attempt to reduce risk or to hedge positions, including the risk of non- U.S. currency ?uctuations, with offsetting transactions, such as short sales and buying or selling options on the same or similar securities. The Investment Manager analyzes the historical and probable price movements of certain securities against that of an underlying security, in an effort to determine not only which securities offer the best hedge, but also which hedge ratio offers the best downside protection as well'as upside potential. The Investment Manager may also purchase and sell market or index options for hedging or speculative purposes. MANAGEMENT OF THE FUND, THE INVESTMENT MANAGER AND OTHER RELATIONSHIPS The Fund. The Fund?s Board of Directors has overall management reaponsibility for the Fund, including establishing investment, dividend and distribution policy (although it will not make or approve investment decisions since all of these have been delegated to the Investment Manager), and having the authority to select and replace the Fund?s Administrator, any of?cers of the Company and other persons or entities with management or administrative responsibilities to the Fund The Fund?s Memorandum and Articles of Association provide that a Director shall not be liable to the Fund for any acts or omissions in the performance of his duties if such person acted henestly and in good faith with a view to the best interests of the Fund and, in the case of criminal proceedings, such a person had no cause to believe that his conduct was unlawful. Such Memorandum and Articles of Association contain certain provisions for the indemni?cation of Directors by the Fund, to'the extent permitted by law, against liabilities to third parties arising in connection with the performance of their?services. The Directors of the Fund are Mr. Steve G. Stevanovich and Mr. Alberto Clodoaldo DE PAULO, whose backgrounds are set forth below. Mr. Steve G. Stevanovich is the Founder and President of Epsilon Investment Management L.L.C. Mr. Stevanovich has over 18 years of experience in international investment management. During these 18 years, Mr. Stevanovich has developed an ability to assess and exploit capital structure mispricings on a global basis while utilizing various hedging techniques in an attempt to maximize capital preservation. Prior to founding Epsilon, Mr. Stevanovich was the Executive Vice President of Everest Capital Limited, a billion global hedge fund. During the ?ve and one-half years that Mr. Stevanovich spent at Everest, the fund had a compounded retum of over 25% per annum. Prior to joining Everest Capital, Mr. Stevanovich had over seven years of experience in corporate ?nance and investment banking, most recently at O?Connor, Altwell Company, a leveraged buyout ?rm in Boston where he was involved in analyzing and valuing companies in various industries and negotiating the capital structure and pricing of various transactions. Mr. Stevanovich has a BA in Economics from the University of Chicago and an MBA ?'om the University of Chicago Graduate School of Business. Alberto Clodoaldo DE PAULO is a Managing Director of Dutch Antilles Management N.V. He was born in Curacao on September 7th, 1938, residing at Plantage Klein Kwartier z/n, Curacao, Netherlands Antilles, with the personal title of Epsilon Global Asset Management Ltd. The Investment Manager of the Fund is Epsilon Global Asset Management Ltd. the "Investment Manager" or "Epsilon"). In its capacity as Investment Manager to the Fund, Epsilon provides all advisory services required for the Fund?s operation and has full discretion in the management of the fund's trading and investments transactions. Speci?cally, Epsilon manages the investment and reinvestment of the Fund?s assets, including the selection of securities brokers and banks. Steve G. Stevanovich, whose background is set forth above, is responsible for the investment decisions of the Fund and iS'assisted by a team of investment professionals. Investment Management Agreement. Under an Investment Management Agreement (the "Management Agreement"). between the Investment Manager and the Fund, the Investment Manager will invest and reinvest the assets of the Fund in accordance with the investment objective and policies of the Fund set forth above. It is noted that the Investment Manager will maintain the Fund?s ?nancial records and compute the net asset value. Under the terms of the Management Agreement, the Fund will pay to Epsilon Global Asset Management Ltd. for its services as Investment Manager a "Fixed Fee" and an "Incentive Fee" as described below. The Fixed Fee for any ?scal quarter is an amount payable in arrears equal to 0.5% of the net assets of the Fund before any Incentive Fee allocation on the last day of such quarter. The Fund will pay the Fixed Fee in US. dollars after the end of such quarter, unless the Investment Manager elects to defer receipt of the Fixed Fee as ?rrther described below. The Fixed Fee will be deducted in computing the net pro?t or net loss of the Fund. In the event that the Investment Manager is not acting as Investment Manager for an entire ?scal quarter, the Fixed Fee payable by the Fund for such ?scal quarter will be prorated to re?ect the portion of such ?scal quarter in which the Investment 6 Case Document 8-6 Filed 04/01/10 Page 19 of 190 Manager is acting as such under the Management Agreement. Notwithstanding the foregoing, certain shareholders may, in effect, be charged the Fixed Fee at a- rate less than 0.5% of the net assets of the Fund before any Incentive Fee allocation on the last day of each quarter. The Incentive Fee is an amount, allocated annually or such shorter period upon redemption of Common Stock, equal to twenty percent of the net pro?ts (including net unrealized gains), if any, during such Performance Period allocable to each share of Common Stock If a share of Common Stock has a loss chargeable to it during any ?scal year and during a subsequent year there is a pro?t allocabie to such share, there will be no Incentive Fee payable with respect to such share until the amount of the loss previously allocated to such share has been recouped. In certain circumstances due to prior net losses or a less carryforward at the Fund level), all or a portion of the Incentive Fee attributable to a share of Common Stock may be paid by redemption of a portion of a shareholder's shares of Common Stock. Notwithstanding the foregoing, certain shareholders may, in effect, he charged the Incentive Fee at a rate less than 20% of the net pro?ts of the Fund during any Performance Period. The Management Agreement provides that the Investment Manager will be paid the Incentive Fee within 30 days after the end of the Performance Period, unless the Investment Manager elects to defer receipt of the Incentive Fee as further described below. The Investment Manager may elect to defer payment of its Fixed Fee or Incentive Fee to the ?rst day of any Performance Period following the quarter or year such fee was earned. If the Investment Manager elects to defer payment of all or part of the Fixed Fee or Incentive Fee, any such deferred amounts payable to the Investment Manager shall be treated, and the amounts eventually payable at the end of such deferred periods shall be determined, as if such deferred amounts had been invested in shares of Common Stock On the ?rst day of the ?scal quarter or year following the year the deferred fee was earned and redeemed as of the last day of the deferred period. The deferred fees and amounts of net pro?ts, if any, allocated to such deferred fees shall be paid after the end of the deferred period. If any cash dividends are paid with respect to the Common Stock during any of such deferred periods, there shall be paid to the Investment Manager, at the time of payment of such dividends, an amount equal to the dividends that would have been paid to the Investment Manager if the deferred amounts had been invested in shares of Common Stock; As noted above, the Fund invests all of its assets through a "master-feeder" fund structure in the Master Fund, a Cayman Islands limited partnership of which the-Investment Manager serves as'the General Partner of the Partnership and the Investment Manager. The Limited Partnership Agreement of the Master Fund provides that the General Partner shall be paid a ?xed fee for each quarter in an amount equal to 0.5% of the net assets of the Master Fund before any Incentive Fee Allocation and an incentive allocation equal to 20% of the net pro?ts of each limited partner in the Master Fund. However, to the extent that the Master Fund pays Fixed Fees and Incentive Fees with regard to investments made into the Master Fund, such Fixed Fee and Incentive Fee amounts will not be charged at the Investor Fund level. The Management Agreement provides that it shall continue until the close of business on December 31, 2030, except that either the Fund or the Investment Manager may terminate the Management Agreement effective at the close of business on the last day of any ?scal year by giving the other party not less than 60 days written notice. The Management Agreement recognizes that the Investment Manager has investments of its own and is acting as investment manager for others. The Management Agreement ?irther recognizes that the Investment Manager may become associated with other investment entities and engage in investment management for others. Except to the extent necessary to perform its obligations under the Management Agreement, the Investment Manager or its af?liates are not limited or restricted from engaging in or devoting time and attention to the management of any other business, whether of a similar or dissimilar nature, or to render services of any kind to any other corporation, ?rm, individual or association. As a result, the Investment Manager and its af?liates and other clients may?hold substantial positions in securities that are owned by the Fund. If the Investment Manager and its af?liates and other clients hold a substantial position in an issuer, liquidity and concentration considerations may limit the ability of the Investment Manager to add to the position on behalf of the Fund or other clients or to readily dispose of the position. The Investment Manager may on occasion give advice or take action with respect to those accounts that differs from the advice given with respect to the Fund. See discussion on page 11 under "Con?icts of Interest." - Case Document 8-6 Filed 04/01/10 Page 2.0 of 190 Pursuant to the Investment Management Agreement between the Fund and the Investment Manager the Investment Manager shall not be liable to the Fund for any acts or omissions in the performance of ?ieir respective services in the absence of willful misconduct, gross negligence or as otherwise required by law, and each agreement contains provisions for the indemni?cation of each of the Managers by the Fund against liabilities to third parties arising in connection with the performance of their services, to the extent permitted by law. Prime Broker and Brokerage Commissions. Although the Investment Manager will regularly review the brokerage commission rates charged to the Fund, it has complete discretion to determine which brokerage ?rms will be engaged by the Fund, regardless of their commission rates. The fund will use Goldman Sachs Co. as its principal prime broker and custodian, but may engage other brokers to provide similar services. Portfolio transactions for the Fund will be allocated by the Investment Manager to broker-dealers on the basis of best execution, price, and brokerage services special execution capabilities, clearance, settlement and custodial services) which bene?t the Fund. The Investment Manager may also generally consider the amount and nature of research, execution and other services provided by brokers, as well as the extent to which such services are relied upon, and may attempt to allocate a portion of the brokerage business of the Fund on the basis of that consideration. The investment information received from brokers may be used by the Investment Manager in servicing any other entities to which the Investment Manager provides investment advice and not all such information may be used by the Investment Manager in connection with the Fund. A broker will not be excluded from receiving brokerage business because it does not provide research services. Among the services the Investment Manager may consider in allocating portfolio transactions to broker-dealers is whether a broker?dealer has referred investors to the Fund. If, and when, such an allocation of portfolio transactions is made, the commission rates charged for such transactions shall not exceed commercially reasonable rates. CERTAIN RISK FACTORS AN INVESTMENT IN THE FUND IS SPECULATIVE AND IS SUITABLE ONLY FOR PERSONS WHO ARE ABLE TO ASSUME THE RISK OF LOSING THEIR ENTIRE INVESTMENT. PROSPECTIVE PURCHASERS SHOULD CAREFULLY CONSIDER . THE FOLLOWING RISKS BEFORE SUBSCRIBING FOR SHARES. Limited Operating Histo?. The Fund commenced operation only in July, 2001 and has only a limited operating history upon which an evaluation of the Fund's performance can be made. The success of the Fund will be largely dependent on the judgment and ability of the Investment Manager. Securities to be Purchased. The Fund may purchase low rated or unrated debt securities. Such securities may offer higher yields than do higher rated securities, but generally involve greater volatility of price andrisk of . principal and income, including the possibility of default by, or bankruptcy of, the issuers of the securities. In addition, the markets for such securities may be limited The Fund may enter into contracts with dealers as principal to purchase certain securities and instruments. Such transactions are not subject to exchange rules and may result in losses to the Fund in the event of a default or bankruptcy of a counterparty. The Fund may also purchase securities issued by companies from many countries and by the countries themselves. Such investments will cause the Fund to be affected by changes in the currency exchange rates and revaluation of currencies. Less information may be available about non-U.S. issuers than about their US. counterparts. Further, securities markets of certain other countries may not be as liquid as U.S.'markets. Investment in these securities may result in higher costs to the Fund than investment in US. securities due to the cost of converting a fereign currency to dollars, the payment of ?xed brokerage commissions on some non?US. exchanges and the imposition of transfer taxes or transaction charges by those exchanges. Investment in securities of certain countries may also be subject to political -or economic risks. The Fund may invest in securities of United States or non-US. closed-ended investment companies. There may be no liquid secondary market for these securities and some of the companies may limit the intervals at which shares may be redeemed. Leverage and Short Sales. The Fund'may maximize its investment position by purchasing securities on margin. As a result, the possibilities of pro?t and loss will be increased. Borrowing money to purchase securities. will provide the Fund with advantages of leverage, but exposes it to capital risk and higher current expenses. Any gain in the value of securities purchased with borrowed money or income earned ?om these securities that exceeds interest paid on the amount borrowed would cause the Fund?s investment pro?t or loss to increase faster than would otherwise be the cue. Conversely, any decline in the value of the securities purchased would cause the Fund?s 8 Case Document 8-6 Filed 04/01/10 Page 21 of 190 investment profit or loss to decrease faster than would otherwise be the case. In addition to purchasing securities on margin, the Fund may engage in short selling of securities. A short sale will result in a gain if the price of the securities sold declines suf?ciently between the time of the short sale and the time at which securities are purchased to replace those borrowed. A short sale will result in a loss if the price of securities sold short increases or does not decline suf?ciently to cover transactions. Any gain would be decreased and any loss would be increased by the amount of any premium or interest that the Fund may be required to pay with respect to the borrowed securities. Assets May Not Be Diversi?ed.? The Fund may at times have?an unusually high concentration in certain types of securities positions. Accordingly, the Fund's assets may be subject to greater risk of loss than if they were more Widely diversi?ed, since the failure of one or more limited number of investments could have a material adverse effect on the Fund. Foreign Exchanges. The Fund may invest in nan-United States securities and may trade securities on exchanges located outside the United States, where protection a?orded to investors by the Securities and Exchange Commission and federal securities laws do not apply. Accordingly, the Fund is subject to various risks inherent in trading non-US. securities and/or trading on foreign exchanges, including ?uctuations in currency exchange rates, exchange controls, expropriation, burdensome or confiscatory taxation, moratoria, or political or economic events, all of which could have an adverse effect on the Fund's ability to generate pro?ts on investments. As the Fund determines its investment pro?t or loss in United States dollars, it will be subject to the risk of fluctuation in the exchange rate between the local currency and dollars and to foreign exchange controls. Although the Fund may hedge against ?uctuations in currency exchange rates, there can be no assurance that the Fund would not incur losses as a result of adverse changes in currency exchange rates and foreign exchange controls. The Fund is unable to predict the nature of future exchange controls, Imposition or signi?cant increases in the level of exchange controls or other restrictions could have an adverse effect on the Fund. Limited Liquidity of Investment. The Fund does not intend to list its Shares on any securities exchange. It is not expected that there will be any established over-thc?counter market for sale of the Shares, and it is not anticipated that there will be any secondary market for trading in the Shares. However, a Shareholder may request that the Fund redeem some or all of his or her Shares. Under certain circumstances, including market conditions which would prohibit the liquidation of positions, the Fund may delay redemption beyond the end of the applicable year. Active Investments. The Investment Manager may seek to effect the control er management of a company in Which the Fund has an investment position. The Investment Manager may take positions in excess of 5% of a company's outstanding voting shares, possibly giving the Investment Manager the ability to in?uence the actions of management. Additionally, the Investment Manager may structure, negotiate and execute private transactions directly with publicly traded companies or their agents. Often, the resulting security is convertible debt with underlying publicly traded cormnon stock. The Fund may also invest in the securities of privately held companies. The Failure of Brokerage Firms. The Fund may be subject to a risk of loss of the assets held by a broker-dealer in the event of a broker-dealer's bankruptcy. In the event of a failure of a broker-dealer used by the Fund, the United States Securities Investor Protection Corporation provides a maximum of of account insurance, only of which may be taken in cash. To the extent the Fund leaves assets in the possession of its broker in excess of these amounts, the Fund may receive only a pro rata share of the remaining assets deposited with the failed broker-dealer. Moreover, because the Fund may trade on non-United States exchanges with non-United States brokers and/or dealers,the failure of a non-United States broker or dealer could result in the complete loss of Fund amounts on deposit with such broker or dealer, depending on the regulatory rules governing such broker. Government Regglation. The Fund is not registered as an investment company under the Investment Company Act of 1940, and the Investment Manager is not registered as an investment adviser under the U.S. Investment . Advisers Act of 1940 (or any similar law). Shareholders, therefore, are not afforded the protective measures provided by such laws. Substantial Fees and Expenses. The expenses to which the Fund will be subject could be substantial. Arbitrage Trading May Involve Risks. The Fund's investments may involve arbitrage between the prices of two securities, between the equity and equity options of the same or similar securities, between the price of a security and its announced buy-out or exchange price and/or any combination thereof. Given the volatile nature of certain arbitrage situations, the short-term performance of the Fund's arbitrage investments may ?uctuate signi?cantly in 9 Case Document 8-6 Filed 04/01/10 Page 22 of 190 value. The Fund may purchase or sell securities (on a cmrent basis) and take offsetting positions in the options of the same or similar securities. These offsetting positions entail a substantial risk that the price differential could change unfavorably, causing a loss to the Fund. Unidenti?ed Investments. The Fund has not identi?ed any particular investments to make from the proceeds of this offering, other than to make investments en the basis of opporttmities as they may arise. Therefore, prospective investors must rely on the ability of the Investment Manager in making investments consistent with the Fund's objectives. Shareholders will not have the Opportunity to evaluate the relevant economic, ?nancial and other information which will be utilized by the Fund in deciding whether or not to make a particular investment. The. Memorandum andArticles of Association of the Fund do not restrict the type of investments the Fund may make. Options. The Fund may engage in the trading of options, including index and equity options. Such trading involves risks substantially similar to those involved in trading margined securities, in that optious are speculative and highly leveraged. Speci?c market movements of the securities underlying an option cannot accurately be predicted. The purchaser of an option is subject to the risk of losing the entire purchase price of the option. The writer of an option is subject to the risk of loss resulting from the difference between the premium received for the option and the price of the security underlying the option which the writer must purchase or deliver upon exercise of the option. Futures Contracts. Futures contracts are contracts usually made on a futures exchange which call for the future delivery of a speci?ed "commodity" at a specified time and place. These contractual obligations, depending on whether one is a buyer or a seller, may be satis?ed either by taking or making physical delivery of the "commodity" or by making an offsetting sale or purchase of an equivalent futures contrast on the same exchange prior to the end of trading in the contract mouth. Commodity futures prices are highly volatile. Price movements of commodity futures contracts are in?uenced by, among other things, changing supply and demand relationships, governmental, agricultural and trade programs and policies and national and international political and economic events. Financial instrument and foreign currency futures and forward prices are in?uenced by, among other things, interest rates, changes in balances of payments and trade, domestic and international rates of in?ation, international trade restrictions and currency revaluations. Because low margin deposits are normally required, an extremely high degree of leverage is obtainable in commodity futures trading. A relatively small price movement in a commodity futures contract, consequently, may result in large losses. Thus, like other highly leveraged investments, any purchase or sale of a commodity futures contract may result in losses that exceed the amount invested. The Investment Manager may use derivatives or other securities, both listed and over-the- counter, instead of purchasing or selling securities outright. These securities allow the Investment Manager to gain exposure to certain markets or securities which the Investment Manager might otherwise not be able to execute. If the Investment Manager believes that a situation merits investment, but the costs and risks associated with such an investment are prohibitive or unacceptable, then the Investment Manager may enter into an over?the-counter option contract, custom securities basket or swap transaction in order to gain exposure to the situation. Such instruments involve risks not associated with more traditional types of investments, including counterpart)! default risk. Nature of Investments. A portion of the portfolio of the Fund may consist of securities issued by privately-held companies. There is generally little or no publicly available information about such companies and the Fund must rely on the due diligence of the Investment Manager to obtain the information necessary for the decision to. invest in them. Typically, such companies depend for their success on the management, talents and efforts of one person or a small gr0up of persons, so that the death, disability or resignation of such person or persons could have a materially adverse impact on them. Moreover, small companies frequently have smaller product lines and smaller market shares than larger companies and therefore may be more vulnerable to economic downturns. Because these companies will generally have highly leveraged capital structures at least initially, reduced cash flow resulting from an economic downturn may adversely affect the return on, or the recovery of, the Company's investment in them. Investment in such companies therefore involves a high degree of business and ?nancial risk, which can result in substantial losses, and, accordingly, should be considered speculative. Illiguidi?. portion of the Frmd's investments may consist of securities acquired directly from their issuers in private transactions. These securities will be restricted securities under the Securities Act of 1933 and may not be resold unless there is an effective registration statement on ?le with the Securities and Exchange Commission with 10 Case Document 8-6 Filed 04/01/10 Page 23 of 190 respect to such securities, or an exemption from registration exists. Such securities will therefore be illiquid. In addition, there may be no established trading market for such securities into which they could be sold, even after an exemption from registration becomes workable. Lack of Liguidig in Markets. Despite heavy volume of trading in securities, the markets for some securities have limited liquidity and depth. This lack of depth could disadvantage the Fund, both in the realization of the prices which are quoted and in the execution of orders at desired prices. Master-Feeder Fund Structure. As noted above, the Fund generally invests all of its investable assets through a "master-feeder" fund structure in the Master Fund. The "master-feeder" fund structure - in particular the existence of multiple investment vehicles investing in the same portfolio presents certain unique risks to investors. Smaller investment vehicles investing in the Master Fund may be materially affected by the actions of larger investment vehicles investing in the Master Fund For example, if a larger investment vehicle withdraws from the Master Fund, the remaining funds may experience higher pro rata operating expenses, thereby producing lower returns. Similarly, the Master Fund may become less diverse due to a withdrawal by a larger investment vehicle, resulting in increased portfolio risk. I Con?icts of Interest. There exist a number of potential con?icts of interest betWeen the Investment Manager and the Fund. In addition to serving as investment manager to the Fund, the Investment Manager serves as the general partner of Epsilon Global Master Fund, L.P., a Cayman Islands partnership and Epsilon Global Master Fund II, L.P., a Cayman Islands partnership, and may have additional investment management clients in the future (collectively, the "Other Clients"). The Other Clients may invest in the same or similar securities as the Fund. Purchase and sale orders may be combined for the Fund and the Other Clients with each entity paying its pro rata share of the total corrunission and paying or receiving its pro rata share of the total cost or sales proceeds. From the standpoint of the Fund, simultaneous identical portfolio transactions for the Fund and the Other Clients may tend to decrease the prices received, and increase the prices required to be paid, by the Fund for its portfolio sales and purchases. Where less than the maximum desired number of shares of a particular scourity'to be purchased is available at a favorable price the shares purchased will be allocated among the Fund and the Other Clients in a manner as determined by-the Investment Manager. In addition, purchase and sale transactions (including swaps) may be effected between the Fund and the Other Clients. The Investment Manager may have con?icts of interest in allocating its time and activity between the Fund and the Other Clients, in allocating investments between the Fund and the Other Clients and in effecting transactions between the Fund and the Other Clients, including ones in which the Investment Manager may have a greater . ?nancial interest. In addition, the Investment Manager'and its of?cers and employees may have investments of their own. Further, the Investment Manager may engage in a wide variety of investment banking activities. The Investment Manager may, in some instances, perform investrnent banking services for companies in which the Fund owns securities. The Investment Manager may choose not to make an otherwise appropriate investment for the Fund if the Investment Manager or its clients have a business relationship with either the potential investee company or with a third party that has indicated its interest in acquiring the potential investee company. Any fees earned by the Investment Manager with respect to its investment banking activities will be paid solely to the Investment ?Manager and not the Fund. . - In addition, the Investment Manager may become aware of investment opportunities and, to the extent the Investment Manager in its sole discretion determines such investment would not be suitable for the Fund, may refer such investment opportunities to others. Any fees or commissions with respect to the referral of such investments will be paid solely to the Investment Manager (see discussion concerning additional potential con?icts of interest under Fees, Compensation and Expenses). The Investment Manager's obligations to the Fund are not exclusive and the' Invesn'nent Manager is not required to devote any speci?c amount of time to the Fund. THE DESCRIPTION CONTAINED HEREIN OF SPECIFIC ACTIVITIES THAT MAYBE ENGAGED IN BY THE FUND SHOULD NOT BE CONSTRUED AS IN ANY WAY LIMITING THE INVESTMENT ACTIVITIES. TEE FUND MAY ENGAGE IN INVESTMENT ACTIVITIES NOT DESCRIBED HEREIN WHICH THE INVESTMENT MANAGER CONSIDERS APPROPRIATE. 11 Filed 04/01/10 Page 24 of,,190 ADNIINISTRATION The Administrator. UBS Fund Services (Cayman) Ltd. serves as the Administrator of the Fund pursuant to an administration agreement to be entered into between the Fund and the Administrator (the ?Administration Agreement?). The Administrator?s principal place of business is located at UBS house, 227 El gin Avenue, P. 0. Box 852, George Town, Grand Cayman, Cayman Islands. The Administrator rs licensed as a mutual fund administrator under the Mutual Funds Law (2001 Revision) of the Cayman Islands. Pursuant to the Administration Agreement, the Administrator will perform or supervise the performance of services necessary for the operation and administration of the Fund (other than making investment decisions), including administrative, accounting, administration and shareholder services. For the purpose of calculating the Net Asset Value of the Fund, the Administrator will rely solely on the valuation of the Master Fund as provided by the Investment Manager. The Administration Agreement also provides for indemni?cation of the Adminisu'ator'and its directors, of?cers and employees from and against any and all liabilities,'obligations, losses, damages, penalties, actions, judgements suites, costs, expenses or disbursements of any kind or nature whatsoever (other than those resulting from fraud, gross negligence or willful default on its part or on the part of its directors, of?cers, servants or agents) which may be imposed on, incurred by or asserted against the Administrator In performing its obligations or duties thereunder The Directors and the Investment Manager, and not the Administrator, are resPonsible for determining that the Shares are marketed and sold in compliance with all applicable securities and other laws. The Administration Agreement is governed by the laws of the Cayman Islands and is for an inde?nite period, but it may be terminated by either party on ninety days written notice to the other party. THE SHARE CAPITAL Capitalization of the Fund. The Fund has an authorized capital of consisting of 10,000,000 shares of common stock (par value 0.01 per share) (the "Shares"). Share Participation in Earnings and Assets. Each Share is entitled to participate ratably, on a share for share basis, with each other outstanding Share, in the earnings and assets of the Fund. SUBSCRIPTION PROCEDURE The minimum subscription for Shares is subject to'the Fund's discretion to accept lesser amounts. The .Fund will offer its Shares on a continuous basis at a price per Share equal to the Net Asset Value (the per Share as of the last Business Day of the date of issuance, plus any applicable subscription charges. A deposit to a Performance Fee Reserve may be required in certain circumstances, and further adjustments to the number of Shares may be required in accordance with an Equalization Credit (See? ?Equalization Adjustments? below for a more detailed description of Equalization Accounting) All persons desiring to subscribe for and purchase Shares should complete, execute and deliver a Subscription Agreement to the Fund?s Administrator. The subscription agreement may be sent by fax if original is received by the Administrator within _10 business days. The wire payment instructions have to include the name of the subscriber which has to match the name on the subscription agreement. Subscription Instructions are attached to this Memorandum as Exhibit A-l. The Subscription Agreement is attached to this Memorandum as Exhibit Shares will generally be issued on the ?rst day of the month following the month in which each subscriber's subscription and payment for Shares is received. Subscriptions received during any period will ordinarily be accepted as of the ?rst day of the following month, subscriptions received between March 1 and March 31, will be accepted as of April 1. The Fund may, in its discretion, accept subscriptions on a day other than the ?rst day of the month. Payments should be made by wire transfer of immediately available ?inds to the Fund's account as follows: 12 Case Document 8-6 Filed 04/01/10 Page 25 of 190 To: UBS AG, Stamford Branch ABA Fedwire: 0260-0799-3 WIF I: For account of: UBS Fund Services (Cayman) Ltd. Accomt#: For further credit to: Epsilon Global Active Value Fund II Ltd. Account#: 72162 All subscriptions for Shares are irrevocable by the Subscriber. The Fund may reject a subscription for any reason. Potential investors, by accepting delivery of this Memorandum, agree to return this Memorandum, including the Exhibit hereto, if such potential investor does not subscribe for Shares, (ii) such potential investor?s subscription is not accepted, or the offering is terminated before the sale to such potential investor is consummated. - Egualization Adjustments. When interim subscriptions are made, certain adjustments may be required to the price paid fer Shares or to the number of Shares purchased. These adjustments are necessary to ensure: the . Performance Fee paid to the Investment Manager is charged only to those Shares which have appreciated in value since their acquisition, all Shareholders have the same amount per Share at risk and all Shares have the same NAV. With respect to a De?cit Interim Subscription, the subscription price per Share is the NAV per Share on the acquisition date plus 20% of the excess, if any, by which the Peak NAV per Share, for a preceding calendar year?end exceeds the NAV per Share on the date of subscription. Such amount (the ?Performance Fee Reserve") shall be added to the purchase price per Share and shall be invested and distributed as set forth herein. The Performance Fee Reserve shall be separately invested in US. Treasury Bills, Certi?cates of Deposit or other equivalently rated short- term instruments. The Performance Fee Reserve shall become payable to the Investment Manager if the de?cit between the NAV per Share on the subscription date and the Peak NAV is recouped by favorable performance of the Fund. The Performance Fee Reserve may, in certain circumstances, be returned to a Shareholder upon redemption of Shares if, and to the extent, such Performance Fee Reserve applicable to the Shares being redeemed has not been earned-by the Investment Manager. after the end of each ?scal year in which a Performance Fee Reserve is held, the interest or dividends earned thereon shall either be paid to the Shareholder who provided such Performance Fee Reserve or reinvested into the Fund in the form of additional Shares, at the Investment Manager?s discretion. With'respect to a Premium Interim Subscription, where the NAV per Share on the date of subscription (computed before accrued Performance Fees) is greater than the Peak NAV per Share, for a preceding calendar year- end, 20% of the excess shall constitute an ?Equalization Credit.? This Equalization Credit accounts for the fact that the NAV per Share at the time of subscription includes a potential Performance Fee to be borne by existing Shareholders which experienced such appreciation. The Equalization Credit serves as a credit against Performance Fees that might otherwise be payable to the Investment Manager by Shareholders of the Fund, but which should not, in equity, be charged against such subscriber?s Shares because, as to its Shares, no favorable performance has yet occurred. Upon redemption by a Shareholder of its Shares, the Equalization Credit, or a portion thereof, will be paid to such Shareholder, without interest, or if a Performance ,?Fee becomes payable prior to such redemption, then the Equalization Credit payable shall be applied to the purchase of additional Shares, subject to appropriate adjustments for favorable performance. Examples of a De?cit Interim Subscription and a Premium Interim Subscription are set forth on the next page. 13 Case 2:10-c-v- -005 5- Document 8-6 Filed 04/01/10 Page 26 of 190 TABLE 1 De?cit Interim Subscription [Based on a 20% Performance Share Allocation]: Peak NAV 1,000 Gross Subscription NAV 900 NAV at Date of Purchase a . 900 Performance Fee Reserve (1,000 4900) 20% 20 Performance Performance Gross NAV Fee Due to Fee Reserve Due NAV Performance at Valuation Investment to Investment (Net of Fee Reserve Date Manager Manager All FEW 1,050 10.0 20.0 1,040 0.0 1,000 - 0.0 200 1,000 0.0 950 0.0 10.0 . 950 . 1020.0 850 0 0. 0 .850 20. 0 NOTE: Gross NAV 15 equal to the NAV before accrual for Performance Fees. The total value of a Shareholder? 5 position is equal to the sum of the NAV (Net of All Fees) and the Performance Fee Reserve on Account. In the above example, the Performance Fee Reserve on Account does not include any accrued interest. TABLE 2 - Premium Interim Subscription [Based on a 20% Performance Share'AlIocation]: Peak NAV 1,000 . Gross Subscription 1,400 NAV at Date of Purchase 1,320 Performance Fee Reserve (1,400 1,000) 20% 80 Equalization Credit Against Future Performance Fees . Performance . Gross NAV Fee Due to Equalization NAV At at Valuation Investment Credit Due to (Net of Performance At Date Manner Shareholder AllJi?eesl Fem?42.05am; 1,500 20.0 80.0 1,400 0.0 0.0 1,400 . 0.0 . 80.0 1,320 0.0 0.0] 1,200 0.0 . 40.0 1,160 40.0 0.0 1,000 . 0.0 0.0 1,000 80900 80.0 0. 0 NOTE: Gross NAV IS equal to the NAV before accrual for Performance Fees The Equalization Credit remaining against future performance fees does not accrue interest; rather, these funds are at risk With other monies in the Fund and will appreciate or depreciate accordingly. 14 Case Document 8-6 Filed 04/01/10 Page 27 of 190 REDEMPTION PROCEDURE Shareholders may redeem their Shares as of the last day of each calendar quarter (the ?Redemption Date), upon 45 days written notice. The amount payable in redemption of the Shares is equal to the "net asset value" of such Shares as of theRedemptiOn Date (the "Redemption Price"). A Shareholder wishing to redeem his Shares is required to deliver to the Fund's Investment Manager, at least 45 days prior to the Redemption Date, a written redemption request indicating the number of Shares to be redeemed. The redemption request must be accompanied by: the share certi?cate(s) if issued, representing the Shares to be redeemed, if issued, and (ii) a certi?cation (in a form ?Jrnished, by or satisfactory to the Fund) identifying all Shares which are directly or indirectly owned by such shareholder. With respect to any partial redemption of Shares, 3. Shareholder may not make a partial redemption of less than and, in the case of a partial redemption, may not reduce such Shareholders unredeemed Shares to an amount less than the minimum investment then required of new Shareholders. Also, in order to be considered a partial redemption, the redemption cannot exceed 90% of a Shareholder?s total capital account Payment in US. dollars of the Redemption Price will he made as soon as practicable but, except in cases where share certi?cates and share transfers are not delivered, the shareholder will receive at least 90% of the Redemption Price no later than thirty (30) days following the date of redemption, with the balance paid within ??een days after the receipt by the Fund of its audited annual ?nancial statements for the ?scal year. The Investment Manager has the right to make payment on such redemption in securities owned by the Fund: The Investment Manager may, in its discretion, deduct from any redemption proceeds an amount determined by the Investment Manager to represent the transaction costs and related expenses incurred by the Fund in connection with the processing of redemptions. - The Investment Manager also has the right to force the complete redemption of any Shareholder at any time at the Investment Manager?s sole discretion. The Fund has the power to suspend the redemption of Shares in the following circumstances: During any period with the New York Stock Exchange, or any other securities exchange - or board of trade or other contract market on which a signi?cant portion of the Fund's assets is ordinarily traded, is closed (other than for holidays) or trading thereon has been restricted or suspended; 'When, for any reason, the value of the Fund's assets cannot be accurately ascertained; During any state of affairs which, in the judgment of the Investment Manager, would render disposition of the und's assets impracticable or be seriously prejudicial to the Fund's Shareholders; or When, in the opinion of counsel to- the Fund, such redemption could result in adverse tax consequences to the Fund or its Shareholders. The Fund will notify Shareholders of the suspension of reder?nptions for any reason. Sales and Transfers of Shares. The Fund has the authority to issue additional Shares following the initial offering, either through the resale of Shares tendered for redemption or through the issuance of authorized but previously unissued Shares. The subscription price payable for any Shares which may be issued'in the ?iture will be the net asset value of such Shares determined at the time of issuance. .15 Case Document 8-6 Filed 04/01/10 Page 28 of 190 Restrictions on Ownership and Tran_s_i_?gr; Compulsory Redemrntioni. The Fund's Articles of Association provide that Shares may be owned only by a limited number of pension and pro?t sharing trusts, charities and other entities which are generally tax-exempt under US. Federal income tax laws tax-exempt entities"); and (ii) otherwise, only by persons who are not 'United States persons". For this purpose, the term "United States . person" is de?ned in the Fund's Articles of Association to include: a United States citizen or a "resident? of the United States (as de?ned for United States federal income tax purposes); a corporation, partnership, trust or other entity organized or created under the laws of the United States, or any organization or entity controlled by a person or persons descn'bed' in or or in which such persons are known to be the owners of a majority of the bene?cial interests therein, as shareholders, partners, bene?ciaries or otherwise, whether directly or indirectly either through other organizations or entities, or through any other arrangement Each subscriber for Shares which is not a US. tax?exempt entity will be required to certify to the Fund: . .the identity of the person or persons on whose behalf the Shares are being acquired and (ii) that the Shares are not being acquired and will not at any time be held for the account or bene?t, directly or indirectly, of any United States persons. Shareholders are required to notify the Fund immediately of any change in such information. It is the responsibility of each investor to verify that he is not a United States person. For this purpose, investors should be, aware that United States federal income tax laws contain speci?c de?nitions of the terms "resident, alien" and "nonresident alien", which must be taken into account in making this determination. Each subscriber will be required to agree that no Shares, nor any interest therein, will be transferred without the prior consent of the Investment Manager or Administrator, which consent may be withheld in the discretion of the Investment Manager or Administrator and that, prior to considering any request to permit a transfer of shares, the Investment Manager or Administrator may require the submission by the proposed transferee of a certi?cation - as to the matters referred to in the preceding paragraph, as well as such other documents as the Investment Manager or Administrator considers neCessary. The Fund?s Memorandum and Articles of Association provide, and each subscriber for'Shares is required to agree, that: any attempted transfer in violation of the foregoing restrictions shall be invalid, and (ii) if the Fund has reason to believethat a Shareholder has violated the applicable restrictiOns on transfer or that any material matters set forth in the certi?cations referred to in the preceding paragraph were false, the Fund may redeem all Shares held by such shareholder compulsorily. Voting and Other Rights. is entitled to one vote on any matter presented to a meeting of Shareholders. Shareholders will receive at least 30 days' notice of any Shareholders' meeting (or 10 days' notice if the Board of Directors determines that prompt shareholder action is advisable) and will be entitled to vote their Shares either personally or by proxy. If the proxy sent to a Shareholder with the notice of meeting is not-completed and received at the Company's registered of?ce prior to the meeting, Shares held by such Shareholder will be voted in the discretion of the attorney-in-fact designated in the Subscription Agreement executed by such Shareholder at the time the Shares were issued At any meeting of Shareholders, a majority of the Shares represented in person (including representation by the attomey?in-fact) or by proxy at the meeting will be suf?cient for the transaction of business. The Administrator will maintain a current stock register for all Shares. All Shares will be issued in registered form. The Fund will not issue certi?cates in bearer form. All Shares, when issued and paid for, will be fully paid and non-assessable and Shareholders will have no personal liability for the debts of the Fund. The Shares have no preemptive rights. In the event of the dissolution of the Fund, the Fund is authorized to distribute amounts due ,to Shareholders, in accordance with their respective interests, either in cash or in the form of portfolio securities or' other assets. DETERMINATION OF NET ASSET VALUE The Investment Manager will value or arrange for the valuation of the securities and other assets of the Fund as of the close of business on the last day of each month in accordance with generally accepted accounting principles. For the purpose of calculating the Net Asset Value of the Fund, the Administrator will rely solely on the valuation of the Master Fund as provided by the Investment Manager. The' 'net asset value" of the Shares, 'for purposes of computing the redemption price applicable to such Shares and the minimum issue price applicable to such Shares after their initial offering, will be determined as follows: 16 Case Document 8-6 Filed 04/01/10 Page 29 of 190 1. Total Net Assets. The value of the "total net asse of the Fund as of a particular date will be computed by subtracting from the total Value of all securities and other assets of the Fund an amount equal to all accrued debts, liabilities and obligations of the Fund (including any contingencies for which it is determined that any accrual should be made). 2. Net Asset Value. The total net assets are allocated pro rata, on a share for share basis, to each outstanding Share. The net asset value of each Share is equal to the amount of such total net assets divided by the number of Shares outstanding on the date as of which the valuation is being made (with due account being given to any Shares "deemed issued" to the Managers under?their respective agreements with the Fund). Net asset value determinations for the Fund will be made in accordance with United States generally accepted accounting principles in which the following principles are observed. In general, portfolio securities will be valued at the last sales price reported on Securities exchanges, or quoted in the NASDAQ National Market System, or at the last reported bid price in the case of other over-the- counter Securities (or listed securities for which there have been no sales on the determination date) held long, or the last reported asked price in the case of other over?the-counter securities (or listed securities for which there have been no sales on the determination date) sold short. Forward contracts will be valued based upon the closing quotations reported for the same on the principal board of trade or other contract market in which dealings are made or by quotations from the counterparty bank. Swap positions will be valued at the average secondary trading market price, as obtained from dealers in such market. Commodities and comr'nodity futures, if utilized by the Fund, will be valued based upon the closing quotations reported for the same on the principal board of trade or contract market in which dealings are made. If a futures contract cannot be liquidated, due to the operation of daily limits or otherwise, on'a day when net assets are determined, a value determined to be fair and rcasdnable by the Investment Manager shall be used. Listed securities options tradedon an exchange will be valued at their last sales prices on the date of determination on the principal exchange on which such options shall have traded on such date (or, in the event that the date of determination is not a date upon which exchange on which such options are traded was open for trading, on the last prior date on which such exchange was so open), or if no sales occurred on_either of the foregoing dates, at the mean between the "bid" and "asked" prices on the principal securities exchange on which such options are traded, on the date of determination (or, in the event that the date of determination is not a date upon which such securities exchanges was open for trading, on the last prior date on which such securities exchange was so open). Premiums received for the writing of listed securities options written by the Fund will be included in the assets of the Fund, and the market value of such options will be included as a liability of the Fund. Over-the-counter options will be valued at fair value, as determined by the Investment Manager, based upon representative brokers? bids or valuations. If such bids or valuations are not available, or, in the opinion of the Investment Manager, do not represent fair value, over-the?counter options will be valued as the Investment Manager deems fair and reasonable. I . In the absence of quoted values, or for assets which are not readily marketable, valuations will be at fair market value as determined by the Investment Manager. FEES COMPENSATION AND EXPENSES Expenses. The Fund will bear all of the continuing offering costs (including legal expenses incident thereto) and all other expenses incurred in the operation of the Fund, if any, including the ordinary and necessary expenses directly related to its investment activities, including brokerage commissions, exchange fees, interest and commitment fees on loans and debit balances, all administratiou fees and all legal and auditing fees, including any legal and auditing fees that relate to extraordinary circumstances, such as tax examinations or litigation involving the Fund. As noted above, the Fund invests its assets through a ?master-feeder? fund structure in the Master Fund. . Each investment vehicle, including the Fund, that invests in the Master Fund will indirectly bear the administrative and other expenses of the Master Fund pro rata based upon its interest in the Master Fund." It is anticipated that virtually all expenses will be incurred at the Master Fund level and therefore that expenses incurred directly by the Fund will be relatively small. If expenses are incurred by the Fund requiring payment by the Fund, the Fund may make a 17 Filed 94/01/10 Page 30 of 190 withdrawal of a portion of its interest in the Master Fund (within the limitation imposed by the Master Fund)? 1n order to pay those expenses. Management Fee. The Investment Manager will receive a quarterly ?xed fee equal to one half of one percent of the Net Asset Value (as de?ned) of the Fund as of the last day of each calendar quarter (equivalent to 2% per annum) The Management Fee will be paid to the Investment Manager within three business days after the close of each calendar quarter. In the discretion of the Investment Manager, certain shareholders may be assessed a- Management Feein a different amount. Performance Fee. The Investment Manager will receive contingent fees, for each calendar year or otherwise . determined upon the redemption of any Common Stock, with respect to such redeemed Common Stock, respectively, (each a ?Performance Period") of the Fund (the ?Performance Fee?), in an amount equal to 20% of the increase of the Fund?s per Share Net Asset Value, if any, after adjustment for additional contributions and/or redemptions. The Investment Manager may elect to defer all or part of Performance Fee amount for two- years, 10 years, or any period in between. If the Investment Manager elects to defer all or part of its Performance Fee, that deferred amount is treated as if it were invested in newly issued common stock of the Fund?as of the last day of the Performance Period. The deferred amount then rises and falls with the value of the Fund?s Shares. If the Fund incurs a net loss during the Performance Period, the Investment Manager will not receive any Performance Fees unless and until the amount of such net loss applicable to each and every Share of the Fund?s stock which experienced such net loss (and which remains outstanding at the time the subsequent pro?t occurs) has been recouped 1n full. As noted above, the Fund invests all of its assets through a ?master-feeder" fund structure in the Master Fund, a Cayman Islands limited partnership. The Limited Partnership Agreement of the Master Fund provides that the General Partner shall be paid a ?xed fee for each quarter in an amount equal to 0.5% of the net assets of the Master Fund before any Incentive Fee allocation and an incentive allocation equal to 20% of the net pro?ts of each limited partner 'in the Master Fund. However, to the extent the Fixed Fees or Incentive Fees are paid by the Master Fund, such Fixed Fee and Incentive Fee amounts will not be charged at the InVestor Fund level. The Management Agreement recognizes that the Investment Manager has investments of its own and is acting as investment manager for others The Management Agreement further recognizes that the Investment Manager may become associated with other investment entities and engage in investment management for others. The Investment Manager or its af?liates are not limited or restricted from engaging in or devoting time and attention to the management of any other business, whether of a similar or dissimilar nature, or to render services of any kind to any other corporation, ?rm, individual or association. ?As a result, the'lnvestrnent Manager and its af?liates and other clients may hold substantial positions in securities that are owned by the Fund. If the Investment Manager and its af?liates and other clients hold a substantial position in an issuer, liquidity and concentration considerations may limit the ability of the Investment Manager to add to the position on behalf of the Fund or other clients or to readily dispose of the position. The Investment Manager may-on occasion give advice or take action With respect to those accounts that differs from the advice given with reSpect to the Fund. See discussion above under "Conflicts of Interest." DIVIDEND POLICY The declaration of dividends on the Shares will be in the discretion of the Board of Directors, and dividends may be declared only out of retained earnings. The Fund does not presently intend to pay dividends on its Shares. TAXATION THE FOLLOWING IS A SUIVIMARY OF CERTAIN U.S.. AND B.V.I. TAX CONSIDERATIONS AFFECTING THE FUND AND ITS SHAREHOLDERS. WHILE THE FOLLOWING SUIWMARY IS BELIEVED TO. BE ACCURATE AS OF THE DATE HEREOF, A OWN CIRCUMSTANCES MAY RENDER THE FOLLOWING SUMMARY INACCURATE OR INCOMPLETE. THUS, THE FOLLOWING SUMMARY SHOULD NOT BE CONSTRUED AS BINDING OR AUTHORITATIVE ADVICE TO ANY ACTUAL OR PROSPECTIVE SHAREHOLDER. ANY ACTUAL OR PROSPECTIVE SHAREHOLDER IS URGED T0 CONSULT HIS OR HER OWN TAX ADVISOR. REGARDING THE TAX CONSIDERATIONS RELEVANT TO AN INVESTMENT IN THE FUND. 18 Case Document 8-6 Filed 04/01/10 Page 31 of 190 United States Federal Income Taxation of the Fund. 1. Neither the Master Fund nor the Fund will be subject to any income, withholding or capital gains taxes in the Cayman Islands or the British Virgin Islands. 2. Under present law, the Fund will not be subject to any United States federal income tax on its capital gains whether from sources within or without the United States to the extent that such gains are not derived from securities classi?ed as United States real property interests within the meaning of Section 897 of the Internal RevenueCode of 1986, as amended (the "Code"). In this connection, the Fund does not presently intend to acquire any securities which would be classi?ed as United States real property interests. 3. The only United States income taxes which will be payable by the Fund on its income from dividends and-interest is the 30% withholding tax applicable to dividends and certain interest income considered to be from sources within the United States. Certain debt obligations which may be acquired by the Fund will not be subject to the 30% withholding tax. The Fund generally intends to invest its cash reserves in short-term debt obligations the interest on which is not subject to 30% withholding. 4. Shareholders who are not residents of the British Virgin Islands will not be subject to any income, withholding or capital gains taxes in the British Virgin Islands with respect to the shares of the Fund owned by them and dividends received on such shares, nor will they be subject to any estate or inheritance taxes in the British Virgin Islands. 5. Shareholders who are not residents of the Cayman Islands will not be subject to any income, withholding or capital gains taxes in the Cayman Islands with respect to the shares of the Fund owned by them and dividends received on such shares, nor will they be subject to any estate or inheritance taxes in the Cayman Islands. 6. Shareholders that are neither citizens nor residents of the United States and are not engaged in a trade or business in the United States will not be subject to any United States federal income, withholding, capital gains, estate or inheritance taxes with respect to shares of the Cemmon Stock owned by them and dividends received on such shares. U.S. Shareholders. As noted above, shares in the Fund may be sold to a limited number of U.S. investors who are pension and pro?t sharing trusts or other organizations which are generally exempt under U.S. federal income tax laws tax?exempt entities"). The U.S. tax-exempt entities in the Fund may not exceed 100 in number. Because the Fund is a "passive foreign investment company" as de?ned in Section 1297 of the U.S. Internal Revenue Code of 1986, as amended, (the "Code"), any U.S. tax-exempt entities will be subject to certain ?ling requirements in the United States. U.S. tax-exempt entity which does not borrow money or otherwise use leverage 'in acquiring Shares in the Fund should not be subject to U.S. federal income tax under the PFIC provisions of the Code on any dividends from the Fund or on any sale or redemption of its Shares in the Fund. . While the Fund may purchase securities on margin, borrow money and otherwise use leverage in connection with its investments, under present U.S. tax law that leverage should not be attributed to U.S. tax-exempt entities who are shareholders in the Fund. Thus, assuming that a U.S. tax-exempt entity does not borrow money or otherwise use leverage in acquiring Shares in the Fund, any dividends from the Fund or gain on the sale or redemption of shares in the Fund should not constitute "unrelated debt-?nanced income" as de?ned in Section 514 of the Code, or "unrelated business taxable income" as de?ned in Section 512 of the Code, to such U.S. tax-exempt entity. I - However, under certain proposed U.S. tax legislation, 3 portion of the dividends received by a U.S. tax- exempt entity, as well as a portion of any gain derived by such an entity from a sale or redemption of Shares, would be treated as "unrelated debt-?nanced income" if that entity were tomb?old 10 percent or more of the outstanding shares of the Fund (directly or by attribution from related parties). It cannot be predicted whether this proposed legislation will become law and, if so, what form the law would ultimately take. The Fund will monitor its shareholders in an attempt to ensure that the Fund is not more than 50% owned by such U.S. tax-exempt entities, so that the Fund will not be a "controlled foreign corporation" as de?ned in Section 957 of the Code. 19 Case rm Document 8-6 Filed 04/01/10 Page 32 of 190 Document 8-6 Filed 04/01/10 Pag9330f190 ERISA Matters. The Fund will not accept any contributions from shareholders that are pension plans or similar pension or retirement trusts (all such entities being herein called "Retirement Trusts") if, after such contribution, the Shares in the Fund held by such Retirement Trusts would represent 25% or more of the total outstanding shares in the Fund. If the shares held by such Retirement Trusts were to exceed this 25% limit, then the Fund's assets would be considered ?plan assets" under the US. Employee Retirement Income Security Act of 1974, as amended which could result in adverse consequences to the Investment Manager and the ?duciaries of the Retirement Trusts. I THE FOREGOING TAX SUMMARY DOES ADDRESS TAX CONSIDERATIONS WHICH MAY BE APPLICABLE TO CERTAIN SHAREHOLDERS UNDER THE LAWS OF JURISDICTIONS OTHER THAN THE UNITED STATES OR THE BRITISH VIRGIN ISLANDS. ACCORDINGLY, ALL PERSONS INTERESTED IN PURCHASING THE SHARES SHOULD INFORM THEMSELVES AS TO ANY INCOME OR OTHER TAX CONSEQUENCES PARTICULAR TO THEIR CIRCUMSTANCES ARISING IN THE JURISDICTION IN WHICH THEY ARE RESIDENT OR DOMICILED FOR TAX PURPOSES IN CONNECTION WITH THE ACQUISITION, HOLDING 0R DISPOSITION OF THE SHARES. MISCELLANEOUS Reports to Shareholders. The ?scal year for the Fund will be the calendar year. The Administrator will furnish each Shareholder an annual report, including audited ?nancial statements, within 120 days following the close of each ?scal year. Quarterly investment reports will also be sent after the close of each interim quarterly period. Accountants and Auditors. Auditors of the Fund's annual ?nancial statements will be selected annually by the Fund's Board of Directors. The Fund?s initial 12/31/02 auditors will be PricewaterhouseCoopers. 20 Case Document 8-6 Filed 04/01/10 Page 34 of 190 APPENDIX A SUBSCRIPTION DOCUMENTS 21 Case Document 8-6 Filed 04/01/10 Page 35 of 190 SUBSCRIPTION AGREEMENT AND STANDING PROXY To: Epsilon Global Active Value Fund II Ltd. c/o UBS Fund Services (Cayman) Ltd. UBS House 227 Elgin Avenue PO. Box 852GT Grand Cayman, Cayman Islands Fax: 1645?9144060 Please ?ll in the following information: Amount of Subscription in U.S. Dollars: ?0,000,900, We hereby apply to subscribe to purchase as many shares in Epsilon Global Active Value Fund II Ltd. (the "Fund") as may be purchased with above amount upon the terms of the Con?dential Offering Memorandum of the thd, as it may be amended, which We have received and read. acknowledge that I am/?we are able to afford a shareholding a venture having the risks and objectives of the Fund- declare the following: (1) the Shares hereby subscribed for are not being acquired directly or . indirectly by, and will not be transferred directly or indirectly to, (A) any individual who is a citizen, national or resident of the United States of America, (B) a corporation, partnership, association, joint?stock company, trust, fund, or any organized group of persons whether incorporated or not, created, organized or existing in, or organized and existing under the laws of the United States of America or any state, territory or possession thereof; or any other trust or 'cstate, other than an estate or trust the' income of which from sources outside of the United States 'of America' 15 not includible in gross income for purposes of computing United States income tax payable by it, (C) any other trust in which one or more of the persons speci?ed in clause (A) and (B) above have a cumulative direct or indirect bene?cial interest in excess of 50 percent of the value of the trust (D) any other non-corporate entity in which one or more of the persons speci?ed in clause (A) or (B) above, directly or indirectly, have more than a 50 percent bene?cial interest, (E) any other corporation in which one or more of the persons speci?ed in clause (A) or (B) above, directly or indirectly, own stock possessing more than 50 percent of the total combined voting power of all classes of stock entitled to vote, or more than 50 percent of the total value of shares of all classes of stock, and (F) any other corporation, partnersln?p, association, joint-stock company, trust, fund, organized group or persons whether incorporated or not with respect to which one or more of the persons speci?ed in clauses (A) or (B) above have the power to exercise a controlling in?uence over the management or policies, unless such power is solely the result of an o?icial position with such company S. Person"); (2) no offer to purchase such shares was made to mefus while I was/we were in the United 4 States; (3) We did not agree to purchase such Shares while In the United States, and (4) We will not attempt by any means, to offer, originate or execute an agreement to sell such Shares while' in the United States. Case Document 8-6 Filed 04/01/10 Page 36 of 190 If the subscriber is a bank or broker-dealer, the subscriber hereby represents and warrants, when it is acquiring Shares on behalf of clients for investment purposes, that such clients are not U. S. Persons, that it will notify the Fund if it shall come to its knowledge that any such client' is or has become a S. Person, that it will not at any time knowingly transfer or deliver the Shares or any part thereof or interest therein to a U. S. Person, and that it will not make any transfer thereof in the United States of America, its territories or possessions. declare that in subscribing for Shares in the Fund, I/each of us am/is a Professional Investor within the meaning of the Mutual Funds Act 1996, as amended in that [check one or both] My/our ordinary business involves, whether for ray/our own accotmt or the account(s) of (an)other(s), the acquisition or disposal of preperty of the same kind as the property, or a substantial part of the property which is (or will be) owned by the Company, as detailed in the Con?dential Offering Memorandum of the Company. My/our net worth (in the case of a natural person, whether individually or jointly with my spouse) exceeds 000, 000 or its equivalent any other law?illy recognized currency and Uwe consent to 'be treated as a Prefessional Investor for the purpose of an investment in the Company Shares will be held in book entry form for the subscriber, following acceptance, by the Administrator, UBS (Cayman Islands) Limited If requested, Share Certi?cates may be issued 1n the name of a nominee. .If this facility is required, please ?ll in name of nominee: The Subscriber ?hereby designates and appoints UBS Fund Services (Cayman) Ltd, through its authorized of?cers and directors, with full power of subscription, as its true and lawful Proxy and Attorney-in-Fact for the purpose of? voting the shares herein subscribed for as said Proxy may determine on any and all matters which may arise at any annual or special meeting of shareholders and upon which such shares eculd be voted by shareholders present in person at such meeting. This Proxy may be revoked by the owner of record of the shares hereby subscribed for, either personally or by presentation of a subsequently executed proxy at any annual meeting or special meeting of shareholders, or by written notice to UBS Fund Services (Cayman) Ltd, PO. Box 852, George Town, Grand Cayman, Cayman Islands. Case 2: -00555- RAJ c_ument _6 Filed 04/01/10 Page 37 of 190 Signature Page for Subscription by an ENTITY SHARES TO BE REGISTERED AS FOLLOWS: ENTITY OWNERSHIP - Check form of organization: El CORPORATION - Please include certi?ed resolutions (or similar documents) authorizing signature. El PARTNERSHIP - Please include a copy of the partnership agreement (or similar document) authorizing signature. B, TRUST - Please include a copy of the trust agreement. 6 cf? (Dan (13?1" Montc?wd Corsebmc?i-M) BANK or BROKER-DEALER See Page A-2 (Please print all information exactly as you wish it to appear on the Company's records.) science) awning Edema 3,ng - 8?0? MAJ-Q ?Suit. 300 'zo?gn?fge-l?le/ (Address) (Telephone Days) 0&0 I - 20g~ S733 @ch (Telephone Evenings) (Country of Formation) The undersigned trustee, partner or of?cer warrants that he has full power and authority ?'om all bene?ciaries or partners or from the board of directors of the entity named below to Sign this Share Application Form on behalf of the entity and that a purchase of Shares in Epsilon Global Active Value Fund II Ltd. is not prohibited by the governing documents of the entity. - - a . I Dated: it I l. 9! 3 Signatures of Entity Subscriber(s) (Please print name below each signature): (Name of Entity) By: (Trustee, perm Ithorized corporate of?cer i hark/M Axed? Ex era?lmie D?ur'iur? (Name and Title) By: (Trustee, partner or authorized corporate of?cer (Name and Title) Case Document 8-6 Filed 04/01/10 Page 38 of 190 SUBSCRIPTION INFORMATION SHARE REGISTRATION INFORMATION (POST) INFORMATION (if other than address of registration) gab-es"; EMQ?che? Name 810 Adcnm. 361'}; 300 Address 5?0on WA ORR 98?? Country of Residence Telephone 20cc $731 Cw Telephone (EveningsMWWG BANK - BANK FOR TRANSFERS in case of redemptions (if other than Name Address of Remitting Bank): a? R?q a Name Address ?m~?vkw?r 03s ?1 Country of Remdence . 20(0 mil?321?; (?mm mam} Telephone . (Sc 6?30: C??f $11537) Telephone (Evenings) Fax Document 8-6 Filed 04/01/10 Page 39 of 190 EPSILON GLOBAL ACTIVE VALUE FUND 11 LTD. SUBSCRIPTION AGREEMENT AND STANDING PROXY Instructions A. All Subscribers. Complete page A-2 by ?lling in the amount of the subscription; page by indicating . whether the Shares are to be issued in book entry fertn or issued in the name of a nominee; and page by completing the necessary subscription information. B. Subscriptions by Individuals. If a subscription is by an individual (including more than one), the "Signature Page for Subscription by an Individual" (page must be completed. C. Subscriptions by Entities. If asubscription is by an entity (trust, partnership, corporation, bank or broker- dealer), the "Signature Page for Subscription by an Entity? (page A-S) must be completed. D. Items to be delivered by All Subscribers. Completed and signed Share ApplicationForm and corresponding signature page (pages A- 2, A4 or A-5, and A-6). (ii) US. dollar denominated funds in the amount of the full purchase price for Shares. Wire transfer funds for the full amount of the subscription to the Company's subscription account at: ?To: UBS AG, Stamford Branch ABA Fedwire: . 0260-0799?3 SWIFT: For account of: UBS Fund Services (Cayman) Ltd. Accounlit: . For further credit to: - Epsilon Global Active Value Fund II Ltd. Account#: 72162 Subscription documents should be delivered or mailed to Epsilon Global Active-Value Fund II Ltd, c/o UBS Fund Services (Cayman) Ltd, UBS House, 227 Elgin Avenue, PO. Box 852GT, Grand Cayman, Cayman Islands Case Document 8-6 Filed 04/01/10 Page 40 of 190 Signature Page for Subscription by an INDIVIDUAL SHARES TO BE REGISTERED AS FOLLOWS: (Check One) - INDIVIDUAL SUBSCRIBER SCRIBERS (Both signatures required below) (Please print all information exactly as you wish it to appear on the Company?s records.) (Name of Subscriber) (Address) (Telephone . Days) (Country of Residence) (Telephone Evenings) (Name of Co-Subscriber) (Address) (Telephone - Days) (Country of Residence) (Telephbne Evenings) Dated: Signatures of Individual Subscriber(s) (Please print name below each signature): Case Document 8-6 Filed 04/01/10 Page'41 of 190 EPSILON GLOBAL ACTIVE VALUE FUND 11 LTD. Maximum Capitalization: 10,000,000 shares Minimum Investment: US $2,000,000 CONFIDENTIAL OFFERING MEMORANDUM THE DIRECT OR INDIRECT OFFER SALE OF SHARES OF EPSILON GLOBAL ACTIVE VALUE FUND II LTD. TO CITIZENS NATIONAL OR RESIDENTS OF, OR INSTITUTIONS OR OTHER ENTITIES ORGANIZED, CHARTERED OR RESIDENT IN, THE UNITED STATES OF AMERICA, WITH THE EXCEPTION OF CERTAIN QUALIFIED TAX EXEMPT ENTITIES IS EXPRESSLY PROHIBITED The date of this offering memorandum is 1 January 2004 a Case Document 8-6 Filed 04/01/10 Page 42 of 190 TABLE OF CONTENTS INVESTOR MUTUAL FUNDS DISCLOSURE 7 ANTI-MONEY LAUNDERING vi) DIRECTORY I SUNMARY OF THE CONFIDENTLAL OFFERING MEMORANDUM 1- The Fund 1 Terms of 2 THE FUND 5 INVESTMENT OBJECTIVES . INVESTMENT PRINCIPLES . '5 MANAGEMENT OF THE FUND, THE INVESTMENT MANAGER AND OTHER RELATIONSHIPS . 6 CERTAIN RISK FACTORS 7 ADMINISTRATION 12 . THE SHARE CAPITAL . 12 SUBSCRIPTION PROCEDURE 12 REDEMPTION PROCEDURE 16 DETERMINATION OF NET ASSET VALUE 17 FEES, COMPENSATIONAND EXPENSES 19 DIVIDEND POLICY 19 TAXATION 19 Appendix A: Subscription Documents- Subscription Agreement and Standing Proxy. . . 22 for Non-U. S. Investors ii Case Document 8-6 Filed 04/01/10 Page 43 of 190 INVESTOR NOTICES THIS NIEMORANDUM CONSTITUTES AN OFFER ONLY TO THE PERSON WHOSE NAME APPEARS IN THE SPACE PROVIDED ON THE COVER PAGE DELIVERY OF THIS MEMORANDUM TO ANYONE OTHER THAN THE PERSON NAMED OR HIS DESIGNATED REPRESENTATIVE IS UNAUTHORIZED, AND ANY REPRODUCTION OF THIS MEMORANDUNI, IN WHOLE OR IN PART, WITHOUT THE PRIOR - WRITTEN CONSENT OF THE ADMINISTRATOR OF THE FUND, IS PROHIBITED. . THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, SHARES IN THE FUND IN ANY JURISDICTION WHERE SUCH OFFER, SOLICITATION, PURCHASE 0R SALE WOULD BE PROHIBITED BY LAW, OR TO ANY FIRM OR INDIVIDUAL TO WHOM IT WOULD BE UNLAWFUL TO MAKE SUCH AN OFFER, SOLICITATION, PURCHASE OR SALE. THIS IVIEMORANDUM CONTAINS A SUMMARY OF THE MATERIAL PROVISIONS OF THE DOCUMENTS REFERRED TO HEREIN. STATEMENTS MADE WITH RESPECT TO THE PROVISIONS OF THOSE DOCUMENTS ARE NOT NECESSARHY COMPLETE, AND REFERENCE IS MADE TO THE ACTUAL DOCUMENT FOR COMPLETE INFORMATION AS TO TIDE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO. SHARES ARE AVAILABLE ONLY TO PERSONS WILLING AND ABLE TO BEAR THE ECONOMIC RISKS OF THIS INVESTMENT. THE SHARES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. INVESTMENT IN THE FUND IS DESIGNED ONLY FOR SOPHISTICATED PERSONS WHO ARE ABLE TO BEAR THE LOSS OF THEIR INVESTMENT. IBIFIFIIHIHIIBFIIHII NO OFFERING LITERATURE SHALL BE EMPLOYED IN THE OFFERING OF THE SHARES EXCEPT AS PROVIDED BY THE FUND, TOGETHER WITH THIS MEMORANDUM NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY REPRESENTATIONS OR PROVIDE ANY INFORMATION WITH RESPECT TO THE SHARES EXCEPT SUCH INFORMATION AS IS CONTAINED IN THIS MEMORANDUM. NEITHER THE DELIVERY OF THIS MEMORANDUM NOR ANY SALES MADE SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATTON THAT THERE HAS BEEN NO CHANGE IN THE MATTERS DISCUSSED HEREIN SINCE TI-EE DATE HEREOF. EACH INVESTOR AND HIS OR HER ADVISORS MAY INQUIRE ABOUT ANY ASPECT OF THE OFFERING. NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY REPRESENTATION WITH RESPECT TO THE FUND, ITS INVESTMENT MANAGER, OR THIS OFFERING OTHER THAN WHICH IS CONTAJNED IN THIS MEMORANDUM. ANY REPRESENTATION NOT CONTAINED HEREIN MUST NOT BE RELIED UPON. NO REPRESENTATION IS BEING MADE HEREBY WITH RESPECT TO THE POTENTIAL RETURN TO BE DERIVED BY AN INVESTOR. ANY INFORMATION CONTAINED IN THE PROMOTIONAL MATERIALS SHALL BE SUPERSEDED BY THE MEMORANDUM TO THE EXTENT SUCH MATERIALS ARE INCONSISTENT THEREWTTH. Case Document 8-6 Filed 04/01/10 Page 44 of 190 EACH INVESTOR IN THE SHARES OFFERED HEREBY MUST ACQUIRE SUCH SHARES SOLELY FOR SUCH INVESTORS OWN ACCOUNT AND NOT WITH AN INTENTION OF DISTRIBUTION, TRANSFER, OR RESALE, EITHER IN WHOLE OR IN PART. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THIS OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY US. FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. THERE IS NO ESTABLISHED MARKET FOR THESE SECURITIES AND NONE WILL DEVELOP. THE FUND IS SUBJECT TO CONFLICTS OF INTEREST. Case Document 8-6 Filed 04/01/10 Page 45 of 190 MUTUAL FUNDS DISCLOSURE The British Virgin Islands Mutual Funds Act 1996 (the as amended, came into force on January 2nd 1998 with the aim of regulating open-ended Mutual Funds, and the Managers and Administrators of open-ended mutual funds. . Three types of funds, namely Private, Professional and Public Funds (each as de?ned in the Act) are regulated . . by the Act. It IS. intended that Epsilon Global Active Value Fund II Ltd. (the "Fund" be recognized under the Act as a Professional Fund. A Professional Fund is de?ned as a mutual ?md: a. the shares of which are made available only to professional investors and the initial investment in which, in respect of the majority of each such investors, is not less than one hundred thousand dollars in US enemy or its equivalent in any other currency; or b. is designatedas aprofessional ?md by regulations. A "Professional Investor? is de?ned as a person whose ordinary business involves, whether for his own account or the account of others, the acquisition or disposal of property of the same kind as the property, or a substantial part of the property, of the fund or a person who has signed a declaration that he, whether individually or jointly with his spouse, has a net worth excess of $1 million in United States cmrency or its equivalent In any other currency and that he consents to being treated as a professional investor. . The Act provides for a Professional Fundto be able to manage or administer its affairs in or from within the Territory for up to fourteen days before being recognized. A recognized Professional Fund is required by the Act to pay an annual fee of Recognition under the Act should not be taken to imply that the Fund has been approved by any regulatory authority in any country such as the United States, the United Kingdom or any other jurisdiction other than the BVI and it is intended that any potential shareholders of the Fund, participate on the basis "that they can a?'ord tolose all or a substantial portion oftheir investment. Case Document 8-6 Filed 04/01/10 Page 46 of 190 ANTI-MONEY LAUNDERING In order to comply with regulations aimed at the prevention of money laundering, the Fund will require veri?cation of identity ?'om all prospective investors (unless in any case the Fund is satis?ed that an exemption under the Money Laundering Regulations 2000 of the Cayman Islands (the ?Regulations? and the Code of Practice 1999 (the ?Code of Practice") of the British Virgin Islands applies), Depending on the of each subscription, it may not be necessary to obtain full documentary evidence of identity where: In the Cayman Islands: the prospective investor makes the payment for his investment ?om an account held in the prospective investor?s name at a recognised ?nancial institution; the prospective investor is regulated by a recognised regulatory authority and is based or incorporated in, or formed under the?law of, a recognised jurisdiction; or the subscription is made by an intermediary acting on behalf of the prospective investor and such intermediary is regulated by a recognised regulatory authority and is based or incorporated' in, or formed under the law of, a recognised jurisdiction In the British Virgin Islands: the investor is a ?Regulated Person? as de?ned in the Code of Practice, carrying on business in the British Virgin Islands; . the investor is an ?authorized ?nancial institution? as that term is used in the Code of Practice in a country or territory which is a member of the Financial Action Task Force (the or the Caribbean Financial Action Task Force (the and which has anti-money laundering laws and procedures that are at least equivalent to the British Virgin Islands; the investor is acting in the course of a business in relation to which a ?regulatory authority? as that term is used in the Code of Practice, outside the British Virgin Islands exercises regulatory functions and is based or incorporated in or formed under the law of a country or territory outside the British Virgin Islands which is a member of FATE or CFAFT and in which there are in force anti-money laundering laws or procedures that are at least equivalent to those of the British Virgin Islands; the subscription is made by an intermediary acting on behalf of the prospective investor and such intermediary is regulated by a recognized regulatory authority and is based or incorporated in, or formed under the law of, a recognized jurisdiction and the intermediary has entered into Terms of Business con?rming compliance with the Code of Practice requirement to retain and provide due diligence records; and the investor is an attorney at law entitled to practice in the Territory of the British Virgin Islands or an accountant bound by anti-money laundering rules of its professional body equivalent to the Code of Practice. For the purposes of the above-referenced exceptions in the Cayman Islands, recognition or classi?cation of a ?nancial institution, regulatory authority or jurisdiction will be determined in accordance with the Regulations by reference to those jurisdictions recognised by the Cayman Islands as having snf?Cient anti-money laundering regulations. . For purposes of the above-referenced exception in the British Virgin Islands, classi?cation of a ?nancial institution, regulatory authority or jurisdiction which there are anti-money laundering laws and procedures that are equivalent to those of the British Virgin Islands will be determined' in accordance with the Code of Practice by the relevant body in the British Virgin Islands.- Case Document 8-6 Filed 04/01/10 Page 47 of 190 The Fund reserves. the right to request such information as is necessary to verify the identity of a prospective investor. The Fund also reserves the right to request such identi?cation evidence in respect of a . transferee of Shares. In the event of delay or failure by the prospective investor or transferee to produce any information required for veri?cation purposes, the Fund may refuse to accept the application or (as the case may be) to register the relevant transfer and (in the case of a subscription of Shares) any funds received will be returned without interest to the account from which the monies were originally debited. The Fund also reserves the right to refuse to make any redemption payment to a Shareholder if any of the Directors of the Fund or the Administrator suspects or is advised that the payment of any redemption moneys to such Shareholder might result in a breach or violation of any applicable anti-money laundering or other laws or regulations by any person in any relevant jurisdiction, or such refusal is considered necessary or appropriate to ensure the compliance by the Fund, its Directors or the Administrator with any such laws or regulations In any relevant jurisdiction. . If, as a result of any information or other matter which comes to his attention, any person resident in the Cayman Islands or the British Virgin Islands (including the Fund, its Directors and the Administrator) knows or suspects that another person is engaged In money laundering, such person is required to report such information or other matter pursuant to the Proceeds of Criminal Conduct Law (2001 Revision) of the Cayman Islands or the Code. of Practice in the British Virgin Islands and such report shall not be treated as a breach of any restriction upon the . disclosrue of information imposed by law or otherwise. vii Case Document 8-6 Filed 04/01/10 Page 48 of 190 FUND REGISTERED OFFICE Epsilon Global Active Value Fund II Ltd. Craigmuir Chambers PO. Box 71 Road Town, Tortola, British Virgin Islands INVESTMENT MANAGER Epsilon Investment Management L.L.C. 7230 W. Palmetto Park Road, Suite 310 Boca Rama-Florida 33433 U.S.A. Phone: 561-237-0330 Fax: 561-23 7?0329 DIRECTORY ADMINISTRATOR UBS Fund Services (Cayman) Ltd. UBS House 227, Elgin Avenue, PO. Box 852- George Town, Grand Cayman Cayman Islands . PRIME BROKER AND CUSTODIAN Goldman Sachs Co. One New York Plaza . New York, New York 10004 U.S.A. ACCOUNTANTS AND AUDITORS PricewaterhouseCOOpers Hofplein 1 9 3032 AC Rotterdam The Netherlands COUNSEL Monahan Biagi, P.L.L.C. 701 Fifth Avenue, Suite 2800 Seattle, Washington 98104 USA. Case Document 8-6 Filed 04/01/10 Page 49 of 190 SUIVLMARY OF THE CONFIDENTIAL OFFERING MEMORANDUM THE FOLLOWING IS A OF THIS CONFIDENTIAL OFFERING MEMORANDUM (THE THIS IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION APPEARING ELSEWHERE HEREIN, AND THE DESCRIPTION OF ANY IS QUALIFIED IN ITS ENTIRETY REFERENCE TO SUCH DOCUMENT. AN INVESTMENT IN THE FUND IS SPECULATIVE AND INVOLVES SUBSTANTIAL RISKS. EACH SHAREHOLDER MAY LOSE HIS ENTIRE INVESTMENT (INCLUDING ANY PROFITS, WHETHER OR NOT DISTRIBUTED). SEE The Fund Epsilon Global Active Value Fund II Ltd. (the "Fund") IS a corporation formed under the laws of the British Virgin Islands. All assets of the Fund are, and the proceeds from the sale of additional shares of Common Stock' 1n the- Fund will be, invested through a "master-feeder" fund structure in Epsilon Global Master Fund 11, L. P., a limited partnership formed under the laws of the Cayman Islands ("Master Fund?). The General Partner of the Master Fund is Epsilon Global Asset Management Ltd. (?the General Partner?), a corporation formed under the laws of the Cayman Islands. Other ?feeder funds?.? investing in the Master Fund include Epsilon Global Active Value Fund II, Epsilon Global Active Value Fund L.P., Epsilon Global Active Value Fund II-G, each a US. partnership organiZed for US. investors, and Epsilon Global Active Value Fund II-G Ltd, a BVI international business company. Other investment vehicles may be formed in the ?rture to invest in the Master Fund. Each such investment vehicle will invest in the Master Fund on substantially the same terms and conditions as the Fund and therefore will generally be allocated a proportionate share of the Master Fund's gains, losses and expenses based on their interest in the Master Fund, adjusted for any di?erences' in fees. It 13 also noted that the Fund IS authorized to invest outside of the Master Fund, although it does not currently anticipate that it will do so. Investment Objective The Fund?s investment objective is capital appreciation with risk control. The Fund seeks to achieve a superior absolute return by employing various investment strategies Investment Manager The Investment Manager of the Fund IS Epsilon Investment Management L. L. C. (the "Investment Manager" or "Epsilon"), a Delaware limited liability company. Under the direction, supervision and control of the Directors of the Fund or their designee(s), Epsilon will be responsible for the analysis and recommendations related to the trading and investment decisions of the Fund. The Investment Manager will receive such fees as are agreed to between the Fund and the Investment Manager. Directors The Directors of the Fund are Mr. Steve G. Stevanovich and Mr. Alberto Clodoaido DE PAULO. Administrator UBS Fund Services (Cayman) Ltd. serves as the Fund's Administrator, and will communicate with the und?s shareholders. Auditors . The Fund's books of account will be audited each year by the Fund's independent auditors, PricewaterhouseCoopers. Prime Broker Custodian The Fund's principal prime broker and custodian is Goldman Sachs Co., New York. Indemni?cation Neither the Administrator, the Investment Manager, nor any of their respective of?cers, directors, employees or agents ("Indemni?ed Parties"), shall be liable, in damages or otherwise, to the Fund or the Shareholders for any act or omission performed or omitted by any of them unless such, act or omission results from willful misconduct, fraud or bad faith. The Fund will indemnify and hold I Case Document 8-6 Filed 04/01/10 Page 50 of 190 I harmless all Indemni?ed Parties from and against any and all claims or liabilities of any nature whatsoever, including attorneys? fees, arising out of or in connection with any action taken or omitted by any Indemni?ed Party, unless such act or omission results from willful misconduct, fraud or bad faith. Fees and Expenses Payable by the Fund Fixed Fee Contingent Fee Reports Fiscal Year Shares The Fund pays or causes to be paid its own fees and expenses, including all legal and accounting expenses. As stated above, the assets of the Fund will be invested through the Master Feeder structure. The General Partner of the Master Fund will receive, in consideration for its services to the Fund, a quarterly ?xed fee' an amount equal to one half of one percent per annum) of the Fund's net assets, determined as of the close of each calendar quarter (the ?Fixed Fee D. In the discretion of the Fund certain shareholders may be assessed a Fixed Fee in a different amount. To the extent that any Fixed Fees are paid to the General Partner by the Master Fund with respect to investments made by the Fund, no Fixed Fee amounts will be charged at the Fund level. The General Partner will receive a contingent fee for each ?scal year or otherwise determined upon the redemption of any Common Stock, with respect to such redeemed Common Stock, respectively, (each a ?Performance Period?) equal to 20% of the amount, if 'any, of the net appreciation of the Fund's net assets during that Performance Period. To the extent that the Contingent Fees are paid to the General Partner of the Master Fund by the Master Fund for investments made by the Fund, no Contingent Fees will be charged at the Fund level. If the Fund incurs a net loss during a ?scal year, the General Partner may not receive any contingent fees from the Fund in a subsequent ?scal year unless and until the amount of such net loss applicable to each and every Share which experienced such net loss (and which remains outstanding at the time the subsequent pro?t occurs) has been recouped in full. Within 120 days following the conclusion of each ?scal year, each Shareholder will receive an annual report (together with an annual audited ?nancial statement) describing the results of the Fund?s trading activities for that ?scal year. The annual report will be audited by the Fund's independent public accormtants. Each Shareholder will also receive a quarterly investment report, describing the Fund's activities in such detail, as the Fund, 1n its sole discretion, shall determine. The Fund reports its results in U. S. dollars. The ?sCal year of the Fund shall end on December 31 of each year, and the ?scal quarters of the Fund shall end on March 31, June 30, September 30 and December 31 of each year; provided, however that the Fund's "initial ?soal year shall begin on the date the Fund commences operations and shall end on the following December 31. Terms of Investment The Fund will issue shares of common stock ("Shares"). Each of the Shares is entitled to participate ratably, on a share for share basis, with all outstanding Shares, in the Fund?s earnings and assets. Purchasers of Shares are referred to herein as Shareholders. With the exception of certain pension and pro?t sharing trusts, charities and other entities which are generally tax- exempt under US. Federal income tax laws tax-exempt entities"), ownership of Shares will be restricted to persons other than "United States persons.? "United States persons" are de?ned to include a citizen or resident of the United States; (ii) a corporation, partnership, trust, or other entity organized or created 'under the laws of the United States; or any organization or entity controlled, directly or indirectly, by a person or persons described in or or in which such persons are known to be the owners, directly or indirectly, of a majority of the bene?cial interests therein. Case Document_8?6 Filed 04/01/10 Page 51 of 190 Minimum Subscri tion The minimum subscription for Shares' 13 000, 000, subject to the Fund?s discretion to accept lesser amounts. Subscription Procedure The Fund offers its shares on a continuous basis at a price per Share equal to the Net Asset Value (the per Share as of date of Issuance, plus any applicable subscription charges A deposit to a Contingent Fee Reserve may be required in certain circumstances and further adjustments to the number of Shares may be required in accordance with an Equalization Credit (See ?Equalization Adjustments? for a more detailed description of Equalization Accounting). Subscriptions received during any period will ordinarily be accepted as of the ?rst day of the following period, subscriptions received between March 1 and March 31 will be accepted as of April 1. The Fund may, in its discretion, accept subscriptions on a day other than the ?rst day of a month. The Fund will issue number of shares by dividing subscription amount- by per share price rounded to 2 decimal places. All persons desiring to subscribe for and purchase Shares should complete, execute and deliver a Subscription Agreement to the Fund. Subscription Instructions are attached to this Memorandum as Exhibit A?l . The Subscription Agreement is attached to this Memorandum as Exhibit Shares will generally be issued on the ?rst day of the month following the acceptance of a subscription (the "Closing Date"). The subscriber's payment for his or her Shares must be made at least one Business Day prior to the Closing Date. Payments should be made by wire transfer of immediately available ?mds to the Fimd's account as follows: To: UBS AG, Stamford Branch ABA Fedwire: 0260-0799-3 SWIFT: For account of: DES Fund Services (Cayman) Ltd. Account#: For further credit to: Epsilon Global Active Value Fund II Accoun?: 72162 All subscriptions for Shares are irrevocable by the subscriber-upon acceptance by the Fund. The Fund or investment Manager may rej ect any subscription for any reasc'm. Potential investors, by accepting delivery of this Memorandum, agree to return this Memorandum, including Exhibits hereto, if such potential investor does not subscribe for Shares, (ii) such potential investor's subscription 18 not accepted, or the offering is terminated before the sale to such potential investor is consummated. Solicitation of Subscriptions 7 There are no underwriting arrangements with respect to the offering of Shares. All solicitations of subscriptions will be made directly by the Company or through the assistance of unaf?liated placement agents and money managers. Such unaf?liated placement agents and money managers may charge their clients a placement fee of up to 5% of the total amount of the subscription for Shares sold with their assistance. The unaf?liated placement agents and money managers may rebate all or a portion of such fees to their clients. Case Document 8-6 Filed 04/01/10 Page 52 of 190 Limited Transferability - - - . .. Each potential investor must represent that they will acquire the Shares only for investment. purposes and not with a view to resale or distribution No Shareholder may transfer Shares without the prior written consent of the Investment Manager and on terms acceptable to Administrator. Redemption Procedure Upon 45 days' prior written notice to the Fund, each Shareholder may request that the Fund redeem all or part of such Shareholder?s Shares as of the close of business on the met day of the calendar quarter. With respect to any partial redemption, a Shareholder may not make a partial redemption of less than and may not reduce such Shareholders unredeemed Shares to ?an amount less than the minimum investment then required of new Shareholders. Also, in order to be considered a partial redemption, the redemption cannot exceed 90% of a' Shareholder?s total capital accormt. In any case, the redemption price shall be the NAV of the redeemed Shares, as calculated at the end of the applicable measurement period . The Fund also has the right to force the complete redemption of any Shareholder at any time at the Investment Manager?s sole discretion. Case Document 8-6 Filed? 04/01/10 Page 53 of 190 .l?lv?ler-?? i - :3 - Epsilon Global Active Value Fund II Ltd. (The ?Fund?) incorporated' in the territory of the British Virgin Islands (the as an international business company. The registered of?ce of the Fund' is located 111 Tortola, British Virgin Islands. Shareholders have the right to purchase additional shares on a basis (see ?Offering of the Shares?) and to redeem shares as of the last day. of end of ?scal quarter on at least 45? days notice (see ?Redemption Procedure?). INVESTMENT OBJECTIVES The Fund?s investment objective is capital appreciation with risk control. The Investment Manager seeks superior absolute returns while reducing the risk of permanent impairment to capital To accomplish this objective, the Investment Manager employs global opportunistic, distressed and event-driven value investing across a variety of security types and asset classes. The Fund seeks invesunent opportrmities and deploys capital on a global basis. The Fund?s opportunistic investment style may lead to investments in capital structure restructuring, the equity or high yield debt of distressed or mismanaged companies which may be in default or in bankruptcy, private corporate debt such as bank debt or trade claims, sovereign debt, convertible securities and special situations including turnarounds, mergers, spinoffs, restructurings, recapitalizations and exchange o??ers. The Fund may also invest in privately negotiated and structured securities of pubhc and private companies. Analy?cal Methodology. The Fund believes that the market price of the various components of a capital structure are ultimately determined by enterprise value. Therefore, when evaluating the securities of distressed or mismanaged companies, the Fund attempts to determine the enterprise or "going concern" value of the company and then compares that value to the current market value of the company's securities. This analysis and comparison enables the Fund to determine which securities are incorrectly priced, and subsequently, offer the best risk/return. Factors considered by the Fund in assessing enterprise value are, among other things. historical and discormted ?iture levels of operating and free cash ?ow, (ii) current and likely future ?nancing needs and alternatives, balance sheet structure including off balance sheet items, (iv) revenue and expense recognition policies, industry standing, (vi) diversity of operations and (vii) background, operational experience and track record of management. The application of the above analytical methodology not only enables the Fund to identify which securities it believes are undervalued, but also which securities are overpriced Once identi?ed, these overpriced securities may be sold short in anticipation of a ?rture price decline. . Global Investments. In non-U.S. markets, the Fund may purchase U.S. dollar and non-U.S. currency denominated equity and debt securities of non-U.S. corporations, as well as the sovereign debt of various governments and the debt of their respective agencies or departments, which may be trading at distressed levels. The Fund may also purchase newly or recently privatized equity or debt securities of former state owned entities in private or open market transactions. When purchasing non-U.S. currency denominated securities, the may hedge currency ?uctuation risk, thereby minimizing the impact of negative currency movements. Special Situations. The focuses on corporate dislocations and discrete events such as a restructuring or a reorganization, the Spinoff of a division or subsidiary, a recapitalization, an acquisition or merger, a tender offer, an asset sale or a regulatory shi?. For example, in a restructuring, a company may sell, spino?' or close unpro?table or non?strategic portions of its business,.thereby leaving a more focused core business. Additionally, the company may restructure its balance sheet by exchanging high interest rate debt-for lower rated debt or equity or some combination thereof. The Fund seeks restructuring situations in an effort to identity companies whOSe core business or whose remaining or newly created securities are incorrectly priced by the market. Risk Control. The Fund may attempt to reduce risk or to hedge positions, including the risk of non-U.S. currency ?uctuations, with offsetting transactions, such as short sales and buying or selling options on the same or similar securities. The Fund analyzes the historical and probable price movements of certain securities against that of an_ 5 Case Document 8-6 Filed 04/01/10 Page 54 of 190 underlying security, in an effort to determine not only which securities offer the best hedge, but also which hedge - ratio offers the best downside protection'as Welles upside-potential. . The Fund may?also purchase and sell market or! - .- index options for hedging or speculative purposes. MANAGEMENT OF THE FUND, THE INVESTMENT MANAGER AND OTHER RELATIONSHIPS The Fund. The Fund?s Board of Directors has overall management responsibility for the Fund, including establishing investment, dividend and distribution policy, and having the authority to select and replace the Fund?s Administrator, any of?cers of the Company and other persons or entities with management or administrative responsibilities to the Fund. The Fund?s Memorandum and Articles of Association provide that a Director shall not be liable to the Fund for any acts or omissions in the performance of his duties if such person acted honestly and in good faith with a view to the best interests of the Fund and, in the case of criminal proceedings, such a person had no cause to believe that his cenduct was unlawful. Such Memorandum and Articles of Association contain certain .provisions- for the indemni?cation of Directors by the Fund, to the extent permitted by law, against liabilities to third parties arising in connection with the of their services. The Directors of the Fund are Mr. Steve G. Stevanovich and Mr. Alberto Clodcaldo DE PAULO, whose backgrounds are set forth below. Mr. Steve G. Stevanovich rs the Founder and President of both Westford Asset Management L. L. C. and Epsilon Investment Management L. C. Epsilon Investment Management L. C. is currently managing over $800 million in assets in various strategies Mr. Stevanovich has over 19 years of experience in international investment management. During these 19 years, Mr. Stevanovich has developed an ability to assess and exploit capital structure mispricings on a global basis while utilizing various hedging techniques in an attempt to maximize capital preservation. Prior to founding Epsilon, _Mr. Stevanovich was the Executive Vice President of Everest Capital Limited, a $1.4 billion global hedge fund. During the ?ve and one?half years that Mr. Stevanovich spent at Everest, the fund had a compounded return of over 25% per annum. Prior to joining Everest Capital, Mr. Stevanovich had over seven years of experience in corporate ?nance and investment banking, most recently at O?Connor, - Altwell Company, a leveraged buyout ?rm in Boston Where he was involved in analyzing and valuing companies in various industries and negotiating the capital structure and pricing of various transactions. Mr. Stevanovich has a BA :11 Economics from the University of Chicago and an MBA ?om the University of Chicago Graduate School of Business. Alberto Clodoaldo DE PAULO is a Managing Director of Dutch Antilles Management N.V. He was born in Curacao on September 7th, 1938, residing at Plantage Klein Kwartier z/n, Curacao, Netherlands Antilles, with the personal title of - Mr. Stevanovich and Mr. de Paulo are assisted by a team of investment professionals. Epsilon Investment Management L.L.C. The Investment Manager of the Fund is Epsilon Investment Management, L. C. (the "Investment Manager" or "Epsilon"), a Delaware limited liability company. In its capacity as Investment Manager to the Fund, and under the direction, supervision and control of the Directors of the Fund or their designee(s), Epsilon provides services required for the Fund's operation including analysis and recommendations related to the fund?s trading and investments transactions. Speci?cally, under the direction, supervision and control of the Fund, Epsilon aids in the management, investment and reinvestment of the Fund's assets, including the selection of securities brokers and banks. Steve G. Stevanovich, Whose background is set forth above, is the sole manager of Epsilon. The Investment Manager and its investment professionals (or their families or related entities) have a signi?cant portion of their net worth invested in the Funds' they manage. Investment Management Aggeement. Under an Investment Management Agreement (the ?Management Agreement") between the Investment Manager and the General Partner of the Master Fund, the Investment Manager will provide research, analysis and recommendations related to the investment and reinvestment the assets of the Fund in accordance with. the investment objective and policies of the set forth above. It is noted that the Investment Manager may also aid in the maintenance the Fund?s ?nancial records and computation the Fund?s net asset value. For its services the Investment Manager will be paid such fees as are agreed to between the General ,Partner and the Investment Manager. The Management Agreement provides that it shall continue until the close of business on December 31, 2030, except that either the General Partner or the Investment Manager may terminate the Management Agreement Case Document 8-6 Filed 04/01/10 Page 55 of 190 effective. at the close of business. on the last day of any ?scal year by giving the other party not less than ten (l0) days written notice The Management Agreement recognizes that the Investment Manager has investments of its own and 15 acting as investment manager fer others. The Management Agreement further recognizes that the Investment Manager may become associated with other investment entities and engage in investment management for others. Except to the extent necessary to perform its obligations under the Management Agreement, the Investment Manager or its af?liates are not limited or restricted ?om engaging in oi devoting time and attention to the management of any other business, whether of a similar or dissimilar nature, or to render services of any kind to any other corporation, ?rm, individual or association. As a result, the Investment Manager and its af?liates and other clients may hold substantial positions in securities that are owned by the Fund. If the Investment Manager and its af?liates and other clients hold a? substantial position in=an issuer, liquidity and concentration considerations may 1 -- limit the ability of the Investment Manager to add to the position on behalf of the Fund or other'clients or to readily dispose of the position. The Investment Manager may on occasion give advice or take action with respect to those accounts that differs from the advice given with respect to the Fund See discussion under "Con?icts of Interest. Pursuant to the Investment Management Agreement between ,the Fund and the Investment Manager the Investment Manager shall not be liable to the Fund for any acts or omissions in the performance of their respective services in the absence of willful misconduct, gross negligence or as otherwise required by law, and each agreement contains provisions for the indemni?cation of each of the Managers by the Fund against liabilities to third parties arising in connection with theperformance of their services, to the extent permitted by- law. Prime Broker and Brokerage Commissions. Although the Fund will regularly review the brokerage commission rates charged to the Fund, it has complete discretion to determine which brokerage ?rms will be engaged by the Fund, regardless of their commission rates. The fund will use Goldman Sachs Co. as its principal prime broker and custodian, but may engage other brokers to provide similar services. Portfolio transactions will be allocated by the Fund to broker-dealers on the basis of best execution, price, and brokerage services special execution capabilities, clearance, settlement and custodial services) which bene?t the Fund. The Fund may also generally consider the amount and nature of research, execution and other services provided by brokers, as well as the extent to which such services are relied upon, and may attempt to allocate a portion of the brokerage business of the on the basis of that consideration. To the extent that the Investment Manager aids the Fund in this regard, the investment information received from brokers may be used by the Investment Manager in servicing any other entities to which the Investment Manager provides investment advice and not all such information may be used by the Investment Manager in connection with the Fund A broker will not be excluded from receiving brokerage business because it does not provide research services. Among the . services the Fund may consider in allocating portfolio transactions to broker-dealers is whether a broker-dealer has referred investors to the Fund. If, and when, such an allocation of portfolio transactions is made, the commission rates charged for such transactions shall not exceed commercially reasonable rates. CERTAIN RISK FACTORS AN INVESTMENT IN THE FUND IS SPECULATIVE AND IS SUITABLE ONLY FOR PERSONS WHO ARE ABLE TO ASSUIVIE THE RISK OF LOSING THEIR ENTIRE INVESTNIENT. PROSPECTIVE PURCHASERS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISKS BEFORE SUBSCRIBING FOR SHARES. Limited Operating Histog. The Fund commenced operation in July, 2001 and has a. limited operating history upon which an evaluation of the Fund's performance can be made. The success of the Fund will be largely dependent on the judgment and ability of the Directors of the Fund, the General Partner of the Master Fund, and the Investment Manager. Risk of Loss of Capital. An investment in the Fund creates. a risk of loss of capital and is designated for sophisticated persons who are able to hear such a risk The Fund believes that its investment program and research techniques moderate this risk to some degree, but can make no warranty or representation in this regard. I Case Document 8-6 Filed 04/01/10 Page 56 of 190 . Reliance on the Investment Manager. Although the Directors of the Fund and the General Partner of the Master. success of the Fund" IS heavily dependent on the activities, judgment and availability of the Investment Manager. An investor in the Fund must rely upon the ability of the Investment Manager in making investment analyses and recommendations consistent with the Fund?s investment objectives and policies. The investor will not have the opportunity to evaluate personally the relevant economic, ?nancial and other information to be used by the Fund or the Investment Manager in the selection, analysis and monitoring of investments. Securities to be Purchased. The Fund may purchase low rated or unrated debt securities. Such securities may offer higher yields than do higher rated securities, but generally involve greater volatility of price and risk of principal and income, including the possibility of default by, or bankruptcy of, the issuers of the securities. In addition, the markets for such securities may be limited. The Fund may enter into contracts with dealers as principal to purchase certain securities and instruments. Such transactions are not subject to exchange rules and . ?may 'result in' losses to the Fund in the event of a "default or bankruptcy of a counterparty. The Fund may also purchase securities issued by companies from many countries and by the countries themselves. Such investments will cause the Fund to be affected by changes in the currency exchange rates and revaluation of currencies. Less ?information may be available about non-U.S. issuers than about their U.S. counterparts. Further, securities markets of certain other countries may not be as liquid as U.S. markets. Investment in these securities may result in higher costs to the Fund than investment in.U.S. securities due to the cost of converting a foreign currency to dollars, the payment of ?xed brokerage commissions on some non-U.S. exchanges and the imposition of transfer taxes or transaction charges by those exchanges. Investments in securities of certain countries may also be subject to political or economic risks. The Fund may invest in securities of United States or non-U. S. closed?ended investment companies. There may be no liquid secondary market for these securities and some of the companies may limit the intervals at which shares may be redeemed. Leverage and Short Sales. The Fund may maximize its investment position by purchasing securities on margin. As a result, the possibilities of pro?t and loss will be increased. Borrowing money to purchase securities will provide the Fund with advantages of leverage, but exposes it to capital risk and higher current expenses. Any gain in the value of securities purchased with borrowed money or income earned ?om these securities that exceeds interest paid on the amount borrowed would cause the Fund's investment pro?t or loss to increase faster than would otherwise be the case. Conversely, any decline in the value of the securities purchased would cause theFund's investment pro?t or loss to decrease faster than would otherwise be the case. In addition to purchasing securities on margin, the ?Fund may engage in short selling of securities. A short sale will result in a gain if the price of the securities sold declines suf?ciently between the time of the short sale and the time at which securities are purchased to replace those borrowed. A short sale will result in a loss if the price of securities sold short increases or does not decline suf?ciently to cover transaction costs. Any gain would be decreased and any loss would be increased by the amount of any premium or interest that the Fund may be required to pay with respect to the borrowed securities. Assets May Not Be Diversi?ed. The Fund may at times have an unusually high concentration in certain types of securities positions Accordingly, the Fund's assets may be subject to greater risk of loss than if they were more widely diversi?ed, since the failure of one or more limited number of investments could have a material adverse effect on the Fund. Foreign Exchanges. The Fund may invest in non?United States securities and may trade securities on exchanges located outside the United States, where protection afforded to investors by the Secmities and Exchange Commission and federal securities laws do not apply. Accordingly, the Fund is subject to various risks inherent in trading non-U.S. securities and/or trading onforeign exchanges, including ?uctuations in currency exchange rates, exchange controls, expropriation, burdensome or con?scatory taxation, moratoria, or political or economic events, all of which could have an adverse effecton the Fund's ability to generate pro?ts on investments. As the Fund determines its investment pro?t or loss in United States dollars, it will be subject to the risk of ?uctuation in the . exchange rate between the local currency and dollars and to foreign exchange controls. Although the Fimd may hedge against ?uctuations in currency exchange rates, there can be no assurance that the-Fund would not incur losses as a result of adverse changes in currency exchange rates and foreign exchange controls. The Fund is unable to predict the nature of future exchange controls. Imposition or signi?c?ant increases in the level of exchange controls or_other restrictions could have an adverse effect on the Fund. Limited Liquidity of Investment. The Fund does not intend to list its Shares on any securities exchange. It is not expected that there will be any established over-the-counter market for sale of the Shares, and it is not anticipated 8 Case Document 8-6 Filed 04/01/10 Page 57 of 190 that there will be any secondary market for trading in the Shares. However, a Shareholder may request that the Fund redeem some or all of his. or her Shares. -- Under certain circumstances, including? market conditions which would prohibit the liquidation of positions, the Fund may delay redemption beyond the end of the applicable year. Active Investments. The Fund may seek to effect the control or management of a company in which the Fund has an investment position. The Fund may take positions in excess of 5% of "a company's outstanding voting shares, possibly giving the Fund the ability to in?uence the actions of management. Additionally, the Fund may structure, negotiate and execute private transactions directly with publicly traded companies or their agents. Often, the resulting security is convertible debt with underlying publicly traded common stock The Fund may also invest in the securities of privately held companies. The Failure of Brokerage Firms. The Fund may be subject to a risk of loss of the assets held by a broker-dealer in the event of a broker-dealer?s bankruptcy. In the event of a failure of a broker-dealer used by the Fund, the United States Securities Investor Protection Corporation provides a maximum of U835 00,000 of account insurance, only of which may be taken in cash. To the extent the Fund leaves assets in the possession of its broker in excess of these aniounts, the Fund may receive only a pro rata share of the remaining assets deposited with the failed broker?dealer. Moreover, because the Fund may trade on non-United States exchanges with non?United States brokers and/or dealers, the failure of a non?United States broker or dealer could result in the complete loss of Fund amounts on deposit with such broker or dealer, depending on the regulatory rules governing such broker. Investments in ?New Issues.? The Fund may invest in ?New Issues? asthat term is de?ned in Rule 2790 of the Conduct Rules of the National Association of Securities Dealers Only those investors which are not restricted, as such term is de?ned by the NASD, may participate in the pro?ts or losses attributable to New Issues. To the extent that a potential investor is ?restricted?, an investment in the Fund may not yield the performance results which may be achieved by those investors which are entitled to participate in New Issues. Government Regglation. The is not registered as an investment company under the Investment Company Act of 1940, and the Investment Manager is not registered as an investment adviser under the US. Investment Advisers Act of 1940 or as a Commodity Trading Adviser under the Commodity Exchange Act (or any similar law). Further, each of the Fund and its directors and of?cers, the General Partner of the Master Fund and the Investment Manager (the ?Operators") are exempt from registration with the Commodity Futures Trading Commission (the as commodity pool operators and, therefore, none of the Operators is required (unlike a registered commodity pool operator) to deliver a disclosure document and a certi?ed annual report to the investors in the Fund. The Operators are exempt fromregistration as commodity pool operators because the Operators and the Fund, as applicable, satisfy the criteria for exemption" 'set forth in Rule adopted by the CFT C. Rule provides that the operator of a ?md is exempt from registration as a commodity pool operator when the sale of interests in the' fund are conducted in a manner so as to exempt the sale thereof from registration under the Securities Act of 1933, as amended (the ?Securities Act?), (ii) (A) the aggregate initial margin and premiums required to establish commodity interest positions (determined at the time the most recent position was established) does not exceed ?ve percent of the liquidation value of the ftmd?s portfolio (after taking into account unrealized pro?ts and unrealized losses on any such positions) or (B) the aggregate net notional value of such positions, determined at the time the most recent position was established, does not exceed one hundred percent (100%) of the liquidation value of the frmd?s portfolio (after taking into account unrealized pro?ts and unrealized losses), each investor in the fund is (A) an ?accredited investor? within the meaning of Rule 501 of Regulation under the Securities Act, (B) a trust that is not an accredited investor, provided that the grantor of the trust is an accredited investor and the bene?ciary of the trust is a family member of the grantor, (C) a ?knowledgeable employee? (as de?ned in 17 CFR 27030-5), or (D) a ?quali?ed eligible person? (as de?ned in CFTC Rule and (iV) interests in the fund are not marketed as, or in, a vehicle for trading in the commodity futures or commodity options markets. Shareholders, therefore, are not afforded the protective measures provided by such laws. Substantial Fees and Emenses. The expenses to which the Fund will be subject could be substantial; Arbitrage Trading May Involve Risks. The Fund?s investments may involve arbitrage between the prices of two securities, between the equity and equity Options of the same or similar securities, between the price'of a security and its announced buy-out or exchange price and/or any combination thereof. Given the volatile nature of certain arbitrage situations, the short-term performance of the Fund's arbitrage investments may ?uctuate signi?cantly in value. The Fund may purchase or sell securities (on a current basis) and take offsetting positions in the options of 9 . Case Document 8-6 Filed 04/01/10 Page 58 of 190 the same or. similar securities. ,Thcse offsetting positiohs. entail a substantial risk that the price differential could.? change unfavorably, causing a loss to the Firridf . . . Unidenti?ed Investments. The Fund has not identi?ed any particular investments to make ?om the proceeds of this offering, other than to make investments on the basis of opportunities as they may arise. Therefore, prospective investors must rely on the ability of the Investment Manager to seek, analyze and recommend investments consistent with the Fund's objectives. Shareholders will not have the opportunity to evaluate the relevant economic, ?nancial and other information which will be utilized by the Fund in deciding whether or not to make a particular investment. The Memorandum and Articles of Association of the Fund do not restrict the type of investments the Fund may make. . thions. The Fund may engage in the trading of options, including index and equity options. Such trading involves risks substantially similar to those involved in trading margined securities, in that options are speculative and highly leveraged. Speci?c market movements of the securities underlying an option cannot accurately be predicted. The purchaser of an option is subject to the risk of losing the entire purchase price of the option. The writer of an option is subject to the risk of loss resulting ?'om the difference between the premium received for the option and the price of the security underlying the Option which the writer must purchase or deliver upon exercise of the option. Futures Contracts. Futures contracts are contracts usually made on a futures exchange which call for the future delivery of a speci?ed "commodity" at a speci?ed time and place. These contractual obligations, depending on whether. one is a buyer or a seller, may be satis?ed either by taking or making physical delivery of the "commodity" or by making an offsetting sale or purchase of an equivalent futures contract on the same exchange prior to the end of trading in the contract month. Commodity futures prices are highly volatile. Price movements of commodity futures contracts are in?uenced by, among other things, changing supply and demand relationships, governmental, agricultural and trade program and policies and national and international political and economic events. Financial instrument and foreign currency futures and forward prices are in?uenced by, among other things, interest rates, . changes in balances of payments and trade, domestic and international rates of in?ation, international trade restrictions and currency revaluations. Because low margin deposits are normally required, an extremely high degree of leverage is obtainable in commodity futures trading. A relatively small price movement in a commodity futures contract, consequently, may result in large losses. Thus, like other highly leveraged investments, any purchase or sale of a commodity futures contract may result in losses that exceed the amount invested. Smthe?cs. The Fund may use derivatives or other securities, both listed and over-the?counter, instead of purchasing or selling securities outright. These securities allow the Fund to gain exposure to certain markets or securities which the Fund might otherwise not be able to execute. If the Fund believes that a situation merits investment, but the costs and risks associated with such an investment are prohibitive or unacceptable, then the Fund may enter into an over-the-counter option contract, custom securities basket or swap transaction in order to gain exposure to the situation Such instruments involve risks not associated with more traditional types of investments, including counterparty default risk. Nature of Investments. A portion of the portfolio of the Fund may consist of securities issued by- privately?held companies. There is generally little or no publicly available information ab0ut such companies and the Fund must rely on the due diligence .of the Investment Manager to obtain the information necessary for the decision to invest in them. Typically, such companies depend for their success on the management, talents and efforts of oneperson or a small group of persons, so that the death, disability or resignation of such person or persons could have a materially . adverse impact on them. . Moreover,'small companies ?'equently have smaller product lines and smaller market shares than larger companies and therefore may be more vulnerable ?to economic downturns. Because these companies will generally have highly leveraged capital structures at least initially, reduced cash ?ow resulting from an economic downturn may adversely affect the return on, or the recovery of, the Company's investment in them. Investment in such companies therefore involves a high degree of business and ?nancial risk, which can result in substantial losses, and, accordingly, should be considered speculative. . Illiguidity. A portion of the Fund's investments may consist of securities acquired directly ??om their issuers in private transactions. These securities will be restricted securities under the Securities Act of 1933 and may not be - resold unless there is an effective registration statement on ?le with the Securities and Exchange Commission with respect to such securities, or an exemption from registration exists. Such securities will therefore be illiquid. In 10 Case Document 8-6 Filed 04/01/10 Page 59 of 190 addition, there may be no established trading market for such securities. into which they could be sold, even after: an 'excmp?oii from rcgistration- becomes werkable: 3- -- - - Lack of Liquiditv? 1n Markets. Despite heavy volume of trading in securities, the markets for some securities have limited liquidity and depth. This lack of depth could disadvantage the Fund, both in the realization of the prices which are quoted and in the execution of orders at desired prices. - Changes in Investment Strategies. The Directors have broad discretion to expand, revise or contract the Fund?s business. Thus, the investment strategies of the Fund may be altered without prior approval by, or notice to, the investors if the Directors determine that such change is in the best interests of the Fund. Any such decision to engage in a new activity could result in the exposure of the Fund?s capital to additional risks which may be substantial. Master-Feeder Fund Structure. The Fund generally invests all of its investable assets through a "master-feeder" fund structure, in which the Fund is a ?feeder entity? to the Master Fund. The "master?feeder" fund structure in particular the existence of multiple investment vehicles investing in the same portfolio presents certain unique risks to investors. Smaller investment vehicles investing in the Master Fund may be materially affected by the actions of larger investment vehicles investing in the Master Fund. For example, if a larger investment vehicle withdraws ?om the Master Fund, the remaining funds may experience higher pro rata operating expenses, thereby producing lower returns. Similarly, the Master Fund may become less diverse .due to a withdrawal by a larger investment vehicle, resulting in increased portfolio risk. Con?icts of Interest. There exist a number of potential con?icts of interest between the Investment Manager and the Fund. In addition to serving as investment manager to the Fund, the Investment Manager currently serves and may have additional investment management clients in the future (collectively, the "Other Clients"). The Other Clients may invest in the same or similar securities as the Fund. Purchase and sale orders may be combined for the Fund and the Other Clients with each entity paying its pro rata share of the total commission and paying or receiving its' pro rata share of the total cost or sales proceeds. From the standpoint of the Fund, simultaneous identical portfolio transactions for the Fund and the Other Clients may tend to decrease the prices received, and increase the prices required to be paid, by the Fund for its portfolio sales and purchases. Where less than the maximum desired number of shares of a particular security to be purchased is available at a favorable price the shares purchased will be allocated among the Fund and the Other Clients. In addition, purchase and sale transactions (including swaps) may be effected between the Fund and the Other Clients. . The Investment Manager may have con?icts of interest in allocating its time and activity between the Fund and the Other Clients, in allocating investment analysis and recommendations between the Fund and the Other Clients and in effecting transactions between the Fund and the Other Clients, including ones in which the Investment Manager may have a greater ?nancial interest. In addition, the Investment Manager and its of?cers and employees may have investments of their own. Further, the Investment Manager may engage in a wide variety of investment banking activities. The Investment Manager may, in some instances, perform investment banking services for companies in which the Fund owns securities. The Investment Manager may choose not to make an otherwise appropriate investment for the Fund if the Investment Manager or its clients have a business relationship with either the potential investee company or with a third party that has indicated its interest in acquiring the potential investee company. Any fees earned by the Investment Manager with respect to its investment banking activities will be paid solely to the Investment Manager and not the Fund. In addition, the Investment Manager may become aware of investment opportunities and, to the extent the Investment Manager in its sole discretion determines such investment would not be suitable for the Fund, may refer such investment opportunities to others. Any fees or commissions with respect to the referral of such investments . will be paid solely to the Investment Manager (see discussion concerning additional potential conflicts of interest under Fees, Compensation and Expenses). The Investment Manager?s obligations to the Fund are not exclusive and the Investment Manager is not required to devote any speci?c amount of time to the Fund. The Investment Manager hasinvestments of its own and is acting as investment manager for others. The Management Agreement recognizes that the Investment Manager may become associated with other investment entities and engage in investment management for others. 11 ?Case. Document 8-6 Filed 04/01/10 Page 60 of 190 The Investment Manager or its a?'iliates are not limited or restricted from engaging in or devoting time and attention to the management of any other business, whether of a similar or dissimilar nature, or to render services of any kind to any other corporation, ?rm, individual or association. As a result, the Investment Manager and its af?liates and other clients may hold substantial positions in securities that are owned by the Fund. If the Investment Manager and its af?liates and other clients hold a substantial position in an issuer, liquidity and concentration considerations may limit the ability of the Investment Manager to recommend adding to the position on behalf of the Fund or other clients or to readily dispose of the position. The Investment Manager may on occasion give advice or take action with respect to those accounts that differs from the advice given with respect to the Fund. THE DESCRIPTION CONTAINED HEREIN OF SPECIFIC ACTIVITIES THAT MAY BE ENGAGED IN BY THE FUND SHOULD NOT BE CONSTRUED AS IN ANY WAY LIMITING THE INVESTNIENT ACTIVITIES. THE FUND MAY ENGAGE IN INVESTMENT ACTIVITIES INOT DESCRIBED HEREIN WHICH THE INVESTNIENT MANAGER CONSIDERS APPROPRIATE. ADMINISTRATION The Administrator. UBS Fund Services (Cayman) Ltd. serves as the Administrator of the Fund pursuant to an - . administration agreement to be entered into between the Fund and the Administrator (the ?Administration Agreement?). The Administrator?s principal place of business is located at UBS house, 227 Elgin Avenue, PO. Box 852, George Town, Grand Cayman, Cayman Islands. The Administrator is licensed as a mutual ?md administrator under the Mutual Funds Law (2001 Revision) of the Cayman Islands. . Pursuant to the Administration Agreement, the Administrator will perform or supervise the performance of services necessary for the operation and administration of the Fund (other than making investment decisions), including administrative, accounting, and shareholder services. For the purpose of calculating the Net Asset Value of the Fund, the Administrator will rely solely on the valuation of the Master Fund as provided by the Investment Manager. The Administration Agreement also provides for indemni?cation of the Administrator and its directors, of?cers and employees from and against any and all liabilities, lobligations, losses, damages, penalties, actions, judgments suites, costs, expenses or disbursements of any kind or nature whatsoever (other than those resulting from fraud, gross negligence or willful default on its part or on the part of its directors, of?cers, servants or agents) which may be imposed on, incurred by or asserted against the Administrator' 1n performing its obligations or duties thereunder. The Directors, and not the Administrator, are re5ponsible for determining that the Shares are marketed and sold in compliance with all applicable securities and other laws. The Administration Agreement is governed by the laws of the Cayman Islands and is for an inde?nite period, but it may be terminated by either party on ninety days written notice to the other party. THE SHARE CAPITAL Capitalization of the thd. The Fund has an authorized capital of 000, consisting of 10,000,000 shares of common stock (par value 0.01 per share) (the "Shares"). Share Participation in Earnings and Assets. Each Share is entitled to participate ratably, on a share for share basis, with each other outstanding Share, in the earnings and assets of the Fund. SUBSCRIPTION PROCEDURE The minimum subscription for Shares is subject to the Fund's discretion to accept lesser amounts. The Fund will offer its Shares on a continuous basis at a price per Share equal to the Net Asset Value (the per Share as of the last Business Day of the date of issuance, plus any applicable subscription charges. A deposit to a Contingent Fee Reserve may be required 1n certain circumstances, and further adjustments to the number of Shares may be required In accordance with an Equalization Credit (See ?Equalization Adjustments? below for a more detailed description of Equalizan'on Accounting). . 12 7 Case Document 8-6 Filed 04/01/10 Page 61 of 190 All desiringth . subscribe for and purchase Shares, shopld complete, execute and deliver a -- Subscription Agreement to the Fund?s Administrator. The subscription agreement may be sent by fax if original is received by the Administrator within 10 business days. The wire payment instructions have to include the name of the subscriber which has to match the name on the subscription agreement Subscription Instructions are attached to this Memorandum as Exhibit A?l. The Subscription Agreement is attached to this Memorandum as Exhibit A-2. Shares will generally be issued on the ?rst day of the month following the month in which each'subscriber's subscription and payment for Shares is received. Subscriptions received during any period will ordinarily be accepted as of the ?rst day of the following month, subscriptions received between March 1 and March 31, will be accepted as of April 1. The ?Fund may, in its discretion, accept subscriptions on a day other than the ?rst day of the month. Payments should be made by wire transfer of immediately available funds to the Fund's account as follows: To: - - UBS AG, Stamford Branch? ABA Fedwire: 0260-0799-3 . SWIFT: - UBSWUS33XXZX For account of: UBS Fund Services (Cayman) Ltd. Accounts: For ?rrther credit to: Epsilon Global Active Value Fund II Ltd. Account#: 7 . 72162 All subscriptions for Shares are irrevocable by the Subscriber. The Fund may reject a subscription for any reason. - Potential investors, by accepting delivery of this' Memorandum, agree to return this Memorandum, including the Exhibit hereto, if such potential investor does not subscribe for Shares, (ii) such potential investor's subscription is not accepted, or the offering is terminated before the sale to such potential investor is consummated. . Equalization Adjustments. When interim subscriptions are made, certain adjustments may be required to the price paid for Shares or to the number of Shares purchased. These adjustments are necessary to ensure: the Contingent paid which may be paid to the General Partner of the Master Fund is charged only to those Shares which have appreciated in value since their acquisition, all Shareholders have the same amount per Share at risk and all Shares have the same NAV. With respect to a De?cit Interim Subscription, the subscription price per Share is the NAV per Share on the acquisition date plus 20% of the excess, if any, by which the Peak NAV per Share, for a preceding calendar year-end exceeds the NAV per Share on the date of subscription. Such amount (the ?Contingent Fee Reserve?) shall be added to the purchase price per Share and shall be invested and distributed as set forth herein. The Contingent Fee Reserve shall be separately invested in U.S. Treasury Bills, Certi?cates of Deposit or other equivalently rated short- term instruments. The Contingent Fee Reserve shall become payable to the General Partner of the Master Fund if the de?cit between the NAV per Share on the subscription date and the Peak NAV is recouped by favorable performance of the Fund. The Contingent Fee Reserve may, in certain circumstances, be returned to a Shareholder upon redemption of Shares if, and to the extent, such Contingent Fee Reserve applicable to the Shares being redeemed has not been earned by the General Partner. a?er the end of each ?scal year in which a Contingent Fee Reserve is held, the interest or dividends earned thereon shall either be paid to the Shareholder who provided such Contingent Fee Reserve or reinvested into the Fund in the form of additional Shares, at the Fund?s discretion. With respect to a Premium Interim Subscription, where the NAV per Share on the date of subscription (computed before accrued Contingent Fees) is greater than the Peak NAV per Share, for a preceding calendar year? - end, 20% of the excess shall constitute an ?Equalization Credit." This Equalization Credit accounts for the fact that the NAV per Share at the time of subscription includes a potential Contingent Fee to be home by existing 13 Case Document 8-6 Filed 04/01/10 Page 62 of1190 Shareholders which experienced such appreciation. The Equalization Credit serves as a credit against Contingent Fees that might otherwise be payable to the General Partner by Shareholders of. the Fund, but which should not, in . equity, be charged against such subSCriber? 3 Shares because, as to its Shares no favorable performance has yet' I. occurred. Upon redemption by a Shareholder of its Shares, the Equalization Credit, or a portion thereof, will be paid to such Shareholder, without interest, or if a Contingent Fee becomes payable prior to such redemption, then the Equalization Credit payable shall be applied to the purchase of additional Shares, subject to appropriate adjustments for favorable performance. Examples of a De?cit Interim Subscription and a Premium Interim Subscription are set forth on the next page. 14 Case Document 8-6 Filed 04/01/10 Page 63 of 190 TABLEL Deficit Interim Subscrip?on'?iasegi Allocation]: . Peak NAV 1,000 Gross Subscription NAV 900 NAV at Date of Purchase 900 Contingent Fee Reserve (1,000 ~900) 20% 20 Contingent Contingent . Gross NAV Fee Due to Fee Reserve Due NAV Contingent at Valuation General to General (Net of Fee Reserve Date Partner Partner All Flag] ?Account 1,050 . . f- 10.0 -- 4,040 - 0.0 . 1,000 0.0 20.0 1,000 0.0 950 0.0 10.0 950 10.0 I 900 0.0 0.0 900 20850 20.0 NOTE: Gross NAV 15 equal to the NAV before accrual for Contingent Fees. The total value of a Shareholder? position is equal to the sum of the NAV (Net of A11 Fees) and the Contingent Fee Reserve on Account In the above example, the Contingent Fee Reserve on Account does not include any accrued interest. TABLE 2 -- Premium Interim Subscription [Based on a 20% Performance Share Allocation]: Peak NAV Gross Subscription NAV NAV at Date of Purchase 1,000 1 ,400. 1,320 Contingent Fee Reserve (1,400 - 1,000) 20% 80 Equalization Credit Against. Future Contingent Fees Contingent Gross NAV Fee Due to Equalization NAV . At . . at Valuation General Credit'D'ue to (Net of Contingent 'At Date Partner Shareholder All Fees) Fee Pavment Redemn?on 1,500 . . 20.0 80.0 1,400 0.0 0.0 1,400 0.0 80.0 1,320 0.0 0.0 1,200 0.0 40.0 1,160 40.0 0.0 i 1,000 0.0 0.0 1,000 80.0 0.0 900 0.0 0.0 900 80.0 0.0 NOTE: Gross NAV is equal to the NAV before accrual for Contingent Fees. The Equalization Credit remaining against future Contingent Fees does not accrue interest; rather, these funds are at risk with other monies in the Fund and will appreciate or depreciate accordingly. 15 Case Document 8-6 Filed 04/01/10 Page 64 of 190 REDEMPTION PROCEDURE Sharehclders may'redeem their Shares as. in" the last day of each calendar quarter (the ?Redemption Dani), upon 45 days written notice. The amount payable in redemption of. the Shares is equal to the "net asset value" of such Shares as of the Redemption Date (the "Redemption Price"). A Shareholder wishing to redeem his Shares is required to deliver to the Fund, at least 45 days prior to the Redemption Date, a written redemption request indicating the number of Shares to be redeemed The redemption request must be accompanied by: the share certi?cate(s) if issued, representing the Shares to be redeemed, if issued, and (ii) a certi?cation (in a form furnished by or satisfactory to the Fund) identifying all Shares which are directly or indirectly owned by such shareholder With respect to any partial redemption of Shares, 21 Shareholder may not make a partial redemption of less than 000, and, the case of a partial redemption, may not reduce such Shareholder' unredeemed Shares to an amount less than the minimum investment then required of new Shareholders. Also, in order to be considered a partial redemption, the redemption cannot exceed 90% of a Shareholder?s total capital account. Payment in US. dollars of the Redemption Price will be made as soon as practicable but, except in cases where share certi?cates and share transfers are not delivered, the shareholder will receive at least 90% of the Redemption Price no later than thirty (30) days following the date of redemption, with the balance paid within ?fteen (15) days after the receipt by the Fund of its audited annual ?nancial statements for the ?scal year. The Fund has the right to make payment on such redemption in securities owned by the Fund. The may, in its discretion, deduct ?'om any redemption proceeds an amount determined by the Fund to represent the transaction costs and related expenses incurred by the Fund In cennection with the processing of redemptions. The Fund also has the right to force the complete redemption of any Shareholder at any time at the sole 7 discretion of the Directors. The Fund has the power to suspend the redemption of Shares" 1n the following circumstances: During any period with the New York Stock Exchange, or any other securities exchange or board of trade or other contract market on which a signi?cant portion of the Fund's - assets is ordinarily traded, is closed (other than for holidays) or trading thereon has been restricted or suspended; - When, for any reason, the value of the Fund's assets cannot be accurately ascertained; During any state of affairs which, in the judgment of the Directors, would render disposition of the Fund's assets impracticable or be seriously prejudicial to the thd?s Shareholders;_ or I When, in the opinion of counsel to the Fund, such redemption could result in adverse tax consequences to the Fund or its Shareholders. The Fund will notify Shareholders of the suSpension of redemptions for any reason. Sales and Transfers of Shares. The Fund has the authority to issue additional Shares following the initial offering, either through the resale of Shares tendered for redemption or through the issuance of authorized but previously unissued Shares. The subscription price payable for any Shares which may be issued in the future willbe the net asset value of such Shares determined at the time of issuance. 16 Case Document 8-6 .Filed'O4/01/1O Page 65 of 190 Restrictions on Ownership and Transfer; Compulsogy Redemptions. The Fund's Articles of Association provide that Shares may be owned only by a limited number of pension and pro?t sharing trusts, charities and other entities which are generally tax?exempt under U.S. Federal income tax laws tax?exempt entities"); and (ii) otherwise,'on1y by persons who are not "United States persons". For this purpose, the term "United States person" is de?ned in the Fund's Articles of Association to include: a United States citizen or a "resident" of the United States (as de?ned for United States federal income tax purposes); a corporation, partnership, trust or other entity organized or created under the laws of the United States; or any organization or entity controlled by a person or persons described in or or in which such persons are known to be the owners of a majority of the bene?cial interests therein, as shareholders, partners, bene?ciaries or otherwise, whether directly or indirectly either through other organizations or entities, or through any other arrangement. Each subscriber for Shares which is not a US. tax-exempt entity will be required to certify to the Fund: the identity of the person or persons on whose behalf the Shares are being acquired and (ii) that the Shares are not being acquired and will not at any time be held for the account or bene?t, directly or indirectly, of any United States persons. Shareholders are required to notify the Fund immediately of any change in such information. It is the responsibility of each investor to verify that he is not a United States person. For this purpose, investors should be aware that United States federal income tax laws contain speci?c de?nitions of the terms "resident alien" and "nonresident alien", which must be taken into account in making this determination. Each subscriber will be required to agree that no Shares, nor any interest therein, will be transferred without the prior consent of the Fund or the Fund?s Administrator, which consent may be withheld in the discretion of the Fund or the Administrator and that, prior to considering any request to permit a transfer of shares, the Fund or the Administrator may require the submission by the proposed transferee of a certi?cation as to the matters referred to in the preceding paragraph, as well as such other documents as the Fund or the Administrator considers The Fund's Memorandum and Articles of Association provide, and each subscriber for Shares' rs required to agree, that: any attempted transfer in violation of the foregoing restrictions shall be invalid, and (ii) if the Fund has reason to believe that a Shareholder has violated the applicable restrictions on transfer or that any material matters set forth in the certi?cations referred to in the preceding paragraph were false, the Fund may redeem all Shares held by such shareholder compulsorily. Voting and Other Rights. Each Share is entitled to one vote on any matter presented to a meeting of Shareholders. Shareholders will receive at least 30 days' notice of any Shareholders' meeting (or 10 days' notice if the Board-of Directors determines that prompt shareholder action is advisable) and will be entitled to vote their Shares either personally or by proxy. If the proxy sent to a Shareholder with the notice of meeting is not completed and received at the Company's registered of?ce prior to the meeting, Shares held by such Shareholder will be voted' in the discretion of the attorney-in-fact designated in the Subscription Agreement executed by such Shareholder at the time the Shares were issued. At any meeting of Shareholders, a majority of the Shares represented in person (including representation by the attorney?in?fact) or by proxy at the meeting will be suf?cient for the transaction of business. The Administrator will maintain a current stock register for all Shares. All Shares will be issued in registered. form. The Fund will not issue certi?cates in bearer form. All Shares, when issued and paid for, will be fully paid and non-assessable and Shareholders will have no personal liability for the debts of the Fund. The Shares have no preemptive rights. In the event of the dissolution of the Fund, the Fund is authorized to distribute amounts due to Shareholders, in accordance with their respective interests, either in cash or in the form of portfolio securities or other assets. DETERMN AT ION 0F NET ASSET VALUE The Fund will value or arrange for the valuation of the securities and other assets of the Fund as of the close of business on the lastday of each month. For the purpose of calculating the Net Asset Value of the Fund, the Administrator will rely solely on information provided by the Investment Manager. The "net asset value" of the Shares, for purposes of computing the redemption price applicable to such Shares and the minimum issue price applicable to such Shares after their initial offering, will be determined as follows: 17 Case Document 8-6 Filed 04/01/10 Page 66 of 190 1. Total Net Assets. The value of the "total net assets" of the Fund as of a particular date will be computed by I subtracting from the total value of all securities and- other assets of- the Fund an amount equal to all accrued debts, - - liabilities and obligations of the Fund (including any contingencies for which it is determined that any accrual should be made). 2. Net Asset Value. The total net assets are allocated pro rate, on a share for share basis, to each outstanding Share. The net asset value of each Share is'ethal to the amount of such total net assets divided by the number of Shares outstanding on the date as of which the valuation is being made. Net asset value determinations for the Fund will be made in accordance with international accounting standards in which the following principles are observed. Securities listedon a national securities exchange or national market shall be valued at: their last sale price on its principal exchange or market on the date of determination, or if no sales-occurred on such day, at the mean between the "bid? and ?ask prices on such day. (ii) Securities not listed on a national securities exchange'or'national market shall be valued at their last closing ?bid? prices if held ?long? and their last closing ?asked? prices if sold ?short? as supplied by the National Association of Securities Dealers or other som'ces, if necessary. Commodities, commodity futures and forward contracts will be valued based upon the closing quotations reported for the same on the principal board of trade or other contract market in which dealings are made or by quotations from the counterparty bank in the case of a forward contract. 'If a futures contract position cannot be liquidated, due to the operation of daily limits or otherwise, on a day as of which Net Asset Value (de?ned herein) is determined, a value determined to be fair and reasonable by the Fund shall be used. Swap positions will be valued at the average secondary trading market price, as obtained from dealers in such market. (iv) Listed securities options and commodity options traded on a national securities exchange or national market will be valued 'at their last sales prices on the date of determination on the principal . national securities exchange or national market on which such options traded on such date (or, in the event that the date of determination is not a date upon which a national securities exchange or national market on which such options are traded was open for trading, on the last prior date ?on which such national securities exchange or national market was so open), or if no sales occurred on either of the foregoing dates, at the mean between the ?bid? and ?asked? prices on the principal national securities exchange or national market on which such options are traded, on the date of determination (or, in the event that the date of determination is not a date upon which such national securities exchanges or national contract market was open for trading, on the last prior date on which such securities exchange or current market was so open). If a commodity option cannot be traded on the date of determination due to the operation of daily limits or otherwise, a value determined to be fair and reasonable by the Fund shall be used. Premiums received for the writing of listed securities options and commodity options written by the and traded on a contract market will be included in the assets of the Fimd, and the market value of such options will be included as a liability of the Fund. Over-the-counter options will be valued at fair value, as determined by the Fund based upon representative brokers? bids or valuations. If such bids or valuations are not available, or, in the opinion of the Fund do not represent fair value, over-the-cOunter options will be valued as the Fund shall deem fair and reasonable. (vi) securities without an active trading market, as hereinafter de?ned, shall be assigned fair value by the Fund based upon: a comparison with market values for similar companies, recent sale price(s), the investment risk and/or potential, opinions of quali?ed investment bankers, marketability (if any) or such other factors as the Fund deems appropriate. For purposes of valuation, an ?active trading market? is deemed to be one in which quotations are available on NASDAQ or if not available on NASDAQ, from one or more dealers' in the NASD pink or yellow sheets on a reasonably consistent basis. 18 Case Document 8-6 Filed 04/01/10 Page 67 of 190 (vii) All other assets shall be valued in accordance with international accounting standards. The - 1-. term ?Net Asset Value? "shall mean the value 'of all assets of the Fund Ideter111ined' 1n a1cordance horewith, less all liabilities and reserves established by the Fund.? FEES COMPENSATION AND EXPENSES Egpenses. The Fund will bear all of the continuing offering costs (including legal expenses incident thereto) and all other expenses incurred in the operation of the Fund, if any, including the ordinary and necessary expenses directly related to its investment activities, including brokerage commissions, exchange fees, interest andcommitment fees on loans and debit balances, all administration fees and all legal and auditing fees, including any legal and auditing fees that relate to extraordinary circumstances, snob as tax examinations or litigation involving the Fund. As noted above, the Fund invests its assets through a ?master?feeder? fund structure in the Master Fimd. Each investment vehicle, including the Fund, that invests in the Master Fund will indirectly bear the administrative and other expenses of the Master Fund pro rata based upon its interest 1n the Master Fund. It 1s anticipated that virtually all "expenses will be moth-fed at the Master Fund level and therefore that expenses incuii'ed directly by the Fund will be relatively small. If expenses are incurred by the Fund requiring payment by the Fund, the Fund may make a withdrawal of a portion of its interest in the Master Fund (within the limitation imposed by the Master Fund) in order to pay those expenses. The Investment Manager will receive a fair market value fee for its services as will be agreed to between the General Partner of the Master Fund and the Investment Manager from time to time. Fixed Fee. The Fund invests its assets into a master fund, Epsilon Global Master Fund 11, LP. In consideration for its services to the Fund, the General Partner of the Master Fund will receive a quarterly ?xed fee equal to one half of one percent (0 50%) of the Net Asset Value (as de?ned) of the Fund as of the last day of each calendar quarter (equivalent to 2% per annum) The Fixed Fee will be paid to the General Partner within three business days after the close of each calendar quarter. Certain shareholders may be assessed a Fixed Fee in a different amount To the extent that any Fixed Fees are paid to the General Partner by the Master Fund with ireSpect to investments made by the Fund, no Fixed Fee's will be charged 'at the Fund level; Contingent Fee. In addition to the Fixed Fee, the General Partner will receive contingent fees, for each calendar year or otherwise determined upon the redemption of any Common Stock, with respect to such redeemed Cummon Stock, respectively, (each a ?Performance Period?) of the Fund (the ?Contingent Fee? an amount equal to 20% of the 1ncrease of the Fund?s per Share Net Asset Value, if any, after adjustment for additional contributions and/or redemptions. To the extent that any Contingent Fees are paid to the General Partner by the Master Fund for investments made by the Fund, no Contingent Fees will be charged at the Fund level. If the Fund incurs a net loss during the Performance Period, the General Partner will not receive any Contingent Fees unless and until the amount of such net loss applicable to each and every Share of the Fund?s stock which experienced such net 1055 (and which remains outstanding at the time the subsequent pro?t occurs) has been recouped In full. - DIVIDEND POLICY The declaration of dividends on the Shares will be in the discretion of the Board of Directors, and dividends may be declared only out of retained earnings. The Fund does not presently intend to pay dividends on its Shares. TAXATION THE FOLLOWING IS A SUMIMARY OF CERTAIN US. AND B.V.I. TAX CONSIDERATIONS AFFECTING THE FUND AND ITS WHILE THE FOLLOWING SUMMARY IS BELIEVED TO BE ACCURATE AS OF THE DATE HEREOF, A OWN CIRCUMSTANCES MAY RENDER THE FOLLOWING SUMNIARY INACCURATE OR INCOMPLETE. THUS, THE FOLLOWING SUMIVIARY SHOULD NOT BE CONSTRUED AS BEWDING 0R AUTHORITATIVE ADVICE TO ANY ACTUAL OR PROSPECTIVE SHAREHOLDER. ANY ACTUAL OR PROSPECTIVE SHAREHOLDER IS URGED T0 CONSULT HIS OR HER OWN TAX ADVISOR REGARDING THE TAX CONSIDERATIONS RELEVANT TO AN INVESTMENT IN THE FUND. 19 Case Document 8-6 Filed 04/01/10 Page 68lo_f 190 United States Federal Income Taxa?pn of the Fund. 1. Neither the Master Fund nor the Fund will be subject to any income, withholding or capital gains taxes in the Cayman Islands or the British Virgin Islands. . 2. Under present law, the Fund will not be subject to any Uni?d States federal income tax on its capital gains whether from sources within or without the United States to the extent that such gains are not derived from securities classi?ed as United States real property interests within the meaning of Section 897 of the lntemal Revenue Code" of 1986, as amended (the "Code"). In this connection, the Fund does not presently intend to acquire any securities which would be classi?ed as United States real property interests. - 3. The only United States income taxes which ?will be payable by the Fund on its income from dividends and interest is the 30% withholding tax applicable to dividends and certain interest income considered to be from'sources within the United States. Certain debt obligations which may be acquired by the Fund will not be subject to the 30% withholding tax. The Fund generally intends to invest its cash reserves in short-term debt obligations the interest on which is not subject to 30% withholding. - 4. Shareholders who are not residents of the British Virgin Islands will not be subject to any income, withholding or capital gains taxes in the British Virgin Islands with respect to the shares of the Fund owned by them and dividends received on such shares, nor will they be subject to any estate or inheritance taxes in the British Virgin Islands. 1 5 . Shareholders who are not residents of the Cayman Islands will not besubject to any income, withholding or capital gains taxes in the Cayman Islands with respect to? the shares of the Fund OWned by them and dividends received on such shares, nor will they be subject to any estate or inheritance taxes in the Cayman Islands. 6. Shareholders that are neither citizens nor residents of the United States and are not engaged in a trade or business in the United States will not be subject to any United States federal income, withholding, capital gains, estate or inheritance taxes with respect to shares of the Common Stock owned by them and dividends received on such shares. - U.S. Shareholders. As noted above, shares in the Fund may be sold to 'a limited number of U.S. investors who are pension and pro?t sharing trusts or other organizations which are generally exempt under US. federal income tax laws tax?exempt entities"). The U.S. tax-exempt entities in the Fund may not exceed 100 in number. Because the Fimd .is a "passive foreign investment company" as de?ned in Section 1297 of the U.S. Internal Revenue Code of 1986, as amended, (the "Code"), any U.S. taxvexernpt entities will be subject to certain ?ling requirements in the United States. A U.S. tax?exempt entity which does not borrow money or otherwise use leverage in acquiring Shares in the Fund should not be subject to U.S. federal income tax under the PFIC provisions of the Code on any dividends from the Fund or on any sale or redemption of its Shares in the Fund. . - While the Fund may purchase securities on margin, borrow money and otherwise use leverage in connection with its investments, under present U.S. tax law that leverage should not be attributed to U.S. tax-exempt entities who are shareholders in the Fund. Thus, assuming that a U.S. tax-exempt entity does not borrow money or otherwise use leverage in acquiring Shares in the Fund, any dividends from the Fund or gain on the sale or redemption of shares in the Fund should not constitute "unrelated debt-?nanced income" as de?ned in Section 514 of the Code, or "unrelated business taxable income" as de?ned in Section 512 of the Code, to such U.S. tax-exempt entity. . . - However, under certain proposed U.S. tax legislation, a portion of the dividends received by a U.S. taxm exempt entity, as well as a portion of any gain derived by such an entity ?our a sale or redemption of Shares, would be treatedas "unrelated debt??nanced income" if that entity were to hold 10 percent or more of the outstanding shares of the Fund (directly or by attribution from related parties). It cannot be predicted whether this proposed legislation will become law and, if so, What form the law would ultimately take. The Fund will monitor its shareholders in an attempt to ensure that the Fund is not more than 50% owned by such U.S. tax-exempt entities, so that the Fund will not be a "controlled foreign corporation" as de?ned in Section 957 of the Code. 20 Case Document.8-6_ Filed 04/01/10 Page 69 of 190 ERISA Matters. The: Fund will not accept. any, contributions from shmeholders that are pension plans or similar pension oi: rotirem?nt? trusts (n1 siich entities being Ii?rein called "Retirement Trusts") if, after siich contribution, the Shares in the Fund held by such Retirement Trusts would represent 25% or more of the total outstanding shares 1n the Fund. If the shares held by such Retirement Trusts were to exceed this 25% limit, then the Fund?s assets would be considered "plan assets" under the U. Employee Retirement Income Security Act of 1974, as amended which could result in adverse consequences to the Investment Manager and the ?duciaries of the Retirement Trusts. THE FOREGOING TAX SUMMARY DOES NOT ADDRESS TAX CONSIDERATIONS WHICH MAY BE APPLICABLE TO CERTAIN SHAREHOLDERS UNDER THE LAWS OF JURISDICTIONS OTHER THAN THE UNITED STATES OR THE BRITISH VIRGIN ISLANDS. ACCORDINGLY, ALL PERSONS INTERESTED IN PURCHASING THE SHARES SHOULD INFORM THEMSELVES AS TO ANY INCOME OR OTHER TAX CONSEQUENCES PARTICULAR TO THEIR CIRCUMSTANCES ARISING IN THE JURISDICTION IN WHICH THEY ARE RESIDENT OR DOMICILED FOR TAX PURPOSES IN CONNECTION WITH THE ACQUISITION, HOLDING OR DISPOSITION OF THE SHARES. 21 Case Document 8-6 Filed 04/01/10 Page mm 190 APPENDIX A SUBSCRIPTION DOCUMENTS 22 Case Document 8-6 Filed 04/01/10 Page 71 of 190 SHARES TO BE REGISTERED AS FOLLOWS: (Check One) 7 SUBSCRIBER. (Both signatures required below) (Please print all information exeetly as you wish it 9 appear on she Company's records.) (Name of Subscriber) (Facsimile) (Address) (Telephone - Days) (Country of Residence) (Telephone - Evenings) (Name of Co-Subscri?ber) (IS-Mail Address) (Address) (Telephone - Days) (Country of Residence) Dated: (Telephone - Evenings) Signatures of Individual Subsc?beds) (Please print name below each signature): A-4 Case-2:10-cv-00555-RAJ-. Document 8-6 Filed 04/01/10 Page .72 of 190 EPSILON GLOBAL ACTIVE VALUE FUND II LTD. REDEMPTION REQUEST FORM INSTRUCTIONS This form should be saved and may be used by a shareholder wishing to redeem Shares in the Fund. Redeeming shareholders should complete and return this form, including page TO: EPSILON GLOBAL ACTIVE VALUE FUND LTD. c/o Epsilon Investment Management L.L.C. I 7280 W. Palmetto Park Road, Suite 310 Boca Raton, Florida 33433 USA Phone: 561-237?0330 Fax: 561-237-0329 20__ Dear Sirs: I hereby request redemption, as de?ned in and subject to all of the terms and conditions of the Con?dential Offering Memorandum of Epsilon Global Active Value Fund II Ltd. ("the Fund"), as it may be amended, of Shares, representing [part/all] of my Shares in the Company. I understand that redemption will only be effective as of the close of business on the last day of a calendar quarter, upon at least forty-?ve (45) days prior written notice. Except as otherwise provided in the Con?dential Offering Memorandum, payment of 90% of the redemption proceeds will be made within thirty (30) days after the effective date of redemption with balance being paid within ?fteen (15) days after receipt by the Fund if its annual audited statements settlement for such year. If I have been issued share certi?cates, I enclose my Share certi?cates, duly endorsed for transfer. I hereby represent and warrant that I am the owner of Shares of the Company with full power and authority to - request redemption of the Shares which are the subject if this request; and (ii) I am not a Person" (as that term is de?ned in the Information Memorandum). Such Shares are not subject to any pledge or otherwise encumbered in any fashion. I acknowledge this I cannot make a partial redemption of less than of Shares as the Net Asset Value is de?ned in the Con?dential Offering Memorandum is computed as the date of redemption and ifI am making a partial-redemption, that my redemption request will be honored only if it does not reduce the Net Asset Value of my remaining Shares below the minimum subscription amount required of new the shareholders of the Fund. My signature has been guaranteed by a commercial bank acceptable to the Fund. B?l . _Ca_se Document 8-6 Filed 04/01/10 Page 73 ?of 190 REDEMPTION REQUEST FORM (Continued) WIRE INSTRUCTIONS (to be completed by redeeming shareholder): Bank name and address: Account: Account Name: Account No: SIGNATURES MUST IDENTICAL TO IN WHICH SHARES ARE REGISTERED PRINT: Name of Registered Owner of Shares Address ENTITY SHAREHOLDER (OR ASSIGNEE) INDIVIDUAL SHAREHOLDEMS) CORPORATION OR (OR ASSIGNEE) By: (Signature of partner, authorized (Signature of individual or assignee) corporate of?cer or trustee Name and Title (Signature of individual or assignee) By: (Signature of partner, authorized comm-ate officer or trustee Name and Tide Signature(s) guaranteed by: Case 2:10-cv-00555-RAJl Document 8-6, Filed 04/01/10 Page 74 of 190 REDEMPTION INFORMATION SHARE REGISTRATION INFORMATION Name Address Country of Residence Telephone Telephone (Evenings) Fax BAN FOR TRANSFER OF REDEMPTION Name Address Country of Residence Telephone Telephone (Evenings) Fax B-3 (POST) INFORMATION (if other than address of regisnation) Name Address County of Residence Telephone Telephone (Evenings) Fax Case Document 8-6 Filed 04/01/10 Page 75 of 190 EPSILON GLOBAL ACTIVE VALUE FUND II LTD. Maximum Capitalization: 10,000,000 Shares Minimum Investment: US $2,000,000 CONFIDENTIAL OFFERING MEMORANDUNI THE DIRECT OR INDIRECT OFFER SALE OF SHARES OF EPSILON GLOBAL ACTIVE VALUE FUND 11 LTD. TO CITIZENS NATIONAL OR RESIDENTS OF, OR INSTITUTIONS OR OTHER ENTITIES ORGANIZED, CHARTERED OR RESIDENT IN, THE UNITED STATES OF AMERICA, WITH THE EXCEPTION OF CERTAIN QUALIFIED TAX EXEMPT ENTITIES IS EXPRESSLY PROHIBITED The date of this offering memorandum is 1 January 2009 - a-?Ir Case Document 8-6 Filed 04/01/10 Page 76 Of 190 TABLE OF CONTENTS ?gs, INVESTOR I MUTUAL FUNDS DISCLOSURE LAUNDERING (vi) DIRECTORY (ix) SUMMARY OF THE CONFIDENTIAL OFFERING MEMORANDUM 1 THE FUND 4 INVESTMENT OBJECTIVES . 4 INVESTMENT PRINCIPLES I 5 MANAGEMENT OF THE FUND, THE INVESTMENT MANAGER . AND OTHER RELATIONSHIPS 6 CERTAIN RISK FACTORS 8 ADMINISTRATION . 14 THE SHARE CAPITAL 15 SUBSCRIPTION PROCEDURE 15 REDEMPTION PROCEDURE 1 9 DETERMINATION OF NET ASSET VALUE 21 FEES, COMPENSATION AND EXPENSES 22 DIVIDEND POLICY 2'3 TAXATION 23 APPENDIX A a U.S. INVESTORS . APPENDIX - SUB SCRIPTION DOCUMENTS FOR US. TAX EXEMPT INVESTORS APPENDIX REDEIVIPTION REQUEST DOCUMENTS Case Document 8-6 Filed 04/01/10 Page 77 of 190 INVESTOR NOTICES THIS MEMORANDUM AN OFFER ONLY TO THE PERSON WHOSE NAME APPEARS IN THE SPACE PROVIDED ON THE COVER PAGE. DELIVERY OF THIS MEMORANDUM TO ANY ONE- OTHER THAN THE PERSON NAMED OR HIS DESIGNATED REPRESENTATIVE IS UNAUTHORIZED, AND ANY REPRODUCTION OF THIS MEMORANDUM, IN WHOLE OR IN PART, WITHOUT THE PRIOR WRITTEN CONSENT OF THE ADNIINISTRATOR OF THE FUND, IS PROHIBITED. THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, SHARES IN THE FUND IN ANY JURISDICTION WHERE SUCH OFFER, SOLICITATION, PURCHASE OR SALE WOULD BE PROHIBITED BY LAW, OR TO ANY FIRM OR INDIVIDUAL TO WHOM IT WOULD BE UNLAWFUL 0 MAKE SUCH AN OFFER, SOLICITATION, PURCHASE OR SALE. THIS MEMORANDUM CONTAINS A OF THE MATERIAL PROVISIONS OF THE DOCUMENTS REFERRED TO HEREIN. STATEMENTS MADE WITH RESPECT TO THE PROVISIONS OF THOSE DOCUIVTENTS ARE NOT NECESSARHY COMPLETE, AND REFERENCE IS MADE TO THE ACTUAL DOCUMENT FOR COMPLETE INFORMATION AS TO THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO. - SHARES ARE AVAILABLE ONLY TO PERSONS WILLING AND ABLE TO BEAR THE ECONOMIC RISKS OF THIS INVESTMENT. THE SHARES ARE SPECULATTVE AND INVOLVE A HIGH DEGREE OF RISK. INVESTIVIENT IN THE FUND IS DESIGNED ONLY FOR SOPI-IISTICATED PERSONS WHO ARE ABLE TO BEAR THE LOSS OF THEIR INVESTMENT. NO OFFERING LITERATURE SHALL BE EMPLOYED IN THE OFFERING OF THE SHARES EXCEPT AS PROVIDED BY THE FUND, TOGETHER WITH THIS NTEMORANDUM. . NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY REPRESENTATIONS OR PROVIDE ANY INFORMATION WITH RESPECT TO THE SHARES EXCEPT SUCH INFORMATION AS IS CONTAINED IN THIS MEMORANDUM. NEITHER THE DELIVERY OF THIS MEMORANDUM NOR ANY SALES MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE MATTERS DISCUSSED HEREIN SINCE THE DATE HEREOF. EACH INVESTOR AND HIS OR HER ADVISORS MAY INQUTRE ABOUT ANY ASPECT OF THE OFFERING. NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY REPRESENTATION WITH RESPECT TO THE FUND, TTS INVESTMENT MANAGER, 0R THIS OFFERING THAT WHICH IS CONTAINED IN THIS MEMORANDUM. ANY REPRESENTATION NOT CONTAINED HEREIN MUST NOT BE RELIED UPON. N0 REPRESENTATION IS BEING MADE HEREBY WITH RESPECT TO THE POTENTIAL RETURN TO BE DERIVED BY AN INVESTOR. ANY INFORMATION CONTAINED IN THE PROMOTIONAL . MATERIALS SHALL BE SUPERSEDED BY THE MEMORANDUM TO THE EXTENT SUCH MATERIALS ARE INCONSISTENT THEREWITH. . THE ADMINISTRATOR IS A SERVICE PROVIDER TO THE FUND AND IS NOT RESPONSIBLE FOR THE PREPARATION OF THIS PRIVATE PLACEMENT MEMORANDUM OR THE ACTIVITIES OF THE FUND AND THEREFORE ACCEPTS NO RESPONSIBILITY FOR ANY INFORMATION CONTAINED IN THIS - MEMORANDUM. THE ADMINISTRATOR IS NOT AN OR OTHER ADVISER TO THE FUND AND WILL NOT PARTICIPATE IN THE INVESTMENT DECISION-NIAKING PROCESS. Case Document 8-6 Filed 04/01/10 Page 78 of 190 EACH INVESTOR IN THE SHARES OFFERED HEREBY MUST ACQUIRE SUCH SHARES SOLELY FOR SUCH OWN ACCOUNT AND NOT WITH AN INTENTION OF DISTRIBUTION, TRANSFER, OR RESALE, EITHER 1N WHOLE OR IN PART. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THIS OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY U. S. FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. THERE IS NO ESTABLISHED MARKET FOR THESE SECURITIES AND NONE WILL DEVELOP. THE FUND IS SUBJECT TO CONFLICTS OF INTEREST. iv Case Document 8-6 Filed 04/01/10 Page 79 of 190 MUTUAL FUNDS DISCLOSURE The British Virgin Islands Mutual Funds Act 1996 (the as amended, came into force on January 2nd 1998 withthe aim of regulating open?ended Mutual Funds, and the Managers and Administrators of open?ended mutual funds. - - . Three types of funds, namely Private, Professional and Public Funds (each as de?ned in the Act) are regulated by the Act. It is intended that Epsilon Global Active Value Fund II Ltd. (the "Fund"), be recognized under the Act as a Professional Fund. A Professional Fund is de?ned as a mutual fund: a the Shares of which are made available only to professional investors and the initial investment in which, in respect of the majority of each such investors, is not less than one hundred thousand dollars in US currency or its equiValent in any other currency, or b. is designated as a professional fund by regulations. A "Professional Investor" is de?ned as a person whose ordinary business involves, whether for his own account . or the acoomt of others, the acquisition or disposal of property of the same kind as the property, or a substantial part of the property, of the fund or a person who has signed a declaration that be, whether individually or jointly with his spouse, has a net worth in excess of $1 million in United States currency or its equivalent in any other currency and that he consents to being treated as a professional investor. . The Act provides for a Professional Fund to be able to manage or administer its affairs in or from within the Territory for up to fourteen days before being recognized A recognized Professional Fund is required by the Act to pay an annual fee of Recognition under the Act should not be taken to imply that the Fund has been approved by any regulatory authority in any country such as the United States, the United Kingdom or any other jurisdiction other than the BVI and it is intended that any potential shareholders of the Fund, participate on the basis that they can afford to lose all or a substantial portion of their investment Case Document 8-6 Filed 04/01/10 Page 80 of 190 ANTI-MONEY In order to comply with regulations aimed at the prevention of money laundering, the Fund will require veri?cation of identity from all prospective investors (unless in any case the Fund is satis?ed that an exemption under the Money Laundering Regulations 2000 of the Cayman Islands (the ?Regulations?) and the Code of Practice 1999 (the ?Code of Practice?) of the British Virgin Islands applies) Depending on the circumstances of each subscription, it may not be necessary to obtain full documentary evidence of identity where: In the Cayman Islands: (3) (C) the prOspective investor makes the payment for his investment from an account held in the prospective investor?s name at a recognised ?nancial institution; the prospective investor is regulated by a recognised regulatory authority and is based or incorporated in, or formed under the law of, a recognised jurisdiction; or the subscription is made by an intermediary acting on behalf of the prospective investor and such . intermediary IS regulated by a recognised regulatory authority and rs based or incorporated" 1n, or formed under the law of, a recognised jurisdiction In the British Virgin Islands: 01) Ch) (C) (6) the investor is a "Regulated Person? as de?ned 1n the Code of Practice, carrying on business 1n the British Virgin Islands; the investor is an ?authorized ?nancial institution? as that term is used in the Code of Practice in a country or territory which is a member of the Financial Action Task Force (the or the Caribbean Financial Action Task Force (the and which has anti?money laundering laws and procedures that are at least equivalent to the British Virgin Islands; the investor is acting in the course of a business in relation to which a ?regulatory authority? as that term is used in the Code of Practice, outside the British Virgin Islands exercises regulatory functions and is based or incorporatedin or formed under the law of a country or territory outside the British Virgin Islands which is a member of FATF or CFATF and in which there are in force anti?money laundering laws or procedures that are at least equivalent to those of the British Virgin Islands; the subscription is made by an intermediary acting on behalf of the prospective investor and such intermediary is regulated by a recognized regulatory authority and is based or incorporated in, or formed under the law of, a recognized jurisdiction and the intermediary has entered into Terms of Business con?rming compliance with the Code of Practice requirement to retain and provide due diligence records; and the investor is an attorney at law entitled to practice in the Territory of the British Virgin Islands or an accountant bound by anti?meney laundering rules of its professional body equivalent to the Code of Practice. In Ireland: the prospective investor is regulated by a recognised regulatory authority and is based or incorporated in, or formed under the law of, a recognised jurisdiction; or the subscription is made by an intermediary acting on behalf of the prospective investor and such intermediary is regulated by a recognised regulatory authority and is based or incorporated in, or formed under the law of, a recognised jurisdiction. Case Document 8-6 Filed 04/01/10 Page 81 of 190 For the purposes of the above-referenced exceptions in the Cayman Islands and Ireland, recognition or classi?cation of a ?nancial institution, regulatory authority or jurisdiction will be determined in accordance with the Regulations by reference to those jurisdictions recognised by the Cayman Islands and Ireland as having suf?cient anti-money laundering regulations. For purposes of the above-referenced exception in the British Virgin Islands, classi?cation of a ?nancial . institution, regulatory authority or jurisdiction in which there are anti-money laundering laws and procedures that are equivalent to those of the British Virgin Islands will be determined accordance with the Code of Practice by the relevant body in the British Vugin Islands. The Fund and the Administrator reserves the right to request such information as is necessary to verify the identity of a prospective investor. The Fund and the Administrator also reserves the right to request such identi?cation evidence in respect of a transferee of Shares. In the event of delay or failure by the prospective investor or transferee to produce any information required for veri?cation purposes, the Fund may refuse to accept the application or (as the case may be) to register the relevant transfer or process a redemption, and (in the case of a subscription of Shares) any funds received will be returned without interest to the account from which the monies were originally debited. The Fund also reserves the right to refuse to make any redemption payment to a Shareholder if any of the Directors of the Fund or the Administrator suspects or is advised that the payment of any redemption moneys to such Shareholder might result in a breach or violation of any applicable anti-money laundering or other laws or regulations by any person in any relevant jurisdiction, or such refusal is considered necessary or appropriate to ensure the compliance by the Fund, its Directors or the Administrator with any such laws or regulations in any relevant jurisdiction. - If, as a result of any information or other matter which comes to his attention, any person resident in the Cayman Islands or the British Virgin Islands (including the Fund, its Directors and the Administrator) knows or suspects that another person is engaged in money laundering, such person is required to report such information or other matter pursuant to the Proceeds of Criminal Conduct Law (2001 Revision) of the Cayman Islands or the Code of Practice in the British Vrrgin Islands and such report shall not be treated as a breach of any restriction upon the disclosure of information imposed by law or otherwise. Measures aimed at the prevention of money laundering may require an applicant for Shares to verify his identity to, the Administrator. Depending on the circumstances of each application, veri?cation may not be required where the applicant makes the payment from an account held in the applicant?s name at a recognised ?nancial institution, or the application is made through a recognised intermediary. These exceptions will only apply if the ?nancial institution or intermediary referred to above rs within a country recognised by Ireland as having equivalent anti?money laundering regulations The Administrator will notify applicants if proof of identity is required. By way of example an individual . may be required to produce a copy of a passport or identi?cation card duly certi?ed by a public authority such as a notary public, the police or the ambassador in his country of residence, together with two items of evidence of his address such as a utility bill or bank statement. In the case of corporate applicants this may require production of a certi?ed cepy of the Certi?cate of Incorporation (and any change of name) and of the Memorandum and Articles of Association (or equivalent), and of the names and residential and business addresses of all directors and bene?cial owners. The details given above are by way of example only and'the Administrator will request such information and documentation as it considers is necessary to verify the identity of an applicant In the event of delay or failure by the applicant to produce any information required for veri?cation purposes, the Administrator may refuse to accept the application and the subscription monies relating thereto or may refuse to process a redemption request until proper information has been provided. Investors should note speci?cally that redemption proceeds will not be remitted to an account which is not in the name of the investor. Each applicant for, Shares acknowledges that the Administrator shall be held harmless against any loss arising as a result of a failure to process his application for Shares or a request for redemption if such information and documentation as has been requested by the Administrator has not been provided by the applicant. Case Document 8-6 Filed 04/01/10 Page 82 of 190 Each applicant for Shares will be required to make such representations as may be required by the Directors in connection with anti-money laundering programmes, including, without limitation, representations that such applicant is not a prohibited country, territory, individual or entity listed on the United States Department of Treasury?s Of?ce of Foreign Assets Control website and that it is not directly or indirectly af?liated with any country, territory, individual or entity named on an OFAC list or prohibited by any OFAC sanctions programmes. Each applicant will also be required to represent that subscription monies are not directly or indirectly derived from activities that may contravene United States federal or state, or international, laws and regulations, . including anti-money laundering laws and regulations. Case FUND REGISTERED OFFICE Epsilon Global Active Value Fund II Ltd.? 7 Craigmuir Chambers PO. Box 71 - Road Town, Tortola, British Virgin Islands INVESTMENT MANAGER Epsilon Investment Management L.L.C. Grand Rue 3 I 1820 Montreux, Switzerland Telephone: 41~21?962?8800 Facsimile: 41?21?962?8801 Document 8-6 Filed 04/01/10 Page 83 of 190 DIRECTORY Equinoxe Alternative Investment Services (Ireland) Limited Equinoxe House Marina Village Malahide County Dublin Ireland PRME BROKER AND CUSTODIAN Goldman Sachs Co. One New York Plaza New York, New York. 10004 USA ACCOUNTANTS AND PricewaterhouseCoopers Accountants N.V. PO. Box 8800 3009 AV Rotterdam The Netherlands COUNSEL Monahan Biagi, P.L.L.C. 701 Fifth Avenue, Suite 2800 Seattle, Washington 98104 Case Document 8-6 Filed 04/01/10 Page84 of 190 SUMMARY OF THE CONFIDENTIAL OFFERING MEMORANDUM THE FOLLOWING IS A SUMMARY OF THIS CONFIDENTIAL OFFERING MEMORANDUM (THE THIS SUNIMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION APPEARING ELSEWHERE HEREIN, AND THE DESCRIPTION OF ANY DOCUMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH AN INVESTMENT THE FUND IS SPECULATIVE AND INVOLVES SUBSTANTIAL RISKS. EACH SHAREHOLDER MAY LOSE HIS ENTIRE INVESTMENT (INCLUDING ANY PROFITS, WHETHER OR NOT DISTRIBUTED). SEE The Fund Epsilon Global Active Value Fund II Ltd. (the "Fund?) is a corporation formed under the laws of the British Virgin Islands. All assets of the Fund are, and the proceeds from the sale of additional Shares of Common Stock in the Fund will be, invested through a "master-feeder" fund structure in Epsilon Global Master Fund II, L.P., a limited partnership formed under the laws of the Cayman Islands ("Master Fund?). The General Partner of the Master Fund . is Epsilon Global Asset Management Ltd. (?the General Partner?), a corporation formed under the'laws of the Cayman Islands. Other ?feeder funds? investing in the Master Fund include Epsilon Global Active Value Fund 11, LR, and Epsilon Global Active Value Fund L.P., each a US. partnership organized for US. investors. Other investment vehicles may be formed in the future to invest in the Master Fund. Each such investment vehicle will invest in the Master Fund on substantially the same terms and conditions as the Fund and therefore will generally be allocated a pmportionate share of the Master Fund's gains, losses and expenses based on their interest in the Master Fund, adjusted for any differences in fees. It is also noted that the Fund is authorized to invest outside of the Master Fund, although it does not currently anticipate that it will do so. Investment Objective The Fund's investment objective is capital appreciation with risk control. The Fund seeks to achieve a superior absolute return by employing various investment strategies. Investment Manager The Investment Manager of the Fund is Epsilon Investment Management L.L.C. (the "Investment Manager" or "Epsilon"), a Delaware limited liability company. Under the direction, supervision and control of the Directors of the Fund or their designee(s), Epsilon will be responsible for recommendations related to the trading and investment decisions of the Fund. The Investment Manager will receive such fees as are agreed to between the Fund and the Investment Manager. Directors . The Directors of the Fund are Mr. Steve G. Stevanovich and Mr. Alberto Clodoaldo d?Abreu de Paulo. Administrator Equinoxe Alternative Investment Services (Ireland) Limited (?Equinoxe?) serves as the Fund's Administrator, and will communicate with the Fund's shareholders._ Auditors The Fund's books of account will be audited each year by the Fund's independent auditors, PricewaterhouseCoopers. Prime Broker Custodian The Fund's principal prime broker and custodian is Goldman Sachs Co., New York. Indemnification - Neither the Administrator, the Investment Manager, nor any of their respective of?cers, directors, employees or agents ("Indemni?ed Parties"), shall be-liable, in damages or otherwise, to the Fund or the Shareholders for any act or omission performed or omitted by any of them unless such act or omission results from willful misconduct, fraud or bad faith. The Fund will indemnify and hold harmless all Indemni?ed Parties from and against any and all claims or liabilities of any nature whatsoever, including attorneys' fees, arising out of or in connection with any action taken or Case Document 8-6 Filed 04/01/10 Page 85 of 190 omitted by any Indemni?ed Party, unless such act or omission results from willful misconduct, fraud or bad faith. Fees and amuse: Payable by the Fund Fixed Fee Contingent Fee Fiscal Year The Fund pays or causes to be paid its own fees and expenses, including all legal and accounting expenses. See ?Fees, Compensation and Expenses? below. As stated above, the assets of the Fund will be invested through the Master Feeder structure. The General Partner of the Master Fund will receive, in consideration for its services to the Fund, a quarterly ?xed fee in an amount equal to one half of one percent per annum) of the Fund's Total Net Assets (as de?ned below), determined as of the close of each calendar quarter (the ?Fixed Fee?). In the discretion of the Fund certain shareholders may be assessed a Fixed Fee in a different amount. To the extent that any Fixed Fees are paid to the General Partner by the Master Fund with respect to investments made by the Fund, no Fixed Fee amounts will be charged at the Fund level. The General Partner will receive a contingent fee for each ?scal year or otherwise determined upon the redemption of any. Common Stock, with respectto such redeemed Common Stock, respectively, (each a ?Performance Period?) equal to 20% of . the amount, if any, of the net appreciation of the Fund's Gross Asset Value during that Performance Period. To the extent that the Contingent Fees are paid to the General Partner of the Master Fund by the Master Fund for investments made by the Fund, no Contingent Fees will be charged at the Fund level. If the Fund incurs a net loss during a ?scal year, the General Partner may not receive any contingent fees from the Fund in a subsequent ?scal year unless and until the amount of such net 1035 applicable to each and every Share which experienced such net loss (and which remains outstanding at the time the subsequent pro?t occurs) has been recouped in full. Within 120 days following the conclusion of each ?scal year, each Shareholder will receive an annual report (together with an annual audited ?nancial statement) describing the results of the Fund's trading activities for that ?scal year. The annual report will be audited by the Fund's independent public accountants. Each Shareholder will also receive a quarterly investment report, describing the Fund's activities in such detail, as the Fund, in its sole discretion, shall determine. The Fund reports its results in U.S. dollars under International Fmancial Reporting Standards. I The ?scal year of the Fund shall end on December 31 of each year, and the ?scal quarters of the Shares Fund shall end on March 31, June 30, September 30 and December 31 of each year, provided, however, that the Fund's initial ?scal year shall begin on the date the Fund commences Operations and shall end on the following December 31. Terms of Investment The Fund will issue shares of common stock Each of the Shares is entitled to participate ratably, on a share for share basis, with all outstanding Shares, in the Fund's earnings and assets. Purchasers of Shares are referred to herein as Shareholders. With the exception of certain pension and pro?t sharing trusts, charities and other entities which are generally tax? exempt under U.S. Federal income tax laws tax?exempt entities"), ownership of Shares will "be restricted to persons other than "United States persons." "United States persons" are de?ned to include a citizen or resident of the United States; (ii) a corporation, partnership, trust, or other entity organized or created under the laws of the United Statesi or any organization or entity controlled, directly .or indirectly, by a person or persons described in or or in which such persons are known to be the owners, directly or indirectly, of a majority of the bene?cial interests therein. Case Document 8-6 Filed 04/01/10 Page 86 of 190 Minimum Subscription The minimum subscription for Shares is 000, 000, subject to the Fund?s discretion to accept lesser amounts. Subscription Procedure The Fund offers its Shares on a continuous basis at a price per Share equal to the Net Asset Value (the per Share as of date of issuance, plus any- applicable subscription charges. A deposit to a Contingent Fee Reserve may be required in certain circumstances, and further adjustments to the number of Shares may be required in accordance with an Equalization Credit (See ?Equalization Adjustments? for a more detailed description of Equalization Accounting). Subscriptions received during any period will ordinarily be accepted as of the ?rst day of the following period, subscriptions received betWeen March 1 and March 31 will be accepted as of April 1. The Fund may, in its discretion, accept subscriptions. on a day other than the ?rst day of a month. The Fund will issue number of Shares by dividing subscription amount by per share price rounded to 2 decimal places. All persons desiring to subscribe for and purchase Shares should complete, execute and deliver a Subscription Agreement to the Fund. All persons subscribing for Shares in the Fund must be quali?ed clients, as set forth in Rule 205- 3 under the Investment Advisers Act of 1940. Subscription Instructions and Agreements are attached to this Memorandum as ApandiCes A and B. Subscribers must complete all relevant sections of this Subscription Agreement. Failure to do so may result in delay of acceptance of a Subscriber?s subscription until a properly completed Subscription Agreement has been received, processed and approved. . Shares will generally be issued on the ?rst day of the month following the acceptance of a subscription (the "Closing Date"). The subscriber's payment for his or her Shares must he made at least one Business Day prior to the Closing Date. Payments should be made by wire transfer of immediately available funds to the Fund's account as follows: To: JP. Morgan Chase N.A., New York, NY ABA Fedwire: 021000021 SWIFT: CHASUS 33 For account of: JPMorgan Chase Bank, .A. SWIFT: Account 0010962009 For further credit to: Epsilon Global Active Value Fund II Ltd. Account 34651 101 A11 subscriptions for Shares are irrev0cable by the subscriber upon acceptance by the Fund. The Fund may reject any subscription for any reason. Potential investors, by accepting delivery of this Memorandum, agree to return this Memorandum, including Appendices hereto, if such potential investor does not subscribe for Shares, (ii) such potential investor's subscription is not accepted, or the offering is terminated before the sale to such potential investor is consummated. _S__olicitation of Subscriptions There are no underwriting arrangements with respect to the offering of Shares. All solicitations of subscriptions will be made directly by the Company or through the assistance of unaf?liated placement agents and money managers. Such unaf?liated placement agents and money managers may charge their clients a placement fee of up to 5% of the total amount of the subscription for Shares sold with their assistance. The unaffiliated placement agents and money managers may rebate all or a portion of such fees to their clients. Case DoCument 8-6 Filed 04/01/10 Page 87 of 190 Limited Transferabilig Each potential investor must represent that they will acquire the Shares only for investment purposes and not with a view to resale or distribution. No Shareholder may transfer Shares without the prior written consent of the Fund and 011' terms acceptable to Administrator. Redemption Procedure Shareholders may, upon forty-?ve (45) days' prior written notice to the Fund and the Administrator request that the Fund redeem all or part of such Shareholder?s Shares as of the close of business on the last day of the calendar quarter. See ?Redemption Procedure.? With respect to any partial redemption, a Shareholder may not make a partial redemption of less than and may not reduce such Shareholder's unredeemed Shares to an amount less than the minimum investment then required of new Shareholders. Also, in order to be considered a partial redemption, the redemption cannot exceed 90% of a Shareholder?s total capital account. In any case, the redemption price shall be the NAV of the redeemed Shares, as calculated at the end of the applicable measurement period. Redemption requests, once received by the Fund and the Administrator, are revocable only with the consent of the Investment Manager, which may withhold its consent for any reason in its sole discretion. Payment in US. dollars of the Redemption Price will be made as soon as practicable, and under normal conditions the shareholder will receive at least 90% of the Redemption Price no later than thirty (30) days following the date of redemption, with the balance, if any, paid within ?fteen (15) days after the receipt by the Fund of its audited annual ?nancial statements for the ?scal year. However, under conditions of market turmoil in which, in the judgment of the Fund?s Investment Manager, the Fund is unable to liquidate portfolio positions in an orderly manner to meet redemptions, the Fund may in its sole discretion delay, in whole or in part, payment of the Redemption Price for longer than thirty (30) days and/or. pay the Redemption Price in two or more stages. With respect to assets representing any part of the Redemption Price not paid within thirty (30) days of the redemption date, the Fund will not charge management fees and will pay interest at the rate paid by the Fund?s prime broker on the Fund?s cash balances. The Fund may agree to arrangements with particular Shareholders regarding the payment of redemption proceeds, which arrangements may include the partial payment of such redemption proceeds, if the Fund?s Directors determine that such arrangements are in the best interests of all Shareholders. The Fund has the right to make" payment on redemptions in securities owned by the Fund. The Fund may, in its discretion, deduct from any redemption proceeds an amount determined by the Fund to represent the transaction costs and related expenses incurred by the Fund in connection with the processing of redemptions. The Fund also has the right to force the complete redemption of any Shareholder at any time in the Fund?s sole discretion. Under certain circumstances, the Fund has the power to suspend the redemption of Shares. See ?Redemption Procedure.? THE FUND Epsilon Global Active Value Fund II Ltd. (The ?Fund?) incorporated in the territory of the British Virgin Islands (the as an international business company. The registered of?ce of the Fund is located in Tortola, British Virgin Islands. INVESTIVIENT OBJECTIVES The Fund?s investment objective is capital appreciation with risk control. The Investment Manager seeks superior absolute returns while reducing the risk of permanent impairment to capital. To accomplish this objective, the Investment Manager employs global opporumistic, distressed and event?driven value investing across a variety of security types and asset classes. Case Document 8-6 Filed 04/01/10 Page 88 of 190 KNIVESMNT PRINCIPLES The Fund seeks investment opportunities and deploys capital on a global basis. The Fund's opportunistic investment style may lead to investments in capital structure restructuring, the equity or high yield debt of distressed or mismanaged companies which may be in default or in bankruptcy, private corporate debt such as bank debt or trade claims, sovereign debt, convertible securities and special situations including tumarounds, mergers, spinoffs, restructurings, recapitalizations and exchange offers. The Fund may also invest in privately negotiated and structured securities of public and private companies, including lease transactions and collateralized debt obligations -. Analytical Methodology. The Fund believes that the market price of the various components of a capital structure are ultimately determined by enterprise value. Therefore, when evaluating the securities of distressed or mismanaged companies, the Fund attempts to determine the enterprise or going concern" value of the company and then compares that value to the current market value of the company's securities. This analysis and comparison enables the Fund to determine which securities are incorrectly priced, and subsequently, offer the best risk/return. Factors considered by the Fund in assessing enterprise value are, among other things: historical and discounted future levels of operating and free cash flow, (ii) current and likely future ?nancing needs and alternatives, balance sheet structure including o? balance sheet items, (iv) revenue and expense recognition policies, industry standing, (vi) diversity of operations and (vii) background, operational experience and track record of management. The application of the above analytical methodology not only enables the Fund to identify which securities it believes are undervalued, but also which securities are overpriced. Once identi?ed, these overpriced securities may be sold short in anticipation of a future price decline. Global Investments. In non?US. markets, the Fund may purchase U.S. dollar and non?US. currency denominated equity and debt securities of non-U5. corporations, as well as the sovereign debt of various governments and the debt of their respective agencies or departments, which may be trading at distressed levels. The Fund may also purchase newly or recently privatized equity or debt securities of former state owned entities in private or open market transactions. When purchasing non?US. currency denominated securities, the Fund may hedge currency ?uctuation risk, thereby minimizing the impact of negative currency movements. Smcial Situations. The Fund focuses on corporate dislocations and discrete events such as a restructuring or a reorganization, the spinoff of a division or subsidiary, a recapitalization, an acquisition or merger, a tender offer, an asset sale or a regulatory shift. For example, in a restructuring, a company may sell, spinoff or close unpro?table or non-strategic portions of its business, thereby leaving a more focused core business. Additionally, the company may restructure its balance sheet by exchanging high interest rate debt for lower rated debt or equity or some combination thereof. The Fund seeks restructuring situations in an effort to identify companies whose core business or whose remaining or newly created securities are incorrectly priced by the market. Risk Control. The Fund may attempt to reduce risk or to hedge positions, including the risk of non-U.S. currency ?uctuations, with offsetting transactions, such as short sales and buying or selling options on the same or similar securities. The Fund analyzes the historical and probable price movements of certain securities against that of an underlying security, in an effort to determine not only which securities offer the best hedge, but also which hedge ratio offers the best downside protection as well as upside potential. The Fund may also purchase and sell market or index options for hedging or. speculative purposes. Case Document 8-6 Filed 04/01/10 Page 89 of 190' MANAGEMENT OF THE FUND THE INVESTMENT MANAGER AND OTHER RELATIONSHIPS The Fund. The Fund?s Board of Directors has overall management responsibility for the Fund, including establishing investment, dividend and distribution policy, andhaving the authority to select and replace the Fund?s Administrator, any of?cers of the Company and other persons or entities with management or administrative responsibilities to the Fund The Fund?s Memorandum and Articles of Association provide that a Director shall not be liable to the Fund for any acts or omissions in the performance of his duties if such person acted houestly and in good faith with a view to the best interests of the Fund and, in the case of criminal proceedings, such a person had no cause to believe that his conduct was unlawful. Such Memorandum and Articles of Association contain certain provisions for the indemni?cation of Directors by the Fund, to the extent permitted by law, against liabilities to third parties arising in connection with the performance of their services. As Director, Mr. Steve G. Stevanovich is responsible for Fund?s operations and activities. The background of Mr. Stevanovich is set forth below. Mr. Steve G. Stevanovich is the Founder and President of both Westford Asset Management L.L.C. and Epsilon Investment Management L.L.C. Mr. Stevanovich has over 22 years of experience in international investment management. During these 22 years, Mr. Stevanovich has deveIOped an ability to assess and exploit capital structure mispricings on a global basis while utilizing various hedging techniques in an attempt to maximize capital preservation. Piior to founding Epsilon, Mr. Stevanovich was the Executive Vice President of Everest Capital Limited, a 4 billion global hedge fund. During the ?ve and one?half years that Mr. Stevanovich Spent at Everest, the fund had a compounded return of over 25% per annum. Prior to joining Everest Capital, Mr. Stevanovich had over seven years of experience in corporate ?nance and investment banking, most recently at 0? Connor, Altwell Company, a. leveraged buyout ?rm in Boston where he was involved in analyzing and valuing companies in various industries and negotiating the capital structure and pricing of various transactions. Mr. Stevanovich has a BA in Economics from the University of Chicago and an MBA from the University of Chicago Graduate School of Business. Mr. Stevanovich is assisted by a team of Epsilon Investment Management L.L.C. The Investment Manager of the Fund. is Epsilon Investment Management, L.L.C. (the "Investment Manager" or "Epsilon"), a Delaware limited liability company. In its capacity as Investment Manager to the Fund, and under the direction, supervision and control of the Directors of the Fund or their designee(s), Epsilon provides services required for the Fund?s operation including analysis and . recommendations related to the fund?s trading and investments transactions. Speci?cally, under the direction, supervision and control of the Fund, Epsilon aids in the management, investment and reinvestment of the Fund's assets, including the selection of securities brokers and banks. Steve G. Stevanovich, whose background is set forth above, is the sole manager of Epsilon. The Investment Manager and its investment professionals (or their families or related entities) have a signi?cant portion of their net worth invested in the Funds they manage. Investment Management Aggeement. Under an Investment Management Agreement (the "Management A greement") between the Investment Manager and the General Partner of the Master Fund, the Investment Manager will provide its services and recommendations related to the investment and reinvestment of the assets of the Master Fund and the Fund in accordance with the investment objectives and policies of the Master Fund and the Fund as set forth above and the provisions of the Master Fund?s Offering Memorandum and Agreement of Limited Partnership For its services the Investment Manager will be paid such fees as are agreed to between the General Partner and the Investment Manager. The Investment Manager is solely re3ponsib1e for the payment of its operational costs, including employee salaries, bonuses, rent, utilities, facilities overhead, travel and insurance. The Fund will be responsible for all of its investment and operating expenses, as described below under .?Fees, Compensation and Expenses? Also see ?Prime Broker and Brokerage Commissions" and ?Con?icts of Interest? below, as they relate to expenses to be paid by the FUnd. The Management Agreement provides that it shall continue until the close of business on December 31, 2030, except that either the General Partner or the Investment Manager may terminate the Management Agreement effective at the close of business on the last day of any ?scal year by giving the other party not less than ten (10) days written notice. Case Document 8-6 Filed 04/01/10 Page 90 of 190 The Management Agreement recognizes that the Investment Manager has investments of its own and is acting as investment manager for others. The Management Agreement further recognizes that the Investment Manager may become associated with other investment entities and engage in investment management for others. Except to the extent necessary to perform its obligations under the Management Agreement, the Investment Manager or its af?liates are not limited or restricted from engaging in or devoting time and attention to the management of any other business, whether of a similar or dissimilar nature, or to render services of any kind to any other corporation, ?rm, individual or association. As a result, the Investment Manager and its affiliates and other clients may hold substantial positions in securities that are owned by the Fund. If the Investment Manager and its af?liates and other clients hold a substantial position in an issuer, liquidity and concentration considerations may limit the ability of the Investment Manager to add to the position on behalf of the Fund or other clients or to readily dispose of the position. The Investment Manager may on occasion give advice or take action with respect to those accounts that differs from the advice given with respect to the Fund. See discussion under "Con?icts of Interest." Pursuant to the Investment Management Agreement between the Fund and the Investment Manager, the Investment Manager shall not be liable to the Fund for any acts or omissions in the performance of its services in the absence of willful misconduct, gross negligence or as otherwise required by law, and each agreement contains provisions for the indemnification of the Investment Manager by the Fund against liabilities to third parties arising in connection with the performance of their services, to the extent permitted by law. PrimLe Broker. and Brokerage Commissions Although the Investment Manager will review the brokerage commission rates charged to the Fund, it has complete discretion to determine which brokerage ?rms will be selected to execute transactions for the Fund, regardless of their commission rates. The Fund will use Goldman Sachs Co. as its principal prime broker and custodian, but may engage other brokers to provide similar services. Portfolio transactions will be allocated by the Investment Manager to broker-dealers on the basis of best execution and best overall terms available, which the Investment Manager will evaluate on the basis of a variety of factors, including a broker?s or dealer?s ability to effect transactions, reliability and ?nancial responsibility, operational ef?ciency, responsiveness, stability, the to achieve prompt and reliable trade executions, price, and execution and other services special execution capabilities, clearance, Settlement, post-trade matching and short-term custodial services) which bene?t the Fund. The Investment Manager may also generally consider the amount, frequency, and nature of research, its quality and comprehensiveness, along with execution and other services provided by brokers, as well as the extent to which such research and other serviCes are relied upon and provide assistance in making investment decisions. The Investment Manager values good service, market information and investment ideas received from brokers, and may in its sole discretion allocate transactions for the account of the Fund to particular brokers in order to obtain-access to such service, information and ideas. The Investment Manager may also cause the Fund to enter into transactions with brokers with the purpose, in whole or in part, of generating commissions to the brokers and resulting "soft dollar" credits, in order to gain access to the broker's proprietary research, data or analyses, and/or to gain access to services, market information and investment ideas from a broker. The investment information received from brokers may be used by the Investment Manager in servicing any other entities to which the Investment Manager provides investment advice and not all such information may be used by the Investment Manager in connection with the Fund. A broker will not be excluded from receiving brokerage business because it does not provide research services. It is the intent of the Investment Manager that all services provided by a broker and paid for with ?soft dollars? generated by trading for the Fund shall only be such services as would be allowed under the safe harbor under Section 28 of the Securities Exchange Act. All such services provided by a broker shall be expenses borne by the Fund, and thus indirectly by the Fund?s Shareholders. Also see ?Investment Management Agreement? above, and ?Conflicts of Interest" and ?Fees, Compensation and Expenses? below as they relate to expenses to be paid by the Fund. Among the services the Investment Manager may consider in allocating portfolio transactions to broker? dealers. subject to its obligation to use its best efforts to seek best executiou for alltransactions, is whether a broker? dealer has referred investors to the Fund. If, and when, such an allocation of portfolio transactions is made, the commission rates charged for such transactions shall not exceed commercially reaSonable rates. - Case Document 8-6 Filed 04/01/10 Page 91 of 190 QRTAIN RISK FACTORS AN INVESTMENT IN THE FUND IS SPECULATIVE AND IS SUITABLE ONLY FOR PERSONS WHO ARE ABLE TO ASSUME OF LOSING THEIR ENTIRE PROSPECTIVE PURCHASERS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISKS BEFORE SUBSCRIBING FOR SHARES. Limited Omrating Rising. The Fund commenced operation in July, 2001 and has a limited operating history upon which an evaluation of the Fund's performance can be made. The success of the Fund will be largely dependent on the judgment and ability of the Directors of the Fund, the General Partner of the Master Fund, and the Investment Manager. Risk of Loss of Capital. An investment in the Fund creates a risk of loss of capital and is designated for sophisticated persons who are able to bear such a risk. The Fund believes that its investment program and research techniques moderate this risk to some degree, but can make no warranty or representation in this regard. Reliance on the Investment Manager. Although the Directors of the Fund and the General Partner of the Master Fund have ultimate resPonsibility for the decisions related to the trading and investment of the Fund?s assets, the success of the Fund is heavily dependent on the activities, judgment and availability of the Investment Manager. An investor in the Fund must rely upon the ability of the Investment Manager in making investment analyses and recommendations consistent with the Fund?s investment objectives and policies, and in accordance with. the provisions of the Master Fund?s Offering Memorandum and Agreement of Limited Partnership. The investor will I. not have the opportunity to evaluate personally the relevant economic, ?nancial and other information to be used by. the Fund or the Investment Manager in the selection, analysis and monitoring of investments. Securities to be Purchased. The Fund may purchase low rated or unrated debt securities. Such securities may offer higher yields than do higher rated securities, but generally involve greater volatility of price and risk of principal and income, including the possibility of default by, or bankruptcy of, the issuers of the securities. In addition, the markets for such securities may be limited The Fund may enter into contracts with dealers as principal to purchase certain securities and instruments. Such transactions are not subject to exchange rules and may result in losses to the Fund in the event of a default or bankruptcy of a counterparty. The Fund may also purchase securities issued by companies from many countries and by the countries themselves. Such investments will cause the Fund to be affected by changes in the currency exchange rates and revaluation of currencies. Less information may be available about non?US. issuers than about their US. counterparts. Further, securities markets of certain other countries may not be as liquid as US. markets. Investment in these securities may result in higher costs to the Fund thaninvestment in US. securities due to the cost of conVerting a foreign currency to dollars, the payment of ?xed brokerage commissions on some non-US. exchanges and the imposition of transfer taxes or transaction charges by those exchanges.- Investments in Securities of certain countries may also be subject to political or economic risks. The Fund may invest in securities of United States or non?U. S. closed-ended investment companies. There may be no liquid secondary market for these securities and some of the companies may limit the intervals at which Shares may be redeemed. A portion of the Fund?s investment program may concentrate on structured ?nance securities with investments in debt obligations, distressed securities and other assets that have signi?cant risks as a result of business, ?nancial market or legal uncertainties. There can be no assurance that the Fund will correctly evaluate the nature and magnitude of the various factors that could affect the value of and return on investment. Prices and market movements of investments may be volatile, and a variety 'of other factors that are inherently dif?cult to predict, such as domestic or international economic and political developments, may signi?cantly affect the results of the Fund?s investments. As a result, the Fund's performance over a particular period may not necessarily be indicatiVe of the results in future periods. . Structured Finance Securities The Fund may invest in structured ?nance securities, which include, among others, collateralized bond obligations,- collateralized loan obligations, collateralized debt obligations, equipment trust certi?cates, collateralized mortgage obligations, letters of credit, asset backed securities, forfeit ?nancing, or similar instruments. Structured ?nance securities may present risks similar to those of the other types of investments in _which- the Fund may invest and, in fact, such risks may be of greater signi?cance in the case of structured ?nance securities. Moreover, investing in structured ?nance securities may entail a variety of unique risks. Among other 8 Case Document 8-6 Filed 04/01/10 Page 92 of 190 risks, structured ?nance securities may be subject to prepayment risk, interest rate risk and credit risk. In addition, the performance of a structured ?nance security will be affected by a variety of factors, including its priority in the capital structure of the issuer thereof, the availability of any credit enhancement, the level and timing of payments and recoveries on and. the characteristics of the underlying receivables, loans or other assets that are being securitized, remoteness of those assets from the originator or transferor, the adequacy of and ability to realize upon any related collateral and the capability of the servicer of the securitized assets. Leveraged Bank Loans. The Fund may also invest in bank loans. Bank loans may become non-performing for a variety of reasons. Such non-performing bank loans may require substantial workout negotiations or restructuring in the event of a default or bankruptcy, which may entail, among other things, a substantial reduction'in the interest rate and a substantial write?down of the principal of the bank loan. In addition, bank loans are generally subject to liquidity risks since bank loans are traded in an ?r"overnthe?counte market. Consequently, there may be limited liquidity if a vehicle IS required to sell or otherwise dispose of such bank loans. Derivative Transactions. The structured ?nance vehicles in which the Fund inVests may, to a limited extent, enter into certain transactions that include the use of options and other derivative instruments. Furthermore, the Fund may purchase or sell derivative instruments in the context of the overall hedging and risk management strategy. Possible losses from derivative transactions differ from losses that could be incurred from a purchase of a security, because potential losses from derivative transactions may be unlimited, whereas losses from purchases of securities cannot exceed the? total amount invested. Leverage and Short Sales. The Fund may maximize its investment position by purchasing securities on margin. As a result, the possibilities of pro?t and loss will be increased. Borrowing money to purchase securities will provide the Fund with advantages of leverage, but exposes it to capital risk and higher current expenses. Any gain in the value of securities purchased with borrowed money or income earned from these securities that exceeds interest paid on the amount borrowed would cause the Fund's investment pro?t or loss to increase faster than would otherwise be the case. Conversely, any decline in the value of the securities purchased would cause the Fund's investment pro?t or loss to decrease faster than would otherwise be the case. In addition to purchasing securities on - margin, the Fund may engage in short selling of securities. A short sale will result in a gain if the price of the securities sold declines suf?ciently between the time of the short sale and the time at which securities are purchased to replace those borrowed. A short sale will result in a loss if the price of securities sold short mereases or does not decline sufficiently to cover transaction costs. Any gain would be decreased and any loss would be increased by the amount of any premium or interest that the Fund may be required to pay with respect to the borrowed securities Assets May Not Be Diversi?ed. The Fund may at times have an unusually high concentration in certain types of securities positions. Accordingly, the Fund's assets may be subject to greater risk of loss than if they were more widely diversi?ed, since the failure of one or more limited number of investments could have a material adverse effect on the Fund. Foreign Exchanges. The Fund may invest in non-United States securities and may trade securities on exchanges located outside the United States, where protection afforded to investors by the Securities and Exchange Commission and federal securities laws do not apply. Accordingly, the Fund is subject to various risks inherent in trading non-US. securities andlor trading on foreign exchanges, including ?uctuations in currency exchange rates, exchange controls, expropriation, burdensome or con?scatory taxation, moratoria, or political or economic events, all of which could have an adverse effect on the Fund?s ability to generate pro?ts on investments. As the Fund determines its investment pro?t or loss in United States dollars, it Will be subject to the risk of ?uctuation in the exchange rate between the local currency and dollars and to foreign exchange controls. Although the Fund may hedge against ?uctuations in currency exchange rates, there can be no assurance that the Fund would not incur losses as a result of adverse changes in currency exchange rates and foreign exchange controls. The Fund is unable to predict the nature of future exchange controls. Imposition or signi?cant increases in the level of exchange controls or other restrictions could have an adverse effect on the Fund. . Limited Liguidity of Investment. The Fund does not intend to list its Shares on any securities exchange. It is not expected that there will be any established over-the-counter market for sale of the Shares, and it is not anticipated that there will be any secondary market for trading in the Shares. However, a Shareholder may request that the Fund redeem some or all of his or her Shares. Under certain circumstances, including market conditions which would preclude the orderly liquidation of positions, the Fund may delay redemptions. See ?Redemption Procedure.? Case Document 8-6 Filed 04/01/10 Page 93 of 190 Active Investments. The Fund may seek to effect the control or management of a company in which the Fund has an investment position. The Fund may take positions in excess of 5% of a company's outstanding voting Shares, possibly giving the Fund the ability to in?uence the actions of management. Additionally, the Fund may structure, negotiate and execute private transactions directly with publicly traded companies or their agents. Often, the resulting security is convertible debt with underlying publicly traded common stock. The Fund may also invest in the securities of privately held companies. The Failure of Brokerage Firms. The Fund may be subject to -a risk of loss of the assets held by a broker?dealer in the event of a broker?dealer's bankruptcy. In the event of a failure of a broker?dealer used by the Fund, the United States Securities Investor Protection Corporation provides a maximum of of account insurance, only of which may be taken in cash. To the extent the Fund leaves assets in the possession of its broker in excess of these amounts, the Fund may receive only a pro rata share of the remaining assets deposited with the failed broker-dealer. Moreover, because the Fund may trade on non-United States exchanges. with non?United States brokers and/or dealers, the failure of a non?United States broker or dealer could result in the complete loss of Fund amounts on deposit with such broker or dealer, depending on the regulatory rules governing such broker. Investments in ?New Issues.? The Fund may invest in ?New Issues? as that term is de?ned in FINRA Rule 5130. Only those investors which are not restricted, as such term is de?ned by FINRA, may participate in the pro?ts or losses attributable to New Issues. To the extent that a potential investor is ?restrict an investment in the Fund may not yield the performance results which may be achieved by those investors which are entitled to participate in New Issues. Government Regu_lation. The Fund is not registered as an investment company under the Investment Company Act of 1940, and the Investment Manager is not registered as an investment adviser under the US. Investment Advisers Act of 1940 or as a Commodity Trading Adviser under the Commodity Exchange Act (or any similar law). Further, each of the Fund and its directors and of?cers, the General Partner of the Master Fund and the Investment Manager (the ?Operators") are exempt from registration with the Commodity Futures Trading Commission (the as commodity pool operators and, therefore, none of the Operators is required (unlike a registered commodity pool operator) to deliver a disclosure document and a certi?ed annual report to the investors in the Fund. The Operators are exempt from registration as commodity pool operators because the Operators and the Fund, as applicable, satisfy the criteria for exemption set forth in Rule adopted by the Rule provides that the operator of a fund is exempt from registration as a commodity pool operator when the sale of interests in the fund are conducted in a manner so as to exempt the sale thereof from registration under the Securities Act of 1933, as?amended (the ?Securities Act"), (ii) (A) the aggregate initial margin and premiums required to establish commodity interest positions (determined at the time the most recent position was established) does not exceed ?ve percent of the liquidation value of the fund?s portfolio (after taking into account unrealized pro?ts and unrealized losses on any such positions) or (B) the aggregate net notional value of such positions, determined at the time the most recent position was established, does not exceed one hundredpercent (100%) of the liquidation value of the fund?s portfolio (after taking into account unrealized pro?ts and unrealized losses), each investor in the fund is (A) an ?accredited investor" within the meaning of Rule 501 of Regulation under the Securities Act, (B) a trust that is not an accredited investor, provided that the grantor of the trust is an accredited investor and the bene?ciary of the trust isa family member of the grantor, (C) a ?knowledgeable employee? (as de?ned in 17 CFR or (D) a ?quali?ed eligible person? (as de?ned in Rule and (iv) interests in the fund are not marketed as, or in, a vehicle for trading in the commodity futures or commodity options markets. Shareholders, therefore, are not afforded the protective measures provided by such laws. Substantial Fees and Emma. The expenses to which the Fund will be subject could be substantial. See ?Fees, Cempensation and Expenses" below. Arbitrage Trading May Involve Risks. The Fund's investments may involve arbitrage between the prices of two securities, between the equity and equity options of the same or similar securities, between the price of a security and its announced buy-out or exchange price andjor any combination thereof. Given the volatile nature of certain arbitrage situations, the short-term performance of the Fund?s arbitrage investments may fluctuate signi?cantly in value. The Fund may purchase or sell securities (on a current basis) and take offsetting positions in the options of the same or similar securities. These offsetting positions entail a substantial risk that the price differential could change unfavorably, causing a loss to the Fund. 10 Case Document 8-6 Filed 04/01/10 Page 94 of 190 Unidenti?ed Investments. The Fund has not identi?ed any particular investments to make ?om the proceeds of this offering, other than to make investments on the basis of opportunities as they may arise. Therefore, prospective investors must rely on the ability of the Investment Manager to seek, analyze and recommend investments consistent with the Fund's objectives. Shareholders will not have the opportunity to evaluate the relevant economic, ?nancial and other information which will be utilized by the Fund in deciding whether or not to make a particular investment. The Memorandum and Articles of Association of the Fund do not restrict the type of investments the Fund may make. Options. The Fund may engage in the trading of options, including credit default swaps index and equity options. Such trading involves risks substantially similar to those involved in trading margined securities, in that options are speculative and highly leveraged. Speci?c market movements of the securities underlying an option cannot accurately be predicted. The purchaser of an option is subject to the risk of losing the entire purchase price of the option. The writer of an option is subject to the risk of loss resulting from the difference between the premium received for the option and the price of the security underlying the option which the writer must purchase or deliver upon exercise of the option. No assurance can be given that the Fund will be able to effect closing transactions at a time when it wishes to do so. If the Fund cannot enter into a closing transaction, the Fund may be required to hold securities that it might otherwise have sold, in which case it would continue to be at market risk on the securities and could have higher transaction costs, including brokerage commissions, upon the sale of securities. In addition, if the Fund utilizes derivatives, including interest rate swaps, assets swaps and credit default swaps, the Fund may take a credit risk with regard to parties With whom it trades and may also hear the risk of settlement default These risks may differ materially from those entailed in exchange?traded transactions that generally are backed by clearing organization guarantees, daily marking-to?market and settlement, and segregation and minimum capital requirements applicable to intermediaries. Transactions entered directly botween two counterparties generally do not bene?t from such protections and expose the parties to the risk of counterparty. default. It is expected that all securities and other assets deposited with custodians or brokers will be clearly identi?ed as being assets (directly or indirectly) of the Fund and hence the Fund should not be exposed to a credit risk with regard to such parties. However, it may not always be possible to achieve this and there may be practical or time problems associated with enforcing rights to its assets in the case of an insolvency of any such party. Futures Contracts. Futures contracts are contracts usually made on a futures exchange which call for the future delivery of a speci?ed "commodity" at a speci?ed time and place. These contractual obligations, depending on whether one is a buyer or a seller, may be satis?ed either by taking or making physical delivery of the "commodity". or by making an offsetting sale or purchase of an equivalent futures contract on the same exchange prior to the end of trading in the contract month. Commodity futures prices are highly volatile. Price movements of commodity futures contracts are in?uenced by, among other things, changing?supply and demand relationships, governmental, agricultural and trade programs and policies and national and international political and economic events. Financial instrument and foreign currency futures and forward prices are in?uenced by, among other things, interest rates, changes in balances of payments and trade, domestic and international rates of in?ation, international trade restrictions and currency revaluations. Because low margin deposits are normally required, an extremely high degree of leverage is obtainable in commodity futures trading. A relatively small price movement in a commodity futures contract, consequently, may result in large losses. Thus, like other highly leveraged investments, any purchase or sale of a commodity futures contract may result in losses that exceed the amount invested. The Fund may use derivatives or other securities, both listed and over?the?counter, instead of purchasing or selling securities outright. These securities allow the Fund to gain exposure to certain markets or securities which the Fund might otherwise not be able to execute. If the Fund believes that a situation . merits investment, but the costs and risks associated with such an investment are prohibitive or unacceptable, then the Fund may enter into an over-the?counter option contract, custom securities basket or swap transaction in order to gain exposure to the situation. Such instruments involve risks not associated with more traditional types of investments, including counterparty default risk. Nature of Investments. A portion of the portfolio of the Fund may consist of securities issued by privately?held companies. There is generally little or no publicly available information about 'such companies and the Fund must rely on the due diligence of the Investment Manager to obtain the information necessary for the decision to invest in them. Typically, such companies depend for their success on the management, talents and efforts of one person or a small group of persons, so that the death, disability or resignation of such person or persons could have a materially adverse impact on them. Moreover, small companies frequently have smaller product lines and smaller market 11 Case Document 8-6 Filed 04/01/10 Page 95 of 190' shares, than larger companies and therefore may be more vulnerable to economic downturns. Because these companies will generally-have highly leveraged capital structures at least initially, reduced cash ?ow resulting from an economic downturn may adversely affect the return on, or the recovery of, the Company's investment in them. Investment in such companies therefore involves a high degree of business and- ?nancial risk, which can result in substantial losses, and, accordingly, should be considered speculative. . Blignidi?. A portion of the Fund's investments may consist of securities acquired directly from their issuers in private transactions. These securities will be restricted securities under the Securities Act of 1933 and may not be resold unless there is an effective registration statement on ?le with the Securities and Exchange Commission with respect to such securities, or an exemption from registration exists Such securities will therefore he illiquid. In addition, there may be no established trading market for such securities into which they could be sold, even after an 7 exemption from registration becomes workable. . Lack of Liguidity in Markets.? Despite heavy volume of trading in securities, the markets for some securities have limited liquidity and depth. This lack of depth could disadvantage the Fund, both in the realization of the prices which are quoted and in the execution of orders at desired prices. Currency Risks. There is no percentage restriction on the Fund?s investments that are denominated in a non-US. eturency. The Fund?s investments that are denominated in a non-US. currency are subject to the risk that the value of a particular currency will change in relation to one or more other cunencies. An increase in the value of the us- dollar compared to the other currencies in which the Fund makes its investments will reduce the effect of increases and magnify the US. dollar equivalent of the effect of decreases in the prices of the Fund?s securities in their local markets. Conversely, a decrease in the value of the US. dollar will have the opposite effect of magnifying the effect of increases and reducing the effect of decreases in the prices of the Fund?s non-US. dollar denominated securities. Among the factors that may affect currency values are trade balances, the level of short-term interest, rates, differences in relative values of similar assets in different currencies, long?term opportunities for investment and capital appreciation and political developments. Interest Rate Risk. The price of most ?xed income securities moves in the Opposite direction of the change in interest rates. For example, as interest rates rise, the price of ?xed income securities falls. If the Fund holds a ?xed income security to maturity, the change in its price before maturity will have little impact on the Fund?s performance; however, if the Fund has to sell the ?xed income security before the maturity date, an increase in interest rates will result in a loss to the Fund. The risk will be greater for-long?terrn securities than for short-term securities. Reinvestment Risk. The Fund reinvests the cash ?ows received from a security. The additional income from such reinvestment, sometimes called interest-on-interest, is reliant on the prevailing interest rate levels at the time of reinvestment. There is a risk that the interest rate at which interim cash flows can be reinvested will fall. Reinvestment risk is greater for longer holding periods and for securities with large, early cash ?oWs such as high- coupon bonds. Tirnigg Risk. Many structured ?nance securities, agency, corporate and municipal bonds, and all mortgage-backed securities, contain a provision that allows the issuer to ?call? all or part of the issue before the bond?s mannity date. The issuer usually retains the right to re?nance the bond in the future if market interest rates decline below the coupon rate. There are three disadvantages to the call provision. First, the cash flow pattern of a callable bond is not known with certainty. Second, because the issuer will call the bonds when interest rates have dropped, the Fund is exposed to reinvestment rate risk the Fund will have to reinvest the proceeds received when the bond is called at lower interest rates. Finally, the capital appreciation potential of a bond will be reduced because the price of a callable bond may not rise much above the price at which the issuer may call the bond. Maturity Risk. In certain situations, the Fund may purchase a bond of a given maturity as an alternative to another bond of a different maturity. Ordinarily, under these circumstances, the Fund will make an adjustment to account for the differential interest rate risks in the two bonds. This adjustinent, however, makes an assumption about how the interest rates at different maturities will move. To the extent that the yield movements deviate from this assumption, there is a yield-curve or maturity risk. Another situation where yield?curve risk should be considered is in the analysis of bond swap transactions where the potential incremental returns are dependent entirely on the parallel shift assumption for the yield curve. 12 Case Document 8-6 Filed 04/01/10 Page 96 of 190 Changes in Igvestment Strategies. The Directors have broad discretion to expand, revise or contract the Fund?s business. Thus, the investment strategies of the Fund may be altered without prior approval by, or notice to, the investors if the Directors determine that such change is in the best interests of the Fund. Any such decision to engage in a new activity could result in the exposure of the Fund?s capital to additional risks which may be substantial. Mister-Feeder Fund Structure. The Fund generally invests all of its investable assets through a "master-feeder" fund structure, in which the Fund is a ?feeder entity? tothe Master Fund. The "master-feeder" fund structure in particular the existence of multiple investment vehicles investing in the same portfolio - presents certain unique risks to investors. Smaller investment vehicles investing in the Master Fund may be materially affected by the actions of larger investment vehicles investing in the Master Fund. For example, if a larger investment vehicle withdraws from the Master Fund, the remaining funds may experience higher pro rata Operating expenses, thereby producing lower returns. Similarly, the Master Fund may become less diverse due to a withdrawal by a larger investment vehicle, resulting in increased portfolio risk. Con?icts of Interest. There exist a number of potential con?icts of interest between the Investment Manager and the Fund. In addition to serving as investment manager to the Fund, the Investment Manager currently serves and may have additional investment management clients in the future (collectively, the "Other Clients"). The Other Clients may invest in the same or similar securities as the Fund. Purchase and sale orders may be combined for the Fund and the Other Clients with each entity paying its pro rata share of the total commission and paying or receiving its pro rata share of the total cost or sales proceeds. From the standpoint of the Fund, simultaneous identical portfolio transactions for the Fund and the Other Clients may tend to decrease the prices received, and increase the prices required to be paid, by the Fund for its portfolio sales and purchases. Where less than the maximum desired number of shares of a particular security to be purchased is available at a favorable price the Shares purchased will be allocated among the Fund and the Other Clients. In addition, purchase and sale transactions (including swaps) may be effected between the Fund and the OtherClients. The Investment Manager may have con?icts of interest in allocating its time and activity between the Fund and the Other Clients, in allocating investment analysis and recommendations between the Fund and the Other Clients and in effecting transactions between the Fund and the Other Clients, including ones in which the Investment Manager may have a greater ?nancial interest. In addition, the Investment Manager and its of?cers and employees may-engage in other commercial activities and have investments of their own. Further, the Investment Manager and its of?cers and employees may engage in a wide variety of investment banking activities. Thelnvestment Manager may, in some instances, perform investment banking services for companies in which the Fund owns securities. The Investment Manager may choose not to make an otherwise appropriate investment fer the Fund if the Investment Manager or its clients have a business relationship with either the potential investee company or with a third party that has indicated its interest in acquiring the potential investee company. Any fees earned by the Investment Manager with respect to its investment banking activities will be paid solely to the Investment Manager and not the Fund. 'In addition, the Investment Manager may become aware of investment opportunities and, to the extent the Investment Manager in its sole discretion determines such investment would not be suitable for the Fund, may refer such investment opportunities to others. Any fees or commissions with respect to the referral of such investments will be paid solely to the Investment Manager (see discussion concerning additional potential con?icts of interest under Fees, Compensation and Expenses). Commissions earned by a broker executing portfolio transactions for the Fund may vary, in whole or in part due to whether the broker provides additional research or execution?related services to the Fund. Commissions paid by the Fund to brokers providing research or other services, including third. party research services paid for out of ?soft dollars? as permitted under the safe harbor under Section 28(e) of the Securities Exchange Act, may be higher than the commissions paid to other brokers. In addition, any research services received from brokers may be used by the Investment Manager in servicing any other entities to which the Investment Manager provides investment advice and not all such information may be used by the Investment Manager in connection with the Fund. Thus, the involvement of the Investment Manager with the Fund?s portfolio transactions and the portfolio transactions of Other Clients, may lead to con?icts of interest and increase commission costs borne by the Fund. The Investment Manager's obligations to the Fund are not exclusive and the Investment Manager and its of?cers and employees are not required to devote any speci?c amount of time to the Fund. The Investment l3 Case Document 8-6 Filed 04/01/10 Page 97 of 190 Manager has investments of its own and is acting as investment manager for others. The Management Agreement recognizes that the Investment Manager may become associated with other investment entities and engage in investment management for others. The Investment Manager or its af?liates are not limited or restricted from engaging in or devoting time and attention to the management of any other business, whether of a similar or dissimilar nature, or to render services of any kind to any other corporation, ?rm, individual or association. As a result, the Investment Manager and its af?liates and other clients may hold substantial positions in securities that are owned by the Fund If the Investment Manager and its af?liates and other clients hold a substantial position in an issuer, liquidity and concentration considerations may limit the ability of the Investment Manager to recommend adding to the position on behalf of the Fund or other clients or to readily dispose of the position. The Investment Manager may on occasion give advice or take action with respect to those accounts that differs from the advice given with respect to the Fund. The Investment Manager or the Fund may enter into .side agreements with Speci?c investors in the Fund providing for different fees, withdrawal rights, access to information about the Fund?s investments, or other matters relating to an investment in the Fund. THE DESCRIPTION CONTAINED HEREIN OF SPECIFIC ACTIVITIES THAT MAY BE ENGAGED IN BY THE FUND SHOULD NOT BE CONSTRUED AS IN ANY WAY LIMITING THE INVESTMENT ACTIVITIES. THE FUND MAY ENGAGE IN INVESTMENT ACTIVITIES NOT DESCRIBED HEREIN WHICH THE INVESTMENT MANAGER CONSIDERS APPROPRIATE ADMINISTRATION The Administrator. Equinoxe Alternative Investment Services (Ireland) Limited, a company incorporated under the laws of Ireland and regulated. by the Irish Financial Services Regulatory Authority, is part of the Equinoxe Alternative Investment Services group of companies based'in Bermuda. . The Administrator is a boutique service provider for alternative investment services and supports a management team comprised of experienced hedge fund administration professionals complemented by key personnel from the buy side of hedge fund and fund of hedge fund operations. Under the Administration Agreement the Administrator has agreed to act as administrator of the Fund in which capacity its services include, subject to the overall supervision of the Directors, to provide company registrar and administrative services, including dealing with the issue, redemption and transfer of Shares, the calculation of the Net Asset Value of the Fund and each Class and per Share, and performing all ?nancial and accounting duties and functions necessary or appropriate in connection with the activities of the Fund. The Administration Agreement provides that the Administrator shall not, in the absence of gross negligence, wilful default or fraud on its part or on the part of its servants, agents, employees, of?cers or delegates (each an ?Associated Person?) be liable for any loss, damage or expense incurred by the Fund arising out of or in connection with the performance (or failure to perform) by the Administrator or its Associated Persons of its duties under or pursuant to the Administration Agreement. In the event that the Administrator incurs any liability under this Agreement, its liability shall be limited to direct losses incurred by the Fund and the Administrator shall not be liable for any special, indirect or consequential losses, regardless of the form of action or whether it was noti?ed of such potential losses, or for any loss of pro?t, goodwill, revenue or anticipated savings. In any case, the Administrator's liability will always be limited to a maximum of two year's worth of fees. In the absence of gross negligence, wilful default or fraud on the part of the Administrator or or its Associated Persons in the performance of its obligations under the Administration Agreement the Fund shall indemnify and keep indemni?ed and hold harmless the Administrator and its ASsociated Persons from and against any and all actions, proceedings, claims, demands, liabilities, losses, damages, costs and expenses (including reasonable legal and professional fees and expenses reasonably incurred arising there?om or incidental thereto) (?Tndemni?ed Claims or Losses?) which may be made or brought against or suffered or incurred by the Administrator or its Associated Persons arising out of or in connecrion with the performance of the Administrator?s duties under the Administration Agreement. The Administration Agreement is terminable by either party giving to the other not less than 90 days? notice in writing expiring at any time. or immediately by notice by one party if the other commits a material breach of the 14 Case Document 8-6 Filed 04/01/10 Page 98 of 190 terms of the Agreement (including the representations and warranties) and where such breach is capable of remedy has not remedied such breach within 30 days after service of notice requiring it to be-rernedied, (ii) goes into liquidation (except a voluntary liquidation for the purposes of reconstruction or amalgamation or merger on terms previously approved in Writing by the other party) or administration (or its equivalent in any jurisdiction} or has a receiver or its equivalent in any jurisdiction appointed over all or any of its assets, or is in violation or default of or in non-compliance with any securities or taxation laws or regulations applicable to the Fund. The Administration Agreement is governed by Irish law. THE SHARE CAPITAL Capitalization of the Fund. The Fund has an authorized capital consisting of 10,000,000 shares of common steel: (the ?Shares"). Share Participation in Earnings and Assets. Each Share is entitled to participate ratably, on a share for share basis, with each other, outstanding Share, in the earnings and assets of the Fund. SUBSCRIPTION PROCEDURE The minimum subscription for Shares is subject to the Fund's discretion to accept lesser amounts. The Fund will offer its Shares on a continuous basis at a price per Share equal to the Net Asset Value (the per Share as of the last Business Day of the date of issuance, plus any applicable subscription charges. A deposit to a Contingent Fee Reserve may be required in certain circumstances, and further adjustments to the number of Shares may be required in accordance with an Equalization Credit (See ?Equalization Adjustments" below for a more detailed description of Equalization Accounting). All persons desiring to subscribe for and purchase Shares should complete, execute and deliver a Subscription Agreement to the Fund?s Administrator. The subscription agreement may be sent by fax if original is received by the Administrator within 10 business days. The wire payment instructions have to include the name of the subscriber which has to match the name on the subscription agreement. All persons subscribing for Shares in the Fund must be quali?ed clients, as set forth in Rule 205?3 under the Investment Advisers Act of 1940. Subscription Instructions and Agreements are attached to this Memorandum as Appendices A and B. Subscribers must complete all relevant sections of this Subscription Agreement. Failure to do so may result in delay of acceptance of a Subscriber?s subscription until a properly completed Subscription Agreement has been received, processed and approved. . Quali?ed Clients. In order to be classi?ed as a ?quali?ed client?, an investor will be required to certify that it comes within any one of the categories of quali?ed clients set forth in Rule 205-3 promulgated under the Investment Advisers Act of 1940, including without limitation, any one of the following: a natural person who or a company that has currently or will have immediately after making an investment in the Fund at least $750,000 invested with the Fund; (ii) a natural person who or a company that has a net worth (together, in the case of a natural person, with assets held jointly with a spouse) of more than $1,500,000 at the time the investor makes its investment into the Pond; or a natural person who or a company that is a quali?ed purchaser as de?ned in section of the InVestrnent Company Act of 1940 (15 U.S.C. at the time the investor makes its investment into the Fund (see below). Quali?ed Purchasers. In order to be classi?ed as a ?quali?ed purchaser", an investor will be required to certify that it comes within any one of the categories of quali?ed pmchaser's set forth in Section 3051-151) of the hives@ent Company Act of 1940, including without limitation, any one of the following: any natural person (mcludmg any person who holds a joint, community property, or other similar shared ownership interest in an issuer that is excepted under Section of the Investment Company Act of 1940 with that person's quali?ed purchaser Spouse) who owns not less 15 Case Document 8-6 Filed 04/01/10 Page 99 of 190 than $5,000,000 in investments, as de?ned by the Commission; (ii) any company that owns not less than $5,000,000 in investments and that is owned directly or indirectly by or for 2 or more natural persons who are related as siblings or spouse (including former spouses), or direct lineal descendants by birth or adoption, spouses of such persons, the estates of such persons, or foundations, charitable organizations, or trusts established by or for the bene?t of such persons, any trust that is not covered by clause (ii) and that was not formed for the speci?c purpose of acquiring the securities offered, as to which the trustee or other person authorized to make decisions with respect to the trust, and each settler or other person who has contributed assets to the trust, is a person described in clause or above, or clause (iv) below; or (iv) any person, acting for its own account or the accounts of other quali?ed purchasers, who in the aggregate owns and invests on a discretionary basis, not less than $25,000,000 in investments. Generally, a subscription will be accepted, and Shares will be issued on the ?rst day of the month following the month in which the subscriber?s subscription and payment for Shares is received, subscriptions received between March 1 and March 31, will generally be accepted as of April 1 The Fund may, in its discretion, accept subscriptions on a day other than the ?rst day of the month. Payment for Shares should be made by wire transfer of . immediately available funds to the Fund's account as follows: TO: I. Morgan Chase A. New York, NY ABA Fedwire: 021000021 SWIFT: CHASUS 33 For account of: JPMorgan Chase Bank, NA. SWIFT: Account 0010962009 For further credit to: Epsilon Global Active Value Fund II Ltd. Account #1 3465 1101 All subscriptions for Shares are irrevocable by the Subscriber. The Fund may reject a subscription for any reason. Potential investors, by accepting delivery of this Memorandum, agree to return this Memorandum, including the Appendices hereto, if such potential investor does not subscribe for Shares, (ii) such potential investor's subscription'is not accepted, or the offering is terminated before the sale to such potential inVestor is consummated. ?nalization Adjustments. When interim subscriptions are made, certain adjustments may be required to be made to the price paid for Shares or to the number of Shares purchased. These adjustments are. necessary to ensure: the Contingent Fee which may be paid to the General Partner of the Master Fund rs charged only to those Shares which have appreciated in value since their acquisition, all Shareholders have the same amount per Share at risk and all Shares have the same NAV. With respect to a De?cit Interim Subscription, the subscription price per Share rs the NAV per Share on the acquisition date plus 20% of the excess, if any, by which the Peak GAV per Share, for a preceding calendar year?end exceeds the GAV per Share on the date of subscription. Such amount (the ?Contingent Fee Reserve?) shall be added to the purchase price per Share and shall be invested and distributed as set forth herein. The Contingent Fee Reserve shall become payable to the General Partner of the Master Fund if the de?cit between the GAV per Share on the subscription date and the Peak GAV is recouped by favorable performance of the Fund. The Contingent Fee Reserve may; in certain circumstances, be returned to a Shareholder upon redemption of Shares if, and to the extent, such Contingent Fee Reserve applicable to the Shares being redeemed has not been earned by the General Partner. after the end of each ?scal year in which a Contingent Fee Reserve is held, the interest or dividends earned thereon shall either be paid to the Shareholder who provided such Contingent Fee Reserve or reinvested into the Fund in the form of additioml Shares, at the Fund?s discretion. 16 Case Document 8-6 Filed 04/01/10 Page 100 of 190 With respect to a Premium Interim Subscription, where the NAV per Share on the date of subscription is greater than the Peak GAV per Share, for a preceding calendar year?end, 20% of the excess shall constitute an ?Bqualization Credit.? This Equalization Credit accounts for the fact that the NAV per Share at the time of subscription includes a potential Contingent Fee to be home by existing Shareholders which experienced such appreciation. The Equalization Credit serves as a credit against Contingent Fees that might otherwise be payable to the General Partner by Shareholders of the Fund, but which should not, in equity, be charged against such subscriber?s Shares because, as to its Shares, no favorable performance has yet occurred. Upon redemption by a Shareholder of its Shares, the Equalization Credit, or a portion thereof, will be paid to such Shareholder, without interest, or if a Contingent Fee becomes payable prior to such redemption, then the Equalization Credit payable shall be applied to the purchase of additional Shares, subject to appropriate adjustments for favorable performance. Examples of a De?cit Interim Subscription and a Premium Interim Subscription are set forth on the next page. 17 Case Document 8-6 Filed 04/01/10 Page 101 of 190 TABLE 1 -- De?cit Interim Subscription [Based on a 20% Contingent Fee Allocation}: Peak GAV 1,000 Gross Subscription 920 NAV at Date of Purchase 900 Contingent Fee Reserve (1,000 900) 20% 20 - Contingent Contingent Gross GAV Fee Due to Fee Reserve Due NAV Contingent at Valuation General to General (Net of Fee Reserve Date Partner Partner All Fees) onAnmel: 1,050 10.0 . 20.0 1,040 0.0 1,000 0.0 20.0 1,000 0.0 950 0.0 10.0 950 10.0 900 0.0 0.0 900 20.0J 350 0.0 0.0 350 20.0 NOTE: Gross GAV is equal to the Total Net Assets after accrual for Fixed Fees and before accrual for Contingent Fees. The total value of a Shareholder?s position is equal to the sum of the NAV (Net of All Fees) and the Contingent Fee Reserve on Account. In the above example, the Contingent Fee Reserve on-Account does not include any accrued interest. TABLE 2 -- Premium Interim Subscription [Based on a 20% Contingent Fee Allocation]: Peak GAV 1,000 Gross Subscription 1,400 NAV at Date of Purchase 1,320 Equalization Credit (1,400 1,000) 20% 80 Equalization Credit Against Future Contingent Fees Contingent Gross GAV Fee Due to Equalization AV At at Valuation General Credit Due to (Net of Contingent At Date -, . .. . 1,500 20.0 80.0 1,400 0.0 0.0 1,400 0.0 . 30.0 1,320 - 0.0 0.0] 1,200 0.0 40.0 1,160 40.0 0.0 1,000 0.0 0.0 1,000 80.0 0.0 900 0.0 0.0 900 30.0 0.0 NOTE: Gross GAV is equal to the Total Net Assets after accrual for Fixed Fees and before accrual for Contingent F665. The Equalization CIEdit Ismailliug against future Contingent Fees does not accrue interest; rather, thesa funds are at risk with other monies in the Fund and will appreciate or depreciate accordingly. 18 Case Document 8-6 Filed 04/01/10 Page 102 of 190 PROCEDURE Shareholders may, upon forty-?ve (45) days' prior written notice to the Fund, except as provided below, request that the Fund redeem all or part of such Shareholder?s Shares as of the close of business on the last day of the calendar quarter (the ?Redemption Date?). Shares acquired through reinvestment of dividends may be redeemed as of the last day of a calendar quarter, subject to the Fund?s dividend policy. See ?Dividend Policy.? The amount payable in redemption of the Shares is equal to the "Net Asset Value" of such Shares as of the Redemption Date (the "Redemption Price"). A Shareholder wishing to redeem Shares is required to deliver to the Fund and the Administrator, at least 45 days prior to the Redemption Date, a written redemption request indicating the number of Shares to be redeemed. The redemption request must be accompanied by a certi?cation (in a form furnished by or satisfactory to the Fund and the Administrator) identifying all Shares which are directly or indirectly owned by such shareholder. Redemption requests may be submitted by fax to the Administrator at (353) 1?816? 8722 and the Fund at 41?21-962?8801, provided that: the original signed redemption request is received by the Administrator prior to the Redemption Date; and (2) the investor receives written con?rmation from the Administrator that the faxed redemption request has been received. The Administrator will con?rm in writing within 5 Business Days of receipt all faxed redemption requests which are received in good order. Investors failing to receive such written con?rmation from the Administrator within 5 Business Days should contact the Administrator at (353) 1-854-8100 to obtain the same. Failure to obtain such written con?rmation will render faxed instructions void. The Fund and Administrator will not pay out redemption proceeds without receipt of the original redemption request. With respect to any partial redemption of Shares, a Shareholder may not make a partial redemption of less than and, in the case of a partial redemption, may not reduce such Shareholder's unredeemed Shares to an amount less than the minimum investment then required of new Shareholders. Also, in order to be considered a partial redemption, the redemption cannot exceed 90% of a Shareholder? 5 total capital account. Redemption requests, once received by the Fund and the Administrator, are revocable only with the consent of the Investment Manager, which may withhold its consent for any reason in its sole discretion. Payment in US. dollars of the Redemption Price will be made as soon as practicable, and under normal conditions the shareholder will receive at least 90% of the Redemption Price no later than thirty (30) days following the date of redemption, with the balance, if any, paid within ?fteen (15) days after the receipt by the Fund of its audited annual ?nancial statements for the ?scal year. However, under conditions of market turmoil in which, in the judgment of the Investment Manager, the Fund is unable to liquidate portfolio positions in an orderly manner to meet redemptions, the Fund may in its sole discretion delay, in whole or in part, payment of the Redemption Price for longer than thirty (30) days andJor pay the Redemption Price in two or more stages. With respect to assets representing any part of the Redemption Price not paid within thirty (30) days of the redemption date, the Fund (will not charge management fees and will pay interest at the rate paid by the Fund?s prime broker on the Fund?s cash balances. The Fund may agree to arrangements with particular Shareholders regarding the payment of redemption proceeds, which arrangements may include the?partial payment of such redemption proceeds, if the Fund? 5 Directors determine that such arrangements are in the best interests of all Shareholders. The Fund has the right to make payment on redemptions in securities owned by the Fund. The Fund may, in its discretion, deduct from any redemption proceeds an amount determined by. the Fund to represent the transaction costs and related expenses incurred by the Fund in connection with the processing of redemptions. The Fund also has the right to force the complete redemption of any Shareholder at any time at the sole discretion of the Directors. The Fund has the power to suspend the redemption of Shares in the following circumstances: During any period with the New York Stock Exchange, or any other securities exchange or board of trade or other contract market on which a signi?cant portion of the Fund's assets is ordinarily traded, is closed (other than for holidays) or trading thereon has been restricted or suspended; When, for any reason, the value of the Fund's assets cannot be accurately ascertained; 19 Case Document 8-6 Filed 04/01/10 Page 103 of 190 During any state of affairs which, in the judgment of the Directors, would render disposition of the Fund?s assets impracticable or be seriously prejudicial to the Fund's Shareholders; or - When, in the opinion of counsel to the Fund, such redemption could result in adverse tax consequences to the Fund or its Shareholders. The Fund will notify Shareholders of the suspension of redemptions for any reason. Resales and Additional Issuance of Shares. The Fund has the authority to issue additional Shares following the initial offering, either through the resale of Shares tendered for redemption or through the issuance of authorized but previously unissued Shares. The subscription price payable for any Shares which may be issued in the future will be the net asset value of such Shares determined at the time of issuance. Restrictions on Ownership and Transfer: Compulsory Redemptions. The Fund's Articles of Association provide that Shares may be owned only by a limited number of pension and pro?t sharing trusts, charities and other entities which are generally tax?exempt under US. Federal income tax laws tax-exempt entities"); and (ii) otherwise, only by persons who are not "United States persons". For this purpose, the term "United States person" is de?ned in the Fund's Articles of Association to include: a United States citizen or a "resident" of the United States (as de?ned for United States federal income tax purposes); a corporation, partnership, trust or other entity organized or created under the laws of the United States; or any organization or entity controlled by a person or persons described in or or in which such persons are known to be the owners of a majority of the bene?cial interests therein, as shareholders, partners, bene?ciaries or otherwise, whether directly or indirectly either through other organizations or entities, or through any other arrangement Each subscriber for Shares which is not a US. tax-exempt entity will be required to certify to the Fund that the Shares are not being acquired and will not at any time be held for the account or bene?t, directly or indirectly, of any United States persons. Shareholders are required to notify the Fund immediately of any change in such information. It is the responsibility of each investor to verify that he is not a United States person. For this purpose, investors should be aware that United States federal income tax laws contain speci?c de?nitions of the terms "resident alien" and nonresident alien", which must be taken into account in making this determination. . Each subscriber will be required to agree that no Shares, nor any interest therein, will be transferred without the prior consent of the Fund, which consent may be withheld in the discretion of the Fund or the Administrator and that, prior to considering any request to permit a transfer of Shares, the Fund or the Administrator may require the submission by the proposed transferee of a certi?cation as to the matters referred to in the preceding paragraph, as well as such other documents, including a completed Subscription Agreement, as the Fund or the Administrator considers necessary. The Fund's Memorandum and Articles of Association provide, and each subscriber for Shares is required to agree, that: any attempted transfer in violation of the foregoing restrictions shall be invalid, and (ii) if the Fund has reason to believe that a Shareholder has violated the applicable restrictions on transfer or that any material matters set forth in the certi?cations referred to in the preceding paragraph were false, the Fund may redeem all Shares held by such shareholder compulsorily. . Voting and Other Rights. Each Share is entitled to one vote on any matter presented to a meeting of Shareholders. Shareholders will receive at least 30 days? notice of any Shareholders' meeting.(or 10 days' notice if the Board of Directors determines that prompt shareholder action is advisable) and will be entitled to vote their Shares either personally or by proxy. If the proxy sent to a Shareholder with the notice of meeting is not completed and received at the Company?s registered of?ce prior to the meeting, Shares held by such Shareholder will be voted in the discretion of the attorney~in~fact designated in the Subscription Agreement executed by such Shareholder at the time the Shares were issued. At any meeting of Shareholders, a majority of the Shares represented in person (including representation by the attomey?in?fact) or by proxy at the meeting will be suf?cient for the transaction of business. The Administrator will maintain a current stock register for all Shares. All Shares will be issued in registered form. The Fund will not issue certi?cates in bearer form. All Shares, when issued and paid for, will be fully paid and non?assessable and Shareholders will have no personal liability for the debts of the Fund. The Shares have no preemptive rights. 20 Case Document 8-6 Filed 04/01/10 Page 104 of 190 In the event of the dissolution of the Fund, the Fund is authorized to distribute amounts due to Shareholders, in accordance with their respective interests, either in cash or in the form of portfolio securities or other assets. DETERMINATION OF NET ASSETVALUE The Fund will value or arrange for the valuation of the securities and other assets of the Fund as of the close of business on the last day of each month. The "Net Asset Value" of the Shares, for purposes of computing the redemption price applicable to such Shares and the minimum issue price applicable to such Shares after their initial offering, will be determined as follows: 1. Total Net Assets. Thevalue of the "Total Net Assets" of the Fund as of a particular date will be computed by subtracting from the total value of all securities and other assets of? the Fund an amount equal to all accrued debts, liabilities and obligations of the Fund (including any contingencies for which it is determined that any accrual should be made) except accruals or reserves for the payment of Fixed Fees and Contingent Fees. 2. Gross Asset Value. The ?Gross Asset Value? of the Fund is equal to the Total Net Assets of the Fund less accruals or reserves for Fixed Fees. . 3. Net Asset Value. The Net Asset Value of the Fund is equal to the Fund?s GAV less accruals or reserves for Contingent Fees. The total Net Asset Value is allocated pro rata, on a share for share basis, to each outstanding Share, Thus, the Net Asset Value of each Share is equal to the amount of such total Net Asset Value divided by the number of Shares outstanding on the date as of which the valuation is being made. Net Asset Value determinations for the Fund will be made in accordance with International Financial Reporting Standards in which the following principles are observed. I A Securities listed on a national securities exchange or national market shall be valued at their last sale price on its principal exchange or market on the date of determination, or if no sales occurred on such day, at the mean between the ?bid" and ?ask prices on such day. - (ii) Securities not listed on a national securities exchange or national market shall be valued at their last closing ?bid" prices if held ?long? and their last closing ?asked? prices if sold ?short? as supplied by the National Association of Securities Dealers or other sources, if necessary. Commodities, commodity futures and forward contracts will be valued based upon the closing quotations reported for the same on the principal board of trade or other contract market in which dealings are made or by quotations from the counterparty bank in the ease of a forward contract If a futures contract position cannot be liquidated, due to the operation of daily limits or otherwise, on a day as of which Net Asset Value (de?ned herein) is determined, a value determined to be fair and reasonable by the Fund shall be used. Swap positions will be valued at the average secondary trading market price, as obtained from dealers in such market. (iv) Listed securities options and commodity Options traded on a national securities exchange or national market will be valued at their last sales prices on the date of determination on the principal national securities exchange or national market on which such options traded on such date (or, in the event that the date of determination is not a date upon which a national securities exchange or national market on which such options are traded was Open for trading, on the last prior date on which such national securities exchange or national market was so open), or if no sales occurred on either of the foregoing dates, at the mean between the ?bid" and ?ask prices on the principal national securities exchange or national market on which such options are traded, on the date of determination (or, in the event that the date of determination is not a date upon which Such national securities exchanges or national contract market was open for trading, on the last prior date on which such securities exchange or current market was so open). If a commodity option cannot be traded on the date of determination due to the operation of daily limits or otherwise, a value determined to be fair and reasonable by the Fund shall be used. Premiums received for the writing of listed securities options and commodity options written by the Fund and traded on a contract market will be included in the assets of the Fund, and the market value of such options will be included as a liability of the Fund. 21 Case Document 8-6 Filed 04/01/10 Page 105 of 190 Over-the-counter options will be valued at fair value, as determined by the Fund based upon representative brokers? bids or valuations. If such bids or valuations are not available, or, in the opinion of the Fund, do not represent fair value, over-the?counter options will be valued as the Fund shall deem fair and reasonable. (vi) Securities without an active trading market, as hereinafter de?ned, shall be assigned fair value by the Fund based upon: a comparison with market values for similar companies, recent sale price(s), the investment risk andfor potential, opinions of quali?ed investment bankers, marketability (if any) or such other factors as the Fund deems appropriate. For purposes of valuation, an ?active trading market? is deemed to be one in which quotations are available on NASDAQ or if not available on NASDAQ, ?'om one or more dealers in the pink or yellow sheets on a reasonably consistent basis. (vii).A11 other assets shall be valued in accordance with International Financial Reporting Standards. FEES, COMPENSATION AND EXPENSES Expenses. The Fund will bear all of the continuing offering costs (including legal expenses incident thereto) and all other expenses incurred in the operation of the Fund, including the ordinary and necessary expenses directly or indirectly related to its investment activities or which the Investment Manager determines to be related to the investment of the Fund?s assets. These expenses shall include normal trading expenses and all research expenses, including but not limited to brokerage commissions, exchange fees, clearing and settlement charges, custodial fees, bank service fees, interest and commitment fees on loans and debit balances, all administration fees and costs and all legal and accounting fees and costs, including any internal or external legal, accounting, professional and auditing fees and costs that relate to day to day operations, or any extraordinary circumstances, such as regulatory examinations ?or litigation involving the Fund, printing and mailing expenses, hardware and software costs related to research or fund accounting, fees and out-of-pocket expenses of any service company retained to provide any accounting, bookkeeping and administrative services, extraordinary expenses, and any other direct or indirect cost of operations not otherwise properly allocated as the responsibility of the Investment Manager. The Investment Manager is solely re5ponsible for the payment of its operational costs, including employee salaries, bonuses, rent, utilities, facilities overhead, travel and insurance, as described under ?Investment Management Agreement? above. Expenses paid by the Fund may be paid with ?soft dollars? or ?hard dollars.? In either case, because such expenses are paid by the Fund, they are indirectly borne by the Shareholders of the Fund. Expenses paid by the Fund may be paid for with ?soft dollars? if the services provided to the Fund are allowed under the safe harbor under Section 28(e) of the Securities Exchange Act. Also see ?Prime Broker and Brokerage Commissions" above relating to the use of ?soft dollars.? - As noted above, the Fund invests its assets through a ?master?feeder? fund structure in the Master Fund. Each investment vehicle, including the Fund, that invests in the Master Fund will indirectly bear the administrative and other expenses of the Master Fund pro rata based upon its interest in'the Master Fund. It is anticipated that virtually all expenses will be incurred at the Master Fund level and therefore that expenses incurred directly by the Fund will be relatively small. If expenses are incurred by the Fund requiring payment by the Fund, the Fund may make a withdrawal of a portion of its interest in the Master Fund (within the limitation imposed by the Master Fund) in order to pay those expenses. The Investment Manager will receive a fair market value fee for its services as will be agreed to between the General Partner of the Master Fund and the Investment Manager from time to time. 22- Case Document 8-6- Filed 04/01/10 Page 106 of 190 Fixed Fee. The Fund invests its assets into a master fund, Epsilon Global Master Fund II, L.P. In consideration for its services to the Fund, the General Partner of the Master Fund will receive a quarterly ?xed fee equal to one half of one percent of the Total Net Assets (as de?ned) of the Fund as of the last day of each calendar quarter (equivalent to 2% per annum) (the ?Fixed Fee?). The Fixed Fee will be paid to the General Partner within three business days (excluding Saturday, Sunday, and US. public holidays) after the close of each calendar quarter. Certain shareholders may be assessed a Fixed Fee in a different amount. To the extent that any Fixed Fees are paid to the General Partner by the Master Fund with respect to investments made by the Fund, no Fixed Fees will be charged at the Fund level. Contingent Fee. In addition to the Fixed Fee, the General Partner will receive contingent fees, for each calendar year or otherwise determined upon the redemption of any Common Stock, with respect to such redeemed Common Stock, respectively, (each a ?Performance Period?) of the Fund (the ?Contingent Fee?), in an amount equal to 20% of the increase of the Fund?s per Share Gross Asset Value, if any, after adjustment for additional contributions andlor redemptions. To the extent that any Contingent Fees are paid to the General Partner by the Master Fund for investments made by the Fund, no Contingent Fees will be charged at the Fund level. If the Fund incurs a net loss during the Performance Period, the General Partner will not receive any Contingent Fees unless and until the amount of such net loss applicable to each and every Share of the Fund?s stock which experienced such net loss (and which remains outstanding at the time the subsequent pro?t occurs) has been recouped in full. - DIVIDEND POLICY The declaration of dividends on the Shares will be in the discretion of the Board of Directors, and dividends may be declared only out of retained earnings. The Fund does not- presently intend to pay dividends on its Shares. . TAXATION THE FOLLOWING IS A SUMNIARY OF CERTAIN US. AND B.V.I. TAX CONSIDERATIONS AFFECTING THE FUND AND ITS SHAREHOLDERS. WHILE THE FOLLOWING SUMNIARY IS BELIEVED TO BE ACCURATE AS OF THE. DATE HEREOF, A OWN CIRCUMSTANCES MAY RENDER THE FOLLOWING- SUMMARY INACCURATE OR INCOMPLETE. THUS, THE FOLLOWING SHOULD NOT BE CONSTRUED AS BINDING OR AUTHORITATIVE ADVICE TO ANY ACTUAL OR PROSPECTIVE SHAREHOLDER. ANY ACTUAL OR PROSPECTIVE SHAREHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX ADVISOR REGARDING THE TAX CONSIDERATIONS RELEVANT TO AN INVESTMENT IN THE FUND. . United States Federal Income Taxation of the Fund. 1. Neither the Master Fund nor the Fund will be subject to any income, withholding or capital gains taxes in the Cayman Islands or the British Virgin Islands. 2. Under present law, the Fund will not be subject to any United States federal income tax on its capital gains whether from sources within or without the United States to the extent that such gains are not derived ?om securities classi?ed as United States real property interests within the meaning of Section 897 of the Internal Revenue Code of 1936, as amended (the "Code"). In this connection, the Fund does not presently intend to acquire any securities which would be classi?ed as United States real property interests. 3. The only United States income taxes which will be payable by the Fund on its income'from dividends and interest is the 30% withholding tax applicable to dividends and certain interest inocume considered to be from sources within the United States. Certain debt obligations which may be acquired by the Fund will not be subject to the 30% withholding tax. The Fund generally intends to invest its cash reserves in short-term debt obligations the interest on which is not subject to 30% withholding. 4. Shareholders who are not residents of the British Virgin Islands will not be subject to any income, withholding or capital gains taxes in the British Virgin Islands with respect to the Shares of the Fund owned by them and dividends received on such Shares, nor will they be subject to any estate or inheritance taxes in the British Virgin Islands. 23 Case Document 8-6 Filed 04/01/10 Page 107 of 190 5. Shareholders who are not residents of the Cayman Islands will not be subject to any income, withholding or capital gains taxes in the Cayman Islands with respect to the Shares of the Fund owned by them and dividends received on such Shares, nor will they be subject to any estate or inheritance taxes in the Cayman Islands. 6- Shareholders that are neither citizens nor residents of the United States and are not engaged in a trade or business in the United States will not be subject to any United States federal income, withholding, capital gains, estate or inheritance taxes with respect to shares of the Common Stock owned by them and dividends received on such shares. U.S. Shareholders. As noted above, Shares in the Fund may be sold to a limited number of US. investors who are pension and pro?t sharing trusts or other organizations which are generally exempt under US. federal income tax laws tax-exempt entities"). The US. tax?exempt entities in the Fund may not exceed 100 in number. Because the Fund is a "passive foreign investment company" as de?ned in Section 1297 of the US. Internal Revenue Code of 1986, as amended, (the "Code"), any U. S. tax-exempt entities will be subject to certain ?ling requirements in the United States. A S. tax?exempt entity which does not borrow money er otherwise use leverage in acquiring Shares in the Fund should not be subject to U. S. federal income tax under the PFIC provisions of the Code on any dividends from the Fund or on any sale or redemption of' its Shares the Fund. While the Fund may purchase securities on margin, borrow money and otherwise use leverage in connection with its investments, under present US. tax law that leverage shouldnot be attributed to US. tax-exempt entities who are shareholders in the Fund. Thus, assuming that a US. tax-exempt entity does not borrow money or otherwise use leverage in acquiring Shares in the Fund, any dividends from the Fund or gain on the sale or redemption of Shares in the Fund should not constitute unrelated debt??nanced income" as de?ned in Section 514 of the Code, or ?unrelated business taxable income" as de?ned 111 Section 512 of the Code, to such U. S. tax-exempt entity However, under certain proposed US. tax legislation, 3 portion of the dividends received by a US. tax- exempt entity, as well as a portion of any gain derived by such an entity from a sale or redemption of Shares, would be treated as "unrelated debt-?nanced income" if that entity were to hold 10 percent or more of the outstanding Shares of the Fund (directly or by attribution from related parties). It cannot be predicted whether this proposed legislation will become law and, if so, what form the law would ultimately take. The Fund will monitor its shareholders in an attempt to ensure that the Fund is not more than 50% owned by such U.S. tax-exempt entities, so that the Fund will not be a "controlled-foreign corporation" as de?ned in Section 957 of the Code. . ERISA Matters. The Fund will not accept any contributions ?om shareholders that are pension plans or similar pension or retirement trusts (all such entities being herein called "Retirement Trusts? if, after such contribution, the Shares in the Fund held by such Retirement Trusts would represent 25% or more of the total outstanding Shares in the Fund. If the Shares held by such Retirement Trusts were to exceed this 25% limit, then the Fund's assets would be considered "plan assets" under the US. Employee Retirement Income Security Act of 1974, as amended which could result in adverse consequences to the Investment Manager and the ?duciaries of the Retirement Trusts. eases: THE FOREGOING TAX SUMIVIARY DOES NOT ADDRESS TAX CONSIDERATIONS WHICH MAY BE APPLICABLE TO CERTAIN SHAREHOLDERS UNDER THE LAWS OF JURISDICTIONS OTHER THAN THE UNITED STATES OR THE BRITISH VIRGIN ISLANDS. ACCORDINGLY, ALL PERSONS INTERESTED IN PURCHASING THE SHARES SHOULD INFORNI THENISELVES AS TO ANY INCOME OR OTHER TAX CONSEQUENCES PARTICULAR TO THEIR CIRCUMSTANCES ARISING IN THE JURISDICTION IN WHICH THEY ARE RESIDENT OR DONIICILED FOR TAX PURPOSES IN CONNECTION WITH THE ACQUISITION, HOLDING OR DISPOSITION OF THE SHARES. 24 Case Document 8-6 Filed 04/01/10 Page 108 of 190 APPENDIX A SUBSCRIPTION DOCUNIENTS For NON-US. INVESTORS 25 Case Document 8-6 Filed 04/01/10 Page 109 of 190 EPSILON GLOBAL ACTIVE VALUE FUND 11 LTD. SUBSCRIPTION AGREEMENT AND STANDING PROXY Instructions for Investors Subscribers must complete all relevant sections of this Subscription Agreement. Failure to do so may result in delay of acceptance of a Subscriber?s subscription until a properly completed Subscription Agreement has been received, processed and approved. A. Complete page by ?lling in the amount of the subscription; . B. Complete page A6 through Au7, including an indication whether the Shares are to be issued in book entry form or issued in the name of a nominee; and page A-ll by completing the necessary subscription information. C. Subscriptions by Individuals. If a subscription is by an individual (including more than one), the "Signature Page for Subscription by an Individual" (page A9) must be completed. . D. Subscriptions by Entities. If a subscription is by an entity (trust, partnership, corporation, bank or broker? dealer), the "Signature Page for Subscription by an Entity" (page must be completed. B. Items to be delivered by All Subscribers. Completed and signed Share Application Form and corresponding signature page (pages A- 2, 9 or and (ii) In the case of new or additional subscriptions for Shares, US. dollar denominated funds in the amount of the full purchase price for Shares. Wire transfer funds for the full amount of the subscription to the Company's subscription account at T0: I JP. Morgan Chase NA, New York, NY ABA Fedwire: 021000021 SWIFT: CHASUS 33 For account of: IPMorgan Chase Bank, NA. Account 0010962009 For further credit to: Epsilon Global Active Value Fund 11 Ltd. Account 34651101 Subscription documents should be delivered or mailed to Epsilon Global Active Value Fund 1] Ltd., c/o Equinoxe Alternative Investment Services (Ireland) Limited, Equinoxe House, Marina Village, Malahide, County Dublin, Ireland. Case Document 8-6 Filed 04/01/10 Page 110 of 190 EPSILON GLOBAL ACTIVE VALUE FUND II LTD. SUBSCRIPTION AGREEMENT AND STANDING PROXY FOR NON-U.S. To: Epsilon Global Active Value Fund II Ltd. c/o Equinoxe Alternative Investment Services (Ireland) Limited Equinoxe House . Marina Village Malahide County Dublin Ireland Fax: (353) .1-816?8722 Please ?ll in the following information: Amount of Subscription in U.S. Dollars: We hereby apply to subscribe to purchase as many Shares in Epsilon Global Active Value Fund II Ltd. (the "Fund") as may be purchased with above amount upon the terms of the Con?dential Offering Memorandum of the Fund, as it may be amended. We acknowledge that I am/we are able to afford a shareholding in a venture having the risks and objectives of the Fund. We acknowledge that I/we have read and understand the Contents of the Con?dential Offering Memorandum, and that We have had the oppOrtunity to ask any questions and have received and reviewed any other additional documentation and materials that I/we deem relevant. We understand that the fees and expenses to which the Fund is subject could be substantial. declare the following: (1) the Shares hereby subscribed for are not being acquired directly or indirectly by, and (ii) will not be transferred directly or indirectly to, (A) any individual who is a citizen, national or . resident of the United States of America, (B) a corporation, partnership, association, joint-stock company, trust, fund, or any organized group Of persons whether incorporated or not, created, organized or existing in, or organized and existing under the laws of the United States of America or any state, territory or possession thereof, or any other trust or estate, other than an estateor trust the income of which from sources outside of the United States of America is not includible in gross income for purposes of computing United States income tax payable by it, (C) any other trust in which one or more of the persons speci?ed in clause (A) and (B) above have a cumulative direct or indirect bene?cial interest in excess of 50 percent of the value of the trust, (D) any other non-corporate entity in which one or more of the persons speci?ed in clause (A) or (B) above, directly or indirectly, have more than a 50 percent bene?cial interest, (E) any other corporation in which one or more of the persons speci?ed in clause (A) or (B) above, directly or indirectly, own stock possessing more than 50 percent of the total combined voting power of all classes of stock entitled to vote, or more than 50 percent of the total value of Shares of all classes of stock, and (F) any other corporation, partnership, association, oint-stock company, trust, fund, organized group or persons whether incorporated or not with respect to which one or more of the persons speci?ed in clauses (A) or (B) above have the power to exercise a controlling influence over the management or policies, unless such power is solely the result of an of?cial position with such company Person"); (2) no offer to purchase such Shares was made to me/us while I was/we were in the United States; (3) We did not agree to purchase such Shares while in the United States; (4) We will not attempt by any means, to offer, originate or execute an agreement to sell such Shares while in the United States; and (5) We agree that We will not, directly or indirectly, participate (de?ned below) in any business or enterprise With any past present or future employee of the Fund, its general partner or its af?liates in any geographical area in which the Fund now conducts business, presently intends to conduct business, or has conducted business. The term Case Document 8-6 Filed 04/01/10 Page 111 of 190 "participate? includes any direct or indirect interest in any enterprise, whether as an investor, of?cer, director, employee, partner, sole proprietor, agent, representative, independent contractor, consultant, franchiser, franChiSee, creditor, owner or otherwise; provided that the term "participate" shall not include ownership of less than two percent of the stock of a publicly-held corporation whose stock is traded on a national securities exchange or in the over-the?counter market Investor agrees that this covenant is reasonable with respect to its duration, geographical area and scope. We also agree that We shall not induce or attempt to induce or solicit any past, present or - future employee of the Fund, its general partner of its af?liates to participate in any business with Investor or its af?liates or in any way interfere with the relationship between the Fund and any of its employees; or (ii) induce or attempt to induce any investor or other business relation of the Fund to cease deing business with the Fund or in any way interfere with the relatiouship between the Fund and any customer, investor or business relation. We agree and understand that the Fund would suffer irreparable harm from a breach by me/us of any of the covenants or agreements contained herein, and that money damages would not be wholly adequate to remedy such breach- In the event of a breach (or an alleged or threatened breach) by melus of any of the provisions of this Agreement, the Fund or its successors or assigns may, in addition to all other rights and remedies in law or in equity existing in their favor, redeem the investment made by meJus, and apply to any court of competent jurisdiction for injunctive or other relief in order to enforce or prevent any violations of the provisions hereof, without the posting of any bond or any other security. We agree that these provisions are reasonable. If llwe are acting as trustee, agent, representative or nominee for a subscriber (a "Bene?cial Owner"), I/we understand and acknowledge that the representations, warranties and agreements, made herein are made by me/us (A) with respect to the me/us and (B) with respect to the Bene?cial Owner. We further represent and warrant that it has all requisite power and authority from said Bene?cial Owner to execute and perform the obligations under this Subscription Agreement We also agrees to indemnify the Fund, the Investment Manager and the Administrator and their directors, members, partners, of?cers and agents for any and all costs, fees and expenses (including legal fees and disbursements) in connection with any damages resulting from the my/our misrepresentation or misstatement contained herein, or the assertion of my/our lack of proper authorization from the Bene?cial Owner to enter into this Subscription Agreement or perform the obligations hereof. We understand and agree that the Fund prohibits the investment of funds by any persons or entities that are acting, directly or indirectly, in contravention of any applicable laws and regulations, including anti?money laundering regulations or conventions, (ii) on behalf of terrorists or terrorist organizations, including those persons or entities that are included on the List of Specially Designated Nationals and Blocked Persons maintained by the U.S. Treasury Department's Of?ce of Foreign Assets Control as such list may be amended from time to time, for a senior foreign political figure, any member of a senior foreign. political ?gure? 5 immediate family or any close associate of a senior foreign political ?gure, unless the Fund, after being speci?cally noti?ed by the Subscriber in writing that it is such a person, conducts further due diligence, and determines that such investment shall be permitted, or (iv) for a foreign shell bank (such persons or entities in (iv) are collectively referred to as "Prohibited Persons") We represent, warrant and covenant that: it is not, nor is any person or entity controlling, controlled by or under common control with the Subscriber, a Prohibited Person, and (ii) to the extent the Subscriber has any bene?cial owners, it has carried out thorough due diligence to establish the identities of such bene?cial owners, based on such due diligence, the Subscriber reasonably believes that no such bene?cial owners are Prohibited Persons, it holds the evidence of such identities and status and will maintain all such evidence for at least ?ve years from the date of the Subscriber?s complete redemption from the Fund, and it will make available such information and any additional information requested by the Fund that is required under applicable regulations. If any of the foregoing representations, warranties or covenants ceases to be true or if the Fund no longer reasonably believes that it has satisfactory evidence as to their truth, notwithstanding any other agreement to the contrary, the Fund may, in accordance with applicable regulations, freeze the Subscriber's investment, either by prohibiting additional investments, declining or suspending any redemption requests and/or segregating the assets constituting the investment, or the Subscriber's investment may Case Document 8-6 Filed 04/01/10 Page'112 of 190 immediately be redeemed by the Fund, and the Fund may also be required to report such action and to disclose the Subscriber's identity to OFAC or other authority. In the event that the Fund is required to take any of the foregoing actions, the I/we understand and agree that I/we shall have no claim against the Fund, the Investment Manager, the Administrator, and their respective af?liates, directors, members, partners, shareholders, of?cers, employees and agents for any form of damages as a result of any of the aforementioned actions. The Subscriber agrees that all or any funds payable to the Subscriber (including redemption proceeds) may be wire transferred to the Subscriber at the account referenced below until further written notice, signed by one or more of the individuals authorized to act on behalf of the Subscriber, to Equinoxe Alternative Investment Services (Ireland) Limited, Equinoxe House, Marina Village, Malahide, County Dublin, Ireland. Bank Name: Bank Address: ABA or CHIPS No.: Account Name: AocOunt No.: For Further credit: [/We understand and agree that any redemption proceeds paid to it will be paid to the same account from which the my/our investment in the Fund was originally remitted, unless the Fund, in its sole discretion, agrees otherwise. If any of the foregoing representations cease to be true, l/we will notify the Fund of the facts pertaining to such changed circumstances. We represent, warrant and Covenant that: the subscription is not made with a view to ?nancing terrorism; (ii) it is not, nor is any person or entity controlling, controlled by or under common control with the Subscriber, a Prohibited Person, and to the extent the Subscriber has any bene?cial owners: I/we have carried out thorough due diligence to establish the identities of such bene?cial owners; based on such due diligence, the I/we reasonably believe that no such bene?cial owners are Prohibited Persons; I/we hold the evidence of. such identities and status and will maintain all such evidence for at least ?ve years from the date of the Subscriber?s complete redemption from the Fund; and I/we will make available such information and any additional information requested by the Fund that is required under applicable regulations. We acknowledge that due to anti? mouey laundering and anti?terrorist ?nancing requirements operating within their respective jurisdictions, the Administrator and the Fund (as the case may be) may require further identi?cation of moles before an application or redemption can be processed and the Administrator and the Fund shall be held harmless and indemni?ed against any loss arising as a result of a failure to process the application or redemption if such information as has been required by the parties referred to has not been provided by rue/us. IlWe consent to the retention and processing of my/our data by the Administrator for the purposes of maintaining a register of investors, providing subscription and redemption of shares/units and (1) to the transfer of such data to other companies or entities within the Administrator?s group, including its of?cers outside the European Economic Areas (the and (2) to the transfer of such data to third party companies or entities including their of?cers outside the EEA where the transfer is necessary for the maintenance of records, administrations or provision of services in relation to any investment product or services of any group companies. We understand that the transfer of my/our data may be to a country which does not have equivalent data protection to that of the EEA. We note that I/we have the right to request a copy of any personal data held about me/us and I/we have the right to have any inaccuracies in the data corrected. Case Document 8-6 Filed 04/01/10 Page 113 of 190 If the subscriber is a bank or broker~dealer, the subscriber hereby represents and warrants, when it is acquiring Shares on behalf of clients for investment purposes, that such clients are not U.S. Persons, that it will notify the Fund if it shall come to its knowledge that any such client is or has become a U.S. Person, that it will not at any time knowingly transfer or deliver the Shares or any part thereof or interest therein to a U.S. Person, and that it will not make any transfer thereof in the United States of America, its territories or possessions. declare that in subscribing for Shares in the Fund, l/each of us amfrs a Professional Investor within the meaning of the Mutual Funds Act 1996, as amended in that: [check one or both] My/our ordinary business involves, whether for my/our own account or the account(s) of (an)other(s), the acquisition or disposal of property of the same kind as the property, or a substantial part of the property which' is (or will be) owned by the Company, as detailed in the Con?dential Offering Memorandum of the Company. My/our net worth (in the case of a natural person, whether individually or jointly with my spouse) exceeds or its equivalent in any other lawfully recognized currency and consent to be treated as a Professional Investor for the purpose of an investment in the Company. Shares will be held in book entry form for the subscriber, following acceptance, by the Administrator, Equinoxe Alternative Investment Services. Allocations of New Issues. For purposes of determining the undersigned?s eligibility to participate in the Fund?s investment in ?New Issues", as de?ned in FINRA Rule 5130, the undersigned hereby warrants and represents that undersigned; or if the undersigned is a corporation, partnership, trust or other entity, warrants and represents that it and any person having a bene?cial interest in the undersigned APPROPRIATE (A) is is not a member of the Financial Industry Regulatory Authority FINRA Member?) or Other broker dealersof?cer, director, general partner, employee or agent of a FINRA Member (in the case of an agent, such person is engaged in the investment banking or securities business) or of any other broker?dealer (other than a limited business broker-dealer), or a person associated with a FINRA Member or with any other broker-dealer or a member of any such person? immediate family. The term ?person associated with a FINRA Member? in this sub-paragraph (B) is every sole proprietor, partner, of?cer, director or branch manager of any FINRA Member, or any natural person occupying a similar status Or performing similar functions, or any natural person engaged in the investment banking or securities business who is directly or indirectly controlling or controlled by such member, whether or not any person is registered or exempt from registration with FINRA under the By~Laws or the Rules of FINRA. (ii) The term ?immediate family? includes parents, mother?in?law or father~in~ law, husband or wife, brother or sister, brother-in?law, sister-in?law, son?in?law or daughter?in?law, and children, and any other individual to whom the person provides or receives material support from the immediate family member, is Case Document 8-6 Filed 04/01/10 Page 1140f 190 employed by or associated with the member or an af?liate of the member, selling the new issue to an immediate family member, or such person has an ability to control the allocation'of the new issue?nder with respect to initial public offerings of securities or any person acting in a ?duciary capacity to a managing underwriter, including, among others, an attorney, accountant or ?nancial consultant or a member of the immediate family of any such person if such person materially supports, or receives material support from, the immediate family member. (D) DisDis not any person (whether natural or non-natural) who has authority to buy or sell securities for a bank, savings and loan institution, insurance company, investment company, investment advisor or collective investment account, and or any member of the immediate family of any such person that materially supports, or receives material support from, such personany person listed, or required to be listed, in Schedule A of Form BD (application to become a broker?dealer) (other than with respect to a limited business broker? dealer), except persons identi?ed by an ownership code of less than 10%; or any person listed, or required to be listed, in Schedule cf Form BD (other than with respect to a limited business broker-dealer), except persons whose listing on Schedule relates to an ownership interest in a person listed on Schedule A 7 identi?ed by an ownership code of less than 10%; or any person listed, or required to be listed, in Schedule of From BD that meets any of the foregoing two criteria referenced above; or any person that directly or indirectly owns 10% or more of a public reporting company listed, or required to be listed, in Schedule A of Form BD(other than a reporting company that is listed on a national secruities exchange, or other than with respect to a limited business broker-dealer); or any person that directly or indirectly owns 25% or more of a public reporting company listed, or required to be listed, in Schedule of Form BD (other than a reporting company that is listed on a national securities exchange, or other than with respect to a limited business broker-dealer; and any immediate family member of any person described in the foregoing criteria, unless the person owning the broker-dealer does not materially support, or receive material support from, the immediate family member, (ii) is not an owner of the member, or an af?liate of the member, selling the new issue to the immediate family member; and has no ability to control the allocation of the new issue. Benefit Plan Investors. Are you a ?Bene?t Plan Investor? i. an employee bene?t plan, whether or not subject to the U. S. Employee Retirement Income Security Act of 1974, as amended (e g. a Non US pension plan, employee bene?t plan established by a non U.S. employer, an annuity plan, an individual retirement account, an individual retirement annuity; OR (ii) an entity whose underlying assets include "plan assets? by reason of a plan?s investment in the entity a group trust or fund of funds or a hypothetical entity. with signi?cant (25 or more) Bene?t Plan Investor Ownership). yes no Case Document 8-6 Filed 04/01/10 Page 115 of 190 (initial) We con?rm that no advice or other discretionary servicehas been provided by Equinoxe Alternative Investment Services (Ireland) Limited or any of its subsidiaries or af?liates in the decision to invest in the shares of the Fund. None of Equinoxe Alternative Investment Services (Ireland) Limited, its subsidiaries or af?liates act as investment or other advisor to the Subscriber. We represent that the following individual or individuals are authorized to act on behalf of rue/us to give ?and receive instructions between the Fund (or its representatives, including the Fund's administrator) and the Subscriber. Such individuals are the only persons so authorized until further written notice, signed by one or more of such individuals, to Equinoxe Alternative Investment Services (Ireland) Limited, Equinoxe House, Marina Village, Malahide, County Dublin, Ireland. Name Specimen Si gpamre We represent that the funds utilized for the payment of subscription amounts is sourced as follows: Name and Address of Financial Institution Wiring/Paying Subscription Monies: Name and Number of Account at Financial Institution being debited: The Subscriber hereby designates and appoints the Investment Manager, through its authorized of?cers and directors, with full power of subscription, as its true and lawful Proxy and Attorney-in?Fact for the purpose of voting the Shares herein subscn'bed for as said Proxy may determine on any and all matters which may arise at any annual or special meeting of shareholders and upon which such Shares could be voted by shareholders present in person at such meeting. This Proxy may be revoked by the owner of record of the Shares hereby subscribed for, either personally or by presentation of a subsequently executed proxy at any annual meeting or special meeting of shareholders, or by written notice to Equinoxe Alternative Investment Services (Ireland) Limited, Equinoxe House, Marina Village, Malahide, County Dublin, Ireland. . The Administrator and the Fund are each hereby authorized and instriicted to accept and execute any instructions in respect of the shares to which this Agreement relates given by the Subscriber in written form or by facsimile. If instructions are given by the Subscriber by facsimile, the Subscriber undertakes to send the original letter A-7 Case Document 8-6 Filed 04/01/10 Page 116 of 190 of instructions to the Administrator and the Fund and agrees to keep each of them indemni?ed against any loss of any nature whatsoever arising to any of them as a result of any of them acting upon facsimile instructions. The and the Fund may rely conclusively upon and shall incur no liability in respect of any action take upon any notice, consent, request, instructions or other instrument believed in good faith to be genuine or to be signed by properly authorized persons. We agree We will, to the fullest extent permitted by applicable law, indemnify, defend and hold harmless the Fund, the Administrator, the Investment Advisors, and their respective of?cers, directors, shareholders, partners and employees from and against any and all losses, claims, damages or liabilities of any nature whatsoever, including,? without limitation, attorneys? fees and expenses arising out of or in connection with any breach of or failure by rue/us to comply with any representation, warranty, covenant or agreement made by rue/us in this Subscription Agreement. The provisions of this indemnity shall survive the admission of Subscriber as a shareholder of the Fund. Case Doeument 8-6 Filed 04/01/10 Page 117 of 190 SHARES TO BE REGISTERED AS FOLLOWS: (Check One) INDIVIDUAL SUBSCRIBER Signature Page for Subscription by an INDIVIDUAL CO-SUBSCRIBERS (Both signatures required below) (Please print all information exactly as you Wish it to appear on the Company's records.) (Name of Subscriber) (Facsimile) (Address) (Telephone - Days) (country of Residence) (Telephone - Evenings) (Name of (Ea-Subscriber) (Ema Address) (Address) (Telephone - Days) 1 (Country of Residence) (Telephone Evenings) Dated: Signatures of Individual Subscriber(s) (Please print name below each signature): A-9 Case Document8-6 Filed 04/01/10 Page 118 of 190 Signature Page for Subscription by an ENTITY SHARES TO BE REGISTERED AS FOLLOWS: ENTITY OWNERSHIP Check form of organization: CORPORATION - Please include certi?ed resolutions (or similar documents) authorizing signature. Please include a copy of the partnership or company agreement (or similar document) authorizing signature. - El TRUST - Please include a copy of the trust agreement BANK or (Please print all information exactly as you wish it to appear on the company's records.) (Name of Subscriber) (E-Mail Address) (Address) (Telephone - Days) (Facsimile) (Country of Formation) (Telephone Evenings) The undersigned trustee, partner or of?cer warrants that he has full power and authority from all bene?ciaries or partners or from the board of directors of the entity named below to Sign this Share Application Form on behalf of the entity and that a purchase of Shares in Epsilon Global Active Value Fund II Ltd. is not prohibited by the governing documents of the entity. Dated: Signatures of Entity Subscriber(s) (Please print name below each signature): ,(Name of Entity) By: (Trustee, partner or authorized corporate of?cer (Name and Title) By: (Trustee, partner or authorized corporate of?cer (Name and Title) Case Document 8-6 SUBSCRIPTION INFORMATION SHARE REGISTRATION INFORMATION Name Address Country of Residence Telephone Telephone (Evenings) Fax REMITTING BANK Name Address Country of Residence Telephone Telephone (Evenings) Fax A?ll Filed 04/01/10- Page 119 of 190 MAILING (POST) INFORMATION (if other than address of registration) - BANK FOR TRANSFERS in case of redemptions (if other than Name Address of Remitting Bank): Case Document 8-6 Filed 04/01/10 Page 120 of 190 APPENDIX SUBSCRIPTION DOCUNDENTS For US. TAX EXEMPT INVESTORS B?l Case Document 8-6 Filed 04/01/10 Page 121 of 190 EPSILON GLOBAL ACTIVE VALUE FUND II LTD. SUBSCRIPTION AGREEMENT AND STANDING PROXY Instructions for US. Tax Exempt Investors Subscribers must complete all relevant sections of this Subscription Agreement. Failure to do so may result in delay of acceptance of a Subscriber?s subscription until a properly completed Subscription Agreement has been received, processed and approved. A. Complete page B-4 by ?lling in the subscriber?s name and the amount of the subscription; B. Complete pages B-5 through by making the appropriate representations; C. Complete pages B-14 and B- 15 by providing the necessary subscription information; D. Subscriptions by Entities: If a subscription is by an entity (corporation, bank or broker-dealer), the "Signature Page for Subscription by an' Entity" (page or ?Signature Page for Subscription by Trust/Partnership/IRA? (page must be completed. B. Items to be delivered by Subscribers. Completed and signed Share Application Form and corresponding signature pages (pages B-4 throughB? ?15, B- 16 orB? 17, andB- 18). (ii) In the case of new or additional subscriptions for Shares, US. dollar denominated funds in the amount of the full purchase price for Shares. Wire transfer funds for the full amount of the subscription to the Cornpany's subscription account at: T0: J.P. Morgan Chase N.A., New York, NY ABA Fedwire: 021000021 SWIFT: CHASUS 33 . For account of. JPMorgan Chase Bank, NA SWIFT: Account 7 0010962009 For further credit to: Epsilon Global Active Value Fund II Ltd. Account 34651101 Subscription documents should be delivered or mailed to Epsilon Global Active Value Fund II Ltd., c/o Equinoxe Alternative Investment Services (Ireland) Limited, Equinoxe House, Marina Village, Malahide, County Dublin, Ireland Case Document 8-6 Filed 04/01/10 Page 122 of 190 EPSILON GLOBAL ACTIVE VALUE FUND II LTD. SUBSCRIPTION AGREEMENT AND STANDING PROXY FOR US. TAX EXEMPT INVESTORS SUBSCRIBER NAME: SUBSCRIPTION AMOUNT: . EPSILON GLOBAL ACTIVE VALUE FUND II LTD. c/o Equinoxe Alternative Investment Services (Ireland) Limited Equinoxe House Marina Village Malahide - County Dublin Ireland Fax: (353) 1-816-8722 Subscription for Shares. We hereby apply to subscribe to purchase as many Shares in Epsilon Global Active Value Fund 1] Ltd. (the ?Fund?) as may be purchased with the above amount upon the terms of the Con?dential Offering Memorandum of the Fund, as it may be amended. We acknowledge that I arn/we are able to afford a shareholding in a venture having the risks and the objectives of the Fund. We acknowledge that I/we have read and understand the contents of the Con?dential Offering Memorandum, and that We have had the Opportunity to ask any questions and have received and reviewed any other additional documentation and materials that I/we deem relevant. We understand that the fees and expenses to which the Fund is subject could be substantial Representations and Warranties. The undersigned recognizes that the Fund is not being registered under the Securities Act of 1933, as amended (the and the undersigned represents, warrants and covenants as follows: . The undersigned is of legal age, is legally competent and, if signing on behalf (Of a partnership, corporation or trust, is duly authorized to execute this Subscription Agreement The undersigned recognizes that the Fund is a highly speculative venture, involving a high degree of ?nancial risk. - The undersigned recognizes that the proposed sale of Shares to the undersigned will not be registered under the Act, and accordingly, that the Shares may not be sold unless they are subsequently registered under the Act or unless, in the Opinion of counsel for the Fund, a sale, assignment or transfer may be made without registration thereunder. Notwithstanding the foregoing, the Fund provides limited rights of withdrawal as outlined in the Con?dential Offering Memorandum. The undersigned confirms that undersigned is acquiring the Shares subscribed for herein solely for undersigned?s own. account, for investment, and not with a view to the disuibution or resale of such securities. The undersigned acknowledges that undersigned has been furnished with a Con?dential Offering Memorandum, which sets forth therelevant terms and conditions of this investment, and such other documents, materials and information as undersigned (and undersigned?s purchaser representative, if any) deems necessary or appropriate for evaluating an investment in the Fund. The undersigned con?rms that undersigned (and undersigned? representative, if any) has read and understands these materials and B-3 Case Document 8-6 Filed 04/01/10 Page 123 of 190 has made such further investigation of the Fund as was deemed appropriate to obtain additional information to verify the accuracy of such materials and to evaluate the merits and risks of this investment The undersigned acknovvledges that he or she (and undersigned?s purchaser'representative, if any), has had the opportunity to ask questions of and receive answers from the Fund and persons acting on undersigned?s behalf concerning the terms and conditious of the offering and the information contained in the offering materials. The undersigned recognizes that the securities laws and regulations of certain states, including the state of which the undersigned is a resident, may impose additional requirements relating to this offering and undersigned?s purchase of Shares in the Fund. The undersigned hereby agrees to execute and to comply with the terms of any additions, supplements or amendments to this Subscription Agreement which are required by the Fund. lItem is presented in alternative form. Please check or Whichever is applicable.[ The undersigned has such knowledge and experience in ?nancial and business matters that the undersigned is capable of evaluating the merits and risks of the undersigned?s investment in the Fund and has obtained, in the undersigned's judgment, suf?cient information hour the Fund to evaluate the merits and risks of such investment. The undersigned has not utilized any other person as the undersigned?s purchaser representative in connection with evaluating such merits and risks. The undersigned has utilized (insert name(s) of purchaser representative(s)) to assist the undersigned' in connection with evaluating the merits and risks of the undersigned? investment in the Fund, and such purchaser representative(s) has (have) completed the Purchaser Representative Acknowledgement attached hereto. The undersigned and named purchaser representative(s) together have such knowledge and experience in ?nancial and business matters that they are capable of evaluating the merits and risks of the undersigned?s investment in the Fund, and have obtained suf?cient information to evaluate the merits and risks of such investment. Additional Subscriber Information. In order to insure that the Shares are sold pursuant to appropriate exemption from registration under the Act, and in compliance for exemption from registration under the Investment Company Act of 1940, and in accordance with the requirements of the Investment Advisers Act of 1940, the undersigned is furnishing the following additional information by checking all boxes below preceding any statement that is applicable to undersigned. The undersigned also understands that all information contained herein will be kept strictly . con?dential by the Fund. The undersigned certi?es that the information contained in the following. checked statements is true and correct and hereby agrees to notify the Fund of any changes which should occur in such information prior to the Fund?s acceptance . of this subscription. CHECK ALL APPLICABLE STATENIENTS IN PARAGRAPHS THROUGH A. I am a natural person whose individual net worth (or joint net worth with my spouse) will exceed 000, 000 at the time of purchase. B. I am a natural person who has had individual income (exclusive of any income attributable to a spouse) of more than $200,000 for the past two years or joint income with a spouse of more than $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year. - C. 1 The undersigned is an entity in which each equity owner is an accredited investor under sub? paragraphs A or aboVe. D. The undersigned is either an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended a corporation, a Massachusetts or similar business trust, or a partnership, B-4 Case Document 8-6 Filed 04/01/10 Page 124 of 190 in each case not formed for the speci?c purpose of acquiring the securities being offered, and with total assets in excess of $5,000,000. E. The undersigned is a trust, with total assets in excess of $5,000,000, not formed for the speci?c purpose of acquiring the securities being offered, whose purchase of the securities being offered is directed by a person who, either alone or with a purchaser representative, has such knowledge and experience in business and ?nancial matters that undersigned is capable, as de?ned by the Act, of evaluating the merits and risks of the prospective investment F. The undersigned is a bank as de?ned in Section of the Act, as amended, (1) acting in its ?duciary-capacity as trustee, or (ii) subscribing for the purchase of securities being offered on its own behalf. G. The undersigned is an individual retirement account established in the name of a person or persons who is or are accredited investors. . H. The undersigned is an employee bene?t plan within the meaning of The Employee Retirement Income Security Act of 1974 where investment decisions are made by a plan ?duciary, as de?ned in Section 3(21) of ERISA, which is' either a bank, savings and loan association, insurance company or registered investment advisor, has total assets in excess of $5,000,000 or is a self?directed plan, with investment decisions made solely by persons that are accredited investors as de?ned under the Act. If the undersigned checked this box, see below Plans]. The undersigned is an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended. . AND CHECK ALL APPLICABLE STATENIENTS IN PARAGRAPHS THROUGH J. The undersigned is an investment company registered in accordance with the relevant provisions of the Investment Company Act of 1940 (a registered investment company). K. .1 The undersigned would be classi?ed as an investment company under Section 3(a) of the Investment Company Act of 1940, but for the application of an exemption from such classi?cation under either Section or Section of the Investment Company Act of 1940. L. The undersigned would be classi?ed as an investment company under Section 3(a) of the Investment Company Act of 1940, but for the application of an exemption from such classi?cation under Section 3(c) of the Investment Company Act of 1940 other than Section or Section M. Paragraphs and above do not apply, and the undersigned is not classi?ed as "an investment company under Section 3(a) of the Investment Company Act of 1940. AND CHECK ALL APPLICABLE STATEMENTS IN PARAGRAPHS THROUGH N. The undersigned is a natural person who or a company that has currently or will have immediately after making an investment in the Fund at least $750,000 invested with the Fund. 0. The undersigned is a natural person who or a company that has a net worth (together, in the case of a natural person, with assets held jointly with a spouse) of more than 500, 000 at the time the investor makes its investment into the Fund. P. The undersigned is a natural person who or a company that is a quali?ed purchaser as de?ned in Section of the Investment Company Act of 1940 (15 U.S.C. at the time the investor makes its investment into the Fund (see below). Case Document 8-6 Filed 04/01/10 Page 125 of 190 ERISA Plans. IF THE UNDERSIGNED CHECKED BOX ABOVE, THEN COMPLETE THIS SECTION. The undersigned is furnishing the following additional information by checking the appropriate response to the following series of questions. The undersigned certi?es that the information contained in the following checked statements are true and correct and hereby agrees to notify the General Partner of any changes which should occur in such information prior, or subsequent to the General Parmer? acceptance of this subscription (3). Is the undersigned a pension, pro?t?sharing, annuity or employee bene?t plan (a ?Plan?) described in the Employee Retirement Income Security Act of 1974 whether or not subject to ERISA, or is the undersigned an entity whose underlying assets include Plan assets by reason of a Plan?s investment in the undersigned? Yes No Is the undersigned a Plan that is voluntary? Yes. Is the undersigned a de?ned contribution plan? Yes No Do individual participants in the plan have any right to direct investment in their account? Yes No If the answer to each of and above is? ?yes please indicate the number of individual participants in the plan. Ifthe number is greater than 100, please enter ?more than 100? Number of Participants: If the undersigned is subscribing as a trustee or?custodian for an Individual Retirement Account, is the undersigned a quali?ed IRA custodian or trustee? Yes No Representations by Employee Bene?t Plans. If the subscriber is an employee bene?t plan (the ?P1an?) subject to ERISA, the undersigned-?duciaries of the Plan acknowledge that they have been informed of and understand the investment objectives, policies and investment strategies which may be pursued by the 1 Fund; (ii) acknowledge they are aware of the provisions of Section 404 of ERISA relating to the requirements for investment and diversi?cation of the assets of employee bene?t plans and trusts subject to represent that they have given appropriate consideration to the facts and circumstances relevant to the Plan?s investtnent in the Fund and have determined that such investment is reasonably designed, as part of the Plan?s portfolio, to further the purposes of the Plan; (iv) represent that, taking into account the other investments made with the assets of the Plan, and the diversi?cation thereof, the Plan?s investment in the Fund is consistent with the requirements of Section 404 and other provisions of and represent that, taking into account the other investments made with the assets of the Plan, the investment of assets of the Plan in the Fund is consistent with the cash ?ow requirements and fundingobjectives of the Plan. If the subscriber is a Plan, the undersigned ?plan sponsor? (within the meaning of Section of ERISA), hereby designates as a ?named ?duciary? of the Plan (within the meaning of Section 402(a)(2) of ERISA). B-6 Case Document 8-6 Filed 04/01/10 Page 126 of 190 Quali?ed Purchaser Acknowledgment IF THE UNDERSIGNED CHECKED BOX ABOVE, THEN COMPLETE THIS SECTION. The undersigned is furnishing the following additional information by checking the appropriate statements below. The undersigned certi?es that the information contained in the following checked statements are true and correct and hereby agrees to notify the Fund of any changes which should occur in such information prior, or subsequent to the Fund?s acceptance of this subscription. A. The undersigned is a natural person (including any person who holds a joint, community property, or other similar shared ownership interest in an issuer that is excepted under section of the Investment Company Act of 1940 with that person?s quali?ed purchaser spouse) who owns not less than $5,000,000 in investments, as de?ned by the Commission. B. This undersigned is a company that owns not less than $5 ,000,000 in investments and that is owned directly or indirectly by or for 2 or more natural persons who are related as siblings or spouse (including former spouses), or direct lineal descendants by birth or adoption, spouses of such persons, the estates of such persons, or foundations, charitable organizations, or trusts established by or for the bene?t of suCh persons. C. This undersigned is a trust that is not covered by clause and that was not formed for the speci?c purpose of acquiring the securities offered, as to which the trustee or other person authorized to make decisions with respect to the trust, and each settlor or other person who has conuibuted assets to the trust, is a' person described in clause or above, or clause below. D. The undersigned is a person, acting for its own account or the accounts of other quali?ed purchasers, who in the aggregate owns and invests on a discretionary basis, not less than $25,000,000 in investments. Power of Attorney. The Subscriber hereby designates and appoints the Investment Manager, through its authorized of?cers and directors, with full power of subscription, as its true and lawful Proxy and Attorney-in?Fact for the purpose of voting the Shares herein subscribed for as said Proxy may determine on any and all matters which may arise at any annual or special meeting of shareholders and upon which such Shares could be voted by shareholders present in person at such meeting. This Proxy may be revoked by the owner of record of the Shares hereby subscribed for, either personally or by presentation of a subsequently executed proxy at any annual meeting or special meeting of shareholders, or by written notice to Equinoxe Alternative Investment Services (Ireland) Limited, Equinoxe House, Marina Village, Malahide, County Dublin, Ireland. Allocations of New Issues. For purposes of determining the?undersigned?s eligibility to participate in the Fund?s investment in ?New Issues", as de?ned in FINRA Rule 5130, the undersigned hereby warrants and represents that undersigned; or if the undersigned is a corporation, partnership, trust or other entity, warrants and represents that it and any person having a bene?cial interest in the undersigned APPROPRIATE (A) is is not a member of the Financial Industry Regulamry Authority FINRA Member?) or other broker dealers. (B) is is not an of?cer, director, general partner, employee or agent of a FINRA Member (in the case of an agent, such person is engaged in the investment banking or securities business) or of any otherbroker-dealer (other than a limited business broker?dealer), or a person associated with a FINRA "Member or with any other broker-dealer or a member of any such person?s immediate family. The term ?person associated with a FINRA Member" in this sub?paragraph (B) B4 Case Document 8-6 Filed 04/01/10 Page 127 of 190 is every sole proprietor, partner, of?cer, director or branch manager of any Member, or any natural person occupying a similar status or performing similar functions, or any natural person engaged in the investment banking or securities business who is directly or indirectly controlling or controlled by such member, whether or not any person is registered or exempt from registration with FINRA under the By?Laws or the Rules of FINRA. (ii) The term ?immediate family? includes parents, mother?'in?Iaw or father-in- law, husband or wife, brother or sister, brother-in-law, sister?in?law, son-in?law or daughter?in-law, and children, and any other individual to whom the person provides or receives material support ?tom the immediate family member, is employed by or associated with the member or an af?liate of the member, selling the new issue to an immediate family member, or such person has an ability to control the allocation of the new issue. (C) is is not a ?nder with respect to initial public offerings of securities or any person acting in a ?duciary capacity to a managing underwriter, including, among others, an attorney, accountant or ?nancial consultant or a member of the immediate family of any such person if such person materially supports, .or receives material support from, the immediate family member. (D) Dis Disnot any person (whether natural or non-natural) who has authority to buy or sell securities for a bank, savings and loan institution, insurance company, investment company, investment advisor or collective investment account, and or any member of the immediate family of any such person that materially supports, or receives material support from, such person. (E) is is not any person listed, or required to be listed, in Schedule A of Form BD (application to become a broker-dealer) (other than with respect to a? limited business broker- dealer), except persons identi?ed by an ownership code of less than 10%; or any person listed, or required to be listed, in Schedule of Form BD (other than with respect to a limited business broker?dealer), except persons whose listing on Schedule relates to an ownership interest in a person listed on Schedule A identi?ed by an ownership code of leSs than 10%; or any person listed, or required to be listed, in Schedule of From BD that meets any of the foregoing two criteria referenced above; or any person that directly or indirectly owns 10% or more of a public reporting company listed, or required to be listed, in Schedule A of Form BD(other than a reporting company that is listed on a national securities-exchange, or other than with respect to a limited business broker?dealer); or any person that directly or indirectly owns 25% or more of a public reporting company listed, or required to be listed, in Schedule of Form BD (other than a reporting company that is listed on a national securities exchange, or other than with respect to a limited business broker~dealer; and any immediate family member of any person described in the foregoing criteria, unless the person owning the broker-dealer does not materially support, or receive material support from, the immediate family member, (ii) is not an owner of the member, or an a?iliate of the member, selling the new issue to the immediate family member; and has no ability to control the allocation of the new issue. Case Document 8-6 Filed 04/01/10 Page 128 of 190 Bene?t Plan Mtors. Are you a ?Bene?t Plan Investor? an employee bene?t plan, whether or not subject to the U.S. Employee Retirement Income Security Act of 1974, as amended g. a Non US pension plan, employee bene?t plan established by a non U.S. employer, an annuity plan, an individual retirement account, an individual retirement annuity; OR (ii) an entity whose underlying assets include "plan assets" by reason of a plan?s investment in the entity a group trust or fund of funds or a hypothetical entity with significant (25% or more) Bene?t Plan Investor Ownership). 7 yes no (initial) IfWe cou?rm that no advice or other discretionary service has been provided by Equinoxe Alternative Investment Services (Ireland) Limited or any of its subsidiaries or af?liates in the decision to invest in the shares of the Fund. None of Equinoxe Alternative Investment Services (Ireland) Limited, its subsidiaries or af?liates act as investment or other advisor to the Subscriber. We represent that the following individual or individuals are authorized to act on behalf of the Subscriber to give and receive instructions between the Fund (or its representatives, including the Fund's administrator) and the Subscriber. Such individuals are the only persons so authorized until further written notice, signed by one or more of such individuals, to Equinoxe Alternative Investment Services (Ireland) Limited, Equinoxe House, Marina Village, Malahide, County Dublin, Ireland. - Name - Sp_e?imen Signature We represent that the funds utilized for the payment of subscription amounts is sourced as follows: Name and Address of Financial Institution Wiring/Paying Subscription Monies: Name and Number of Account at Financial Institution being debited: Case Document 8-6 Filed?O4/Ol/1O Page 129 of 190 Additional Representations and Undertakings. The undersigned understands that no Federal or state agency has recommended or endorsed the purchase of the Shares as an investment or passed on the adequacy of the information set forth in the Con?dential Offering Memorandum or any other Fund documents. . The undersigned acknowledges that the Fund, its af?liates, Investment Manager, nor is of?cers, directors, employees or service providers offered to sell or sold to undersigned Shares in the Fund by means of any form of general solicitation or general advertising, such as media advertising or seminars. The undersigned acknowledges that undersigned has been advised to consult with undersigned?s own attorney regarding legal matters concerning the Fund and to consult with undersigned?s tax advisor regarding the tax consequences of participating in the Fund. . The undersigned hereby agrees that this subscription is irrevocable and that the representations and warranties set forth in this Subscription Agreement shall survive the acceptance hereof. The undersigned agrees that it will not, directly or indirectly, participate (de?ned below) in any business or enterprise with any past, present or future employee of the Fund or its af?liates in any geographical area in which the Fund now conducts business, presently intends to conduct business, or has conducted business. The term "participate" includes any direct or indirect interest in any enterprise, whether as an investor, of?cer, director, employee, partner, sole proprietor, agent, representative, independent contractor, consultant, franchiser, franchisee, creditor, owner or otherwise; provided that the term "participate" shall not include ownership of less than two percent of the stock of a publicly-held corpdration whose stockis traded on a national securities exchange or in the over?the-counter market The undersigned agrees that this covenant is reasonable with respect to its duration, geographical area and scope. The undersigned also agrees that it shall not induce or attempt to induce or solicit any past, present or future employee of the Fund or its af?liates to participate in any business with undersigned or its af?liates or in any way interfere with the relationship between the Fund and any of its employees and af?liates; or (ii) induce or attempt to induce any investor or other business relation of the Fund to cease doing business with the Fund or in any way interfere with the relationship between the Fund and any customer, investor or business relation. The undersigned agrees and understands that the Fund would suffer irreparable harm ?om a breach by the undersigned of any of the covenants or agreements contained herein, and that money damages would not be wholly adequate to remedysuch breach. In the event of a breach (or an alleged or threatened breach) by the undersigned of any of the provisions of this Agreement, the Fund or its successors or assigns may, in addition to all other rights and remedies in law or in equity existing in their favor, redeem the investment made by the undersigned, and apply to any court of competent jurisdiction for injunctive or other relief in order to enforce or prevent any violations of the provisions hereof, without the posting of any bond or any other security. The undersigned agrees that these provisions are reasonable. If I/we are acting as trustee, agent representative or nominee for a subscriber (a "Bene?cial Owner"), I/we understand and acknowledge that the representations, warranties and agreements made herein are made by rue/us (A) with respect to the rue/us and (B) with respect to the Bene?cial Owner. We further represent and warrant that it has all requisite power and authority from said Beneficial Owner to execute and perform the obligations under this Subscription Agreement We also agrees to indemnify the Fund, the Investment Manager and the Administrator and their directors, members, partners, of?cers and agents for any and all costs, fees and expenses (including legal fees and disbursements) in connection with any damages resulting from the ray/our . misrepresentation or misstatement contained herein, or the assertion of mylour lack of proper authorization from the Bene?cial Owner to enter into this Subscription Agreement or perform the obligations hereof. We understand and agree that the Fund prohibits the investment of funds by any persons or entities that are acting, directly or indirectly, in contravention of any applicable laws and regulations, including anti?money laundering regulations or conventions, (ii) on behalf of terrorists or terrorist organizations, including those persons or entities that are included on the List of Specially Designated Nationals and Blocked Persons maintained by the US. Treasury Department's Of?ce of Foreign Assets Control as such list may be amended from time to time, for a senior foreign political ?gure, any member of a senior foreign political ?gure?s immediate family or any Case DOCument8?6 Filed 04/01/10 Page'130 of 190 close associate of a senior foreign political ?gure, unless the Fund, after being speci?cally noti?ed by the Subscriber in writing that it is such a person, conducts further due diligence, and determines that such investment shall be permitted, or (iv) for a foreign shell bank (such persons or entities in (iv) are collectively referred to as "Prohibited Persons"). We represent, warrant and covenant that: it is not, nor is any person or entity controlling, controlled by or under common control with the Subscriber, a Prohibited Person, and (ii) to the extent the Subscriber has any bene?cial owners, it has carried out thorough due diligence to establish the identities of such bene?cial owners, based on such due diligence, the Subscriber reasonably believes that no such bene?cial owners are Prohibited Persons, it holds the evidence of such identities and status and will maintain all such evidence for at least ?ve years from the date of the Subscriber's complete redemption from the Fund, and it will make available such information and any additional information requested by the Fund that is required under applicable regulations. If any of the foregoing representations, warranties or covenants ceases to be true or if the Fund no longer reasonably believes that it has satisfactory evidence as to their truth, notwithstanding any other agreement to the contrary, the Fund may, in accordancewith applicable regulations, freeze the Subscriber's investment, either by prohibiting additional investments, declining or suspending any redemption requests and/or segregating the assets constituting - the investment, or the Subscriber's investment may immediately be redeemed by the Fund, and the Fund may also be required to report such action and to disclose the Subscriber's identity to OFAC or other authority. In the event that the Fund is required to take any of the foregoing actions, the I/we understand and agree that I/we shall have no claim against the Fund, the Investment Manager, the Administrator, and their respective af?liates, directors, members, partners, shareholders, of?cers, employees and agents for any form of damages as a result of any of the aforementioned actious. We understand and agree that any redemption proceeds paid to it will be paid to the same account from which the my/our investment in the Fund was originally remitted, unless the Fund, in its sole discretion, agrees otherwise. If any of the foregoing representations cease to be true, I/we will notify the Fund of the facts pertaining to such changed circumstances. We agree that all or any funds payable to me/us (including redemption proceeds) may be wire transferred to me/us at the account referenced below until further written notice, signed by one or more of the individuals authorized to act on behalf of me/us, to Equinoxe Alternative Investment ServiCes (Ireland) Limited, Equinoxe House, Marina Village, Malahide, County Dublin, Ireland. - Bank Name: . Bank Address: ABA or CHIPS N0.: Account Name: Account No.: For Further credit: We represent, warrant and covenant that; the subscription is not made with a View to ?nancing terrorism; (ii) it is not, nor is any person or entity controlling, controlled by or under common control with the Subscriber, a Prohibited Person, and to the extent the Subscriber has any bene?cial owners: llwe have carried out thorough due diligence to establish the identi?es of such bene?cial owners; based on such due diligence, the I/we reasonably believe that no such bene?cial owners are Prohibited Persons; I/we hold the evidence of such identities and status and will maintain all such evidence for at least ?ve years from the date ?of the Subscriber's complete redemption from the Fund; and I/we will make available such information and any additional information requested by the Fund that is required under applicable regulations. We acknowledge that due to anti-money laundering and anti?terrorist 1 ?nancing requirements operating within their respective jurisdictions, the Administrator and the Fund (as the case may be) may require further identi?cation of me/us before an application or redemption can be processed and the Administrator and the Fund shall be held harmless and indemni?ed against any loss arising as a result of a failure to process the application or redemption if such information as has been required by the parties referred to has not been provided by Inc/us. IfWe consent to the retention and processing of my/our data by the Administrator for the purposes of maintaining a register of investors, providing subscription and redemption of shares/units and (1) to the transfer of such data to other 13?11 Case Document 8-6 Filed 04/01/10 Page 131 of 190 companies or entities within the Administrator?s group, including its of?cers outside the European Economic Areas (the and (2) to the transfer of such data to third party companies or entities including their of?cers outside the EEA where the transfer is necessary for the maintenance of records, administrations or provision of services in relation to any investment product or services of any group companies. We understand that the transfer of ray/our data may be to a'country which does not have equivalent data protection to that of the EEA. We note that I/we have the right to request a copy of any personal data held about me/us and I/we have the right to have any inaccuracies in the data corrected. If the undersigned is a corporation, partnership, association, trust or unincorporated organizah'on, the undersigned represents that it (or, if it is a wholly-owned subsidiary, its parent corporation) has not been formed for the speci?c purpose of making an investment in the Fund and that the undersigned-has the full power and authority under its- governing instruments to execute this agreement on behalf of the undersigned and that the undersigned has the full power and authority under such instruments to become a shareholder in the Fund. If the undersigned is a corporation, partnership, association, trust or unincorporated organization, and the undersigned represents above that the undersigned is, or but for the exceptions provided in Sections or of the Investment Company Act of 1940, would be an investment company, the undersigned is not acquiring ten percent or more of the Shares in the Fund. The undersigned acknowledges that the Fund is restricted by law as to the number of bene?cial interests held in the Fund and it may therefore be necessary to count the bene?cial owners of the undersigned if it owns ten percent or more of the Shares in the Fund. Accordingly, the undersigned shall take whatever action the Fund requests to have undersigned?s interest in the Fund be less than ten percent of the total Shares of the Fund and expressly agrees that the Fund may require the undersigned to withdraw at any time so much of its interest as is necessary to keep such interest below ten percent If the undersigned is a corporation, partnership, association, trust or unincorporated organization, and the undersigned represents under Paragraph under the section entitled ?Additional Subscriber Information" above, that to the best of the undersigned?s knowledge, based upon such investigations as the undersigned has deemed appropriate, the undersigned is not an investment company under the Investment Company Act of 1940, the undersigned represents and agrees that it shall immediately inform the Fund if the undersigned becomes, or'but for the exceptions provided in Sections or of the Investment Company Act of 1940, would be classi?ed as an investment company on any date subsequent to the date of the acceptance of the undersigned?s subscription. The undersigned acknowledges that the Fund is restricted by law as to the number of bene?cial interests held in the Fund and it may therefore be necessary to count the bene?cial owners of the undersigned if it owns ten percent or more of the Shares of the Fund. Accordingly, the undersigned shall take whatever action the Fund requests to have undersigned?s interest in the Fund be less than ten percent of the total Shares of the Fund and expressly agrees that the Fund may require the undersigned to withdraw at any time so much of its interest as is necessary to keep such interest below ten percent The undersigned represents that based on most recent valuations available less than twenty~?ve percent of undersigned?s assets are owned by ?bene?t plan investors?.? as de?ned in regulations of the United States Department of Labor concerning those categories of assets that constitute assets of an employee bene?t plan, and undersigned agrees to notify the Fund if the percentage of its assets owned by bene?t plan investors should equal or exceed twenty-?ve percent If undersigned is a Plan or an IRA, the undersigned recognizes that the Fund will be operated such that less than twenty??ve percent of the Shares in the Partnership will be owned by ?bene?t plan investors? within the meaning of the regulations promulgated under ERISA. Accordingly, the undersigned expressly agrees that the Fund may require undersigned to withdraw at any time so much of its interest as is necessary to keep the total interests of ?bene?t plan investors? below such twenty-?ve percent limit. The Administrator and the Fund are each hereby authorized and instructed to accept and execute any instructions in respect of the shares to which this Agreement relates given by the Subscriber in written form or by facsimile. If instructions are given by the Subscriber by facsimile, the Subscriber undertakes to send the original letter of instructions to the Administrator and the Fund and agrees to keep each of them indemni?ed against any loss of any nature whatsoever arising to any of them as a result of any of them acting upon facsimile instructions. The Administrator and the Fund may rely conclusively upon and shall incur no liability in respect of any action take 3?12 Case Document 8-6 Filed 04/01/10 Page 132 of 190 upon any notice, consent, request, instructions or other instrument believed in good faith to be genuine or to be signed by properly authorized persons. We agree We will, to the fullest extent permitted by applicable law, indemnify, defend and hold harmless the Fund, the Administrator, the Investment Advisors, and their respective officers, directors, shareholders, partners and employees from and against any and all losses, claims, damages or liabilities of any nature whatsoever, including, without limitation, attorneys? fees and expenses arising out of or in connection with any breach of or failure by me/us to comply with any representation, warranty, covenant or agreement made by rue/us in this Subscription Agreement The provisions of this indemnity shall survive the admission of Subscriber as a shareholder of the Fund. The agreements and- representations herein set forth shall become effective and binding upon the undersigned, undersigned?s, legal representatives, heirs, successors and assigns upon the acceptance hereof. IN WITNESS WI-IEREOF, the undersigned has set undersigned?s hand and seal agreeing to the above on the date set forth below. Case Document 8-6 Filed 04/01/10 Page 133 of 190 Signature Page for Subscription by an ENTITY SHARES TO BE REGISTERED AS FOLLOWS: ENTITY OWNERSHIP Check form of organization: CORPORATION - Please include certi?ed resolutions (or similar documents) authorizing signatures. Please include a copy of the partnership or company agreement (or similar document) authorizing signatures. El I Please?include a copy of the trust agreement . Please include a copy of the appropriate account agreements indicating authorized signatories. BANK or (Please print all information exactly as you wish it to appear on the Company's records.) (Name of Subscriber) (B?Mail Address) (Address) (Telephone - Days) (Facsimile) (Country of Formation) (Telephone - Evenings) The undersigned trustee, partner or of?cer warrants that he has full power and authority ?om all bene?ciaries or partners or from the board of directors of the entity named below to sign this Share Application Form on behalf of the entity and that a purchase of Shares in Epsilon Global Active Value Fund II is not prohibited by the governing documents of the entity Dated: Signatures of Entity Subscriber(s) (Please print name below each signature): (Name of Entity) By: (Trustee, partner or autho?zed corporate o?icer (Name and Title) By: (Trustee, partner or authorized corporate of?cer (Name and Title) Case Document 8-6 Filed 04/01/10 Page 134 of 190 SUBSCRIPTION INFORMATION SHARE REGISTRATION INFORMATION Name Address Country of Residence Telephone Telephone (Evenings) Fax REMITTING BANK Name Address Country of Residence Telephone Telephone (Evenings) . Fax MAILING (POST) INFORMATION (if other than address of registration) BANK FOR TRANSFERS in case of redemptions (if other than Name Address of Remitting Bank): Case Document 8-6 Filed 04/01/10 Page 135 of 190 FOR CORPORATION STATE COUNTY . On this day Of 200_, before me personally came to me and known, who, by me duly sworn, did depose and say that deponent resides at . that deponent is the of . the corporation described in, and which executed the foregoing Subscription Agreement, that the deponent knows the seal of the corporation, that the seal af?xed to the Subscription Agreement is the corporate seal, that is was af?xed by order of the board of directors of the corporation; and that deponent signed deponent? 3 name by like order. Notary Public (Print Name): Notary Public (Si gnature): Commission Expires: Date: Stamp or Seal Case Document 8-6 Filed 04/01/10 Page 136 of 190 SIGNATURE FOR (strike out inapplicable terms) STATE COUNTY OF - On the day of 200_ before me personally came I to me known, who, being by me duly sworn, did depose and say that he resides at that undersigned is Partner/Trustee of . the Partnership/Trust described in and which executed the foregoing Subscription Agreement, who duly acknowledged to me that he had full power and authority to sign undersigned?s name thereto. Notary Public (Print Name): Notary Public (Signature): Commission Expires: Date: Stamp or Seal Case 2i10-cv-00555-RAJ Document 8-6 Filed 04/01/10 Page 137 of 190 EPSILON GLOBAL ACTIVE VALUE FUND II LTD. - PURCHASER REPRESENTATIVE The undersigned hereby acknowledges that undersigned is the purchaser representative (as the term is de?ned in Rule 501 promulgated under the Act) of (the ?Subscriber?). By reason of the undersigned's knowledge and experience in business and ?nancial matters in general, and the business of investment in securities in particular, the undersigned believes himself capable of evaluating and has in fact evaluated the merits and risks of this investment on behalf of the subscriber. The undersigned further acknowledges that undersigned received a Con?dential Offering Memorandum dated . 200_, and any other information that the undersigned deemed appropriate to evaluate this investment. Furthermore the undersigned acknowledges that undersigned had the opportunity to. ask questions of, and receive satisfactory answers or documentation from the Fund, or its af?liates, associates or employees concerning the terms and conditions of the offering and the information contained in the Con?dential Offering Memorandum. The undersigned is not an of?cer, director, employee or af?liate of the Fund or owner of ten percent or more of the equity interest in the Fund, and except as otherwise previously disclosed by the undersigned to the subscriber in writing, neither the undersigned nor any af?liate of the undersigned currently has, or has had during the past two (2) years, or contemplates having in the future, any material relationship with the Fund or its af?liates. The undersigned has disclosed to the subscriber the source, and extent of, any and all remuneration received ?om the Fund as compensation for the undersigned?s services as purchaser representative. 7 Signature of Representative Address Print Name of Representative City State Zip Occupation (Area Code) Telephone Entity Case . Document 8-6 Filed 04/01/10 Page 138 of 190 APPENDIX REDEMPTION REQUEST DOCUMENTS C-l Case Document 8-6 Filed 04/01/10 Page 139 of 190 EPSILON GLOBAL ACTIVE VALUE FUND 11 LTD. REDENIPTION REQUEST FORM This form should be saved and may be used by a shareholder wishing to redeem Shares in the Fund. Redeeming shareholders should complete and return this form. TO: EPSILON GLOBAL ACTIVE VALUE FUND 11 LTD. c/o Equinoxe Alternative Investment Services (Ireland) Limited Equinoxe House Marina Village Malahide County Dublin Ireland clo Epsilon Investment Management L.L.C. Grand Rue 3 1 820 Montreux witzerland Fax to the Administrator at: (353) 1?816-8722; and Fax to the Fund at: 41?21?962?8801 20_ Dear Sirs: I hereby request redemption, as de?ned in and subject to all of the terms and conditions of the Con?dential Offering Memorandum of Epsilon Global Active Value Fund II Ltd. (?the th as it may be amended, of Shares, representing [part/all] of my Shares in the Company. I understand that redemption will only be effective as of the close of business on the last day of a calendar quarter (the ?Redemption Date?), upon at least forty-five (45) days prior written notice to both the Fund and the Administrator. I understand that once I have provided my redemption request to the Fund and the Administrator via facsimile: (1) the original signed redemption request must be received by the Administrator prior to the Redemption Date; and (2) I must receive written confirmation from the Administrator that the faxed redemption request has been received by the Administrator. Except as otherwise provided in the Confidential Offering Memorandum, payment of 90% of the redemption proceeds Will be made within thirty (30) days after the effective date of redemption with balance being paid within ?fteen (15) days after receipt by the Fund of its annual audited statements for such ?scal year. have been issued share certi?cates, I enclose my Share certi?cates, duly endorsed for transfer. I hereby represent and warrant that I am the owner of Shares of the Company with full power and authority to request redemption of the Shares which are the subject if this request; and (ii) I am not a Person" (as that term is de?ned in the Information Memorandum) or I am a quali?ed employee bene?t plan within the meaning of ERISA and exempt ?om U.S. taxation under IRC sec. 401(asimilar plan exempt from US. taxation under IRC sec. 408, or I am an organization described in IRC sec. 501(c)(3) and am exempt from US. taxation under IRC sec. 501(a). Such Shares are not subject to any pledge or otherwise encumbered in any fashion. I Case Document 8-6 Filed 04/01/10 Page 140 of 190 acknowledge this I cannot make a partial redemption of less than US $100,000 of Shares as the Net Asset Value is de?ned in the Con?dential Offering Memorandum is computed as the date of redemption and if I am making a - partial redemption, that my redemption request will be honored only if it does not reduce the Net Asset Value of my remaining Shares below the minimum subscription amount required of new the shareholders of the Fund. I understand that my redemption request, once received by the Fund and the Administrator, is revocable only with the consent of the Investment Manager, which may withhold its consent for any reason in its sole discretion. My signature has been guaranteed by a commercial bank acceptable to the Fund. Case Document 8-6 Filed 04/01/10 Page 141 of 190 REDEMPTION REQUEST FORM (Continued) WIRE INSTRUCTIONS (to be completed by redeeming shareholder): Bank name and address: I Account: Account Name: Account No: SIGNATURES MUST BE IDENTICAL TO IN WHICH SHARES ARE REGISTERED PRINT: Name of Registered Owner of Shares Address ENTITY SHAREHOLDER (OR ASSIGNEE) INDIVIDUAL SHAREHOLDERS) CORPORATION OR (OR ASSIGNEE) By: (Signature of patina, authorized (Signature of individual or assignee) corporate of?cer or trustee By: Name and Title (Signature of individual or assignee) (Signature of partner, authorized corporate of?cer or trustee Name and Title Signature(s) guaranteed by: C4 Case Document 8-6 Filed 04/01/10 Page 142 of 190 REDEMIPTION INFORMATION SHARE REGISTRATION INFORMATION Name Address Country of Residence. Telephone Telephone (Evenings) Fax BANK FOR TRANSFER OF REDEMPTION Name Address Country of Residence Telephone Telephone (Evenings) Fax c?s MAILING (POST) INFORMATION (if other than address of registration) Name Address County of Residence Telephone Telephone (Evenings) Fax Case Document 8-6 Filed 04/01/10 Page 143 of 190 EPSILON GLOBAL ACTIVE VALUE FUND 11 LTD. SUBSCRIPTION AGREEMENT AND STANDING PROXY Instructions A. All Subscribers. Complete page by ?lling in the amount of the subscription; page A- 3 by indicating whether the Shares are to be issued' in book entry form or issued' in the name of a nominee; and page by completing the necessary subscription information. B. Subscriptions by Individuals. If a subscription is by an individual (including more than one), the "Signature Page for Subscription by an Individual" (page A-4) must be completed. C. Subscriptions by Entities. If a subscription is by an entity (trust, partnership, corporation, banker broker- dealer), the "Signature Page for Subscription by an Entity" (page A-S) must be completed. D. Items to be delivered by All Subscribers. - Completed and signed Share Application Form and corresponding signature page (pages 2, A-3, A4 or A-5, and A-6). (ii) US. dollar denominated funds in the amount of the full purchase price for Shares. Wire transfer ?inds for the full amount of the subscription to the Company's subscription account at: T0: UBS AG, Stamford Branch ABA Fedwire: 0260-0799-3 SWIFT: For account of: U138 Fund Services (Cayman) Ltd. Account#: For further credit to: Epsilon Global Active Value Fund II Account#: 72162 Subscription documents should be delivered or mailed to Epsilon Global Active Value Fund II Ltd, c/o UBS Fund Services (Cayman) Ltd, UBS House, 227 Elgin Avenue, PO. Box 852GT, Grand Cayman, Cayman Islands EXHIBIT Case Document 8-6 Filed 04/01/10 Page 144 of 190 SUBSCRIPTION AGREEMENT AND STANDING PROXY To: Epsilon Global Active Value Fund II c/o UBS Fund Services (Cayman) Ltd. UBS House - 227 Elgin Avenue PO. Box 852GT Grand Cayman, Cayman Islands ax: 1645?9144060 Please ?ll in the following information: Amount of Subscription in US. Dollars: ?0 We hereby apply to subscribe to purchase as many shares in Epsilon Global Active Value Fund (the "Fund") as may be purchased with above amount upon the terms of the Con?dential Offering Memorandum of the Fund, as it may be amended, which I/we have received and read We acknowledge that I ant/we are able to afford a shareholding in a venture having the riSks and objectives of the Fund. declare the following: (1) the Shares hereby subscribed for are not being acquired directly or indirectly by, and (ii) will not be transferred directly or indirectly to, (A) any individual who is a citizen, national or resident of the United States of America, (B) a corporation, partnership, association, joint-stock company, trust, fund, or any organized group of persons whether incorporated or not, created, organized or existing in, or organized and existing under 'the laws of the United States of America or any state, territory or possession thereof, or any other trust or ?estate, other than an estate or trust the income of which from sources outside of the United States of America is not includible in gross income for purposes of computing United States income tax payable by it, (C) any other trust in which one or more of the persons speci?ed in clause (A) and (B) above have a cumulative direct or indirect bene?cial interest in excess of 50 percent of the value of the trust, (D) any other non-corporate entity in which one or more of the persons speci?ed in clause (A) or (B) above, directly? or indirectly, have more ?rm a 50 percent bene?cial interest, (E) any other corporation in which one or more of the persons speci?ed in clause (A) or (B) above, directly or indirectly, own stock possessing more than 50 percent of the total combined voting power of all classes of stock entitled to vote, or more than 50 percent of the total value of shares of all classes of stock, and (F) any other corporation, partnership, association, joint-stock company, trust, fund, organized group or persons whether incorporated or not with respect to which one or more of the persons speci?ed in clauses (A) or (B) above have the power to exercise a controlling in?uence over the management or policies, unless such power is solely the result of an of?cial position with such company Person"); (2) no offer to purchase such Shares was made to Inc/us while I was/we were inthe United . States; (3) We did not agree to purchase such Shares while in the United States; and (4) We will not attempt by any means, to offer, originate or execute an agreement to sell'such Shares while in the United States. Case Document 8-6 Filed 04/01/10 Page 145 of 190 If the subscriber is a bank or broker?dealer, the subscriber hereby represents and warrants, when it is acquiring Shares on behalf of clients for investment purposes, that such clients are not US. Persons, that it will notify the Fund if it shall come to its knowledge that any such client is or has become a US. Person, that it will not at any time knowingly transfer or deliver the Shares or any part thereof or interest therein to a US. Person, and that it will not make any transfer thereof in the United States of America, its territories or possessions. declare that in subscribing for Shares 1n the Fund, I/each of us am/is a Professional Investor Within the meaning of the Mutual Funds Act 1996, as amended that [check one or both] My/our ordinary business involves, whether for my/our own account or the account(s) of (an)other(s), the acquisition or disposal of property of the same kind as the property, or a substantial part of the property which 13 (or will be) owned by the Company, as detailed 1n the Con?dential Offering Memorandum of the COmpany. My/our net worth (in the case of a natural person, whether individually or jointly with my spouse) exceeds 000, 000 or its equivalent any other lawfully recognized currency and I/we consent to 'be treated as a Professional Investor for the purpose of an investment In the Company. Shares will be held 111 book entry form for the subscriber, following acceptance, by the Administrator, UBS (Cayman Islands) Limited. If requested, Share Certi?cates may be issued in the name of a nominee. If this facility 15 required, please ?ll in name of nominee: The Subscriber "hereby designates and appoints UBS Fund Services (Cayman) Ltd, through its authorized o?icers and directors, with full power of subscription, as its true and IaW?ll Proxy and Attorney-in-Fact for the purpose of voting the'shares herein subscribed for as said Proxy may determine on any and all matters which may arise at any annual or special meeting of shareholders and upon which such shares could be voted by shareholders present in person at such meeting. This Proxy may be revoked by the owner of record of the shares hereby subscribed for, either personally or by presentation of a subsequently executed proxy at any annual meeting or special meeting of shareholders, or by written notice to UBS Fund, Services (Cayman) Ltd., PO. Box 852, Gecn'ge Town, Grand Cayman, Cayman Islands. A23 Case Document 8-6 Filed 04/01/10 Page 146 of 190 Signature Page for Subscription by an INDIVIDUAL SHARES TO BE REGISTERED AS FOLLOWS: (Check One) INDIVIDUAL SUBSCRIBER l] CO-SUBSCRIBERS (Both signatures required below) (Please print all information exactly as you wish it to appear on the Company's records.) (Name of Subscriber) (Address) (Telephone - Days) (County of Residence) (Telephone - Evenings) (Name of Co?Subscriher) (Address) (T elephone - Days) (Country of Residence) Dated: (Telephone - Evenings) Signatures of Individual Subscriber(s) (Please prinf name below each signature): Case Document 8-6 Filed 04/01/10 Page 147 of 190 Signature Page for Subscription by an ENTITY SHARES TO BE REGISTERED AS FOLLOWS: ENTITY OWNERSHIP - Check form of organization: CORPORATION - Please include certi?ed resolutions (or similar documents) authorizing signature. i] PARTNERSHIP Please include a copy of the partnership agreement (or similar document)?authorizing signature. Bf TRUST Please include a copy of. the trust agreement. 6 (no mm+ p??n ?on ?ak??1 Mon-Ci?? Ww> BANK or BROKER-DEALER - See Page (Please print all information exactly as you wish it to appear on the Company's records.) Siam't?rio Ci e?V\ Vi Bx, if jinn-?1 (Name of Subscriber) 30%in Mm?go?e 300 (Address) . (Telephone- Days) Qg? 20!; 93395 S733 Ce?) (Country of Formation) - (Telephone- -Evenings) The undersigned trustee, partner or of?cer warrants that he has full power and authority from all bene?ciaries or partners or from the board of directors of the entity named below to sign this Share Application Form on behalf of the entity and that a purchase of Shares in Epsilon Global Active Value Fund Ltd.- is not prohibited by the governing documents of the entity. a i . I Dated: it I 9? Signatures of Entity (Please print name below each signature): Qar?drlc ?le it warm Palmer Syrian (Name of Entity) By: (Trustee, partner thorized corporate of?cer i (NA \329/ an, Ass'i? E7: 6&2er She-lur- (N ame and Title) By: (Trustee, partner or authorized corporate o?icer (Name and Title) Case Document 8-6 Filed 04/01/10 Page 148 of 190 SUBSCRIPTION INFORMATION SHARE REGISTRATION INFORMATION MAILING (POST) INFORMATION (if other than address of registration) gee/W 0% d4 @L?erd? Name 90 Tk?dd. Aden we Sdidc 300 Address Swen. um 03% 98qu Country of Residence 20 (a 5?4 Li 2% Teiephone 20 9? 5:7 S?s (9 Telephone (Evenings) "20 3 319'- I So Cc. Fax . REMITTING BANK BANK FOR TRANSFERS in case of redemptions (if other than Name 82: Address of Remitting Bank): 0 Name . Address . . 325%va we use 9 85M Country of Residence . Zoe @214 3217' mm} Telephone 13' Q??y ((35,119 Telephone (EVenings) Fax Case Document 8i-6 Filed 04/01/10 Page 149 of 190 i EPSILON GLOBAL ACTIVE VALUE FUND II LTD. SUBSCRIPTION AGREEMENT AND STANDING PROXY Instructions A. All Subscribers. Complete page by ?lling in the amount of the subscription; page A-3 by indicating whether the Shares 'are to be issued in book entry form or issued in the name of a nominee; and page by completing the necessary subscription information. i B. Subscriptions by Individuals. If a subscription is by an individual (including more than one), the "Signature Page for Subscription by an Individual" (page must be completed. C. I Subscriptions by Entities. If a subscription is by an entity (trust, partnership, corporation, bank or broker- dealer), the "Signature Page for Subscription by an Entity" (page A-S) must be completed. D. Items to be delivered by All Subscribers. . Completed and signed Share Application Form and corresponding signature page (pages 2, A-3, A4 or and A-6). (ii) US. dollar denominated ?nds in the'amount of the. full purchase price for Shares. Wire transfer funds for the full amount of the subscription to the Company's subscription account at: T0: UBS AG, Stamford Branch ABA Fedwire: 0260-0799-3 SWIFT: For account of: UBS Fund Services (Cayman) Ltd. Accounta?t: 7 101-WA-359025-000 For further credit to: Epsilon Global-Active Value Fund II Account#: 72162 Subscription documents should be delivered or mailed to Epsilon Global Active Value Fund II Ltd, c/o UBS Fund Services (Cayman) Ltd, UBS House, 227 Elgin Avenue, PO. Box 852GT, Grand Cayman, Caymanlslands E. Case Document 8-6 Filed 04/01/10 Page 150 of 190 SUBSCRIPTION AGREEMENT AND STANDING PROXY To: Epsilon Global Active Value Fund II Ltd. c/o UBS Fund Services (Cayman) Ltd. UBS House 227 Elgin Avenue P.O. Box Grand Cayman, Cayman Islands Fax: 1-345-914-4060 Please ?ll in the following information: Amormt of Subscription in U.S. Dollars: OOQ c300 We hereby apply to subscribe to purchase as many shares in Epsilon Global Active Value Fund II Ltd. (the "Fund") as may be purchased with above amount upon the terms of the Con?dential O?'ering Memorandum of the thd, as it may be amended, which We have received and read. We acknowledge that I ant/we are able to afford a shareholding in a venture having the risks and objectives of the Frmd. lfWe declare the following: (1) the Shares hereby subscribed for are not being acquired directly or indirectly by, and (ii) will not be transferred directly or indirectly to, (A) any individual who is a citizen, national or resident of the United States of America, (B) a corporation, partnership, association, joint-stock company, trust, fund, or any organized group of persons whether incorporated or not, created, organized or existing in, or organized and existing under the laws of the United States of America or any state, territory or possession thereof; or any other trust or estate, other than an estate or trust the income of which from sources outside of the United States of America is not includible in gross income for purposes of computing United States income tax payable by it, (C) any other trust in which one or more of the persons speci?ed in clause (A) and (B) above have a cumulative direct or indirect bene?cial interest in excess of 50 percent of the value of the trust, (D) any other non-corporate entity in which one or more of the persons speci?ed in clause (A) or (B) above, directly or indirectly, have more than a 50 percent bene?cial interest, any other corporation in which one-or more of the persons speci?ed in clause (A) or (B) above, directly or indirectly, own stock possessing more than 50 percent of the total combined voting power of all classes of stock entitled to vote, or more than 50 percent of the total value of shares of all classes of stock, and (F) any other corporation, partnership, association, joint-stock company, trust, fund, organized group or persons whether incorporated or not with respect to which one or more of the persons speci?ed in clauses (A) or (B) above have the power to exercise a controlling in?uence over the management or policies, unless such power is solely the result of an official position with such cempany Person"); (2) no offer to purchase such shares was made to me/us while I waste were in the United States; (3) We did not agree to purchase such Shares while in the United States; (4) We will not attempt by any -means, to offer, originate or execute an agreement to sell such Shares while in the United States and (5) We agree that We will not, directly or indirectly, participate (de?ned below) in any business or enterprise with any past, present or future employee of the Fund, its general partner or its af?liates in any geographical area in which the Fund now conducts business, presently intends to conduct business, or has conducted business. The term "participate" includes any direct or indirect interest in any enterprise, whether as an investor, of?cer, director, employee, partner, sole proprietor, agent, representative, independent contractor, consultant, franchiser, franchisee, creditor, owner or otherwise; provided that the term "participate" shall not include ownership of less than two percent of the stock of a publicly-held corporation whose stock is traded on a national securities exchange or in the over-the?counter market. Investor agrees that this covenant is reasonable with respect to its duration, geographical area and scope. We also agree that We shall not induce or attempt to induce or solicit any past, present or future employee of the Fund, its generalpartner of its af?liates to participate in any business with Investor. or its a?iliates or in any way interfere with the relationship between the Fund and any of its employees; or (ii) induce or attempt to induce any investor or other business relation of the Fund to cease doing business with the Fund or in any way interfere with the relationship between the Fund and any customer, investor or business relation. We agree and understand that the Fund would suffer irreparable harm from a breach by me/Case 2: 10- c-v- O.-0555 RAJ Document. 8-.6 Filed 04/01/10--. Page 151 .of .190 agreements contained herein, and that money damages would not be wholly adequate to remedy such breach. In the seam. of .a breach tar an .allasad. 9r.- threatened aof. thapmtisisassf this immanent the Fund . .- . -- or its successors or assigns may, in addition to all other rights and remedies in law or in equity existing in their favor, redeem the investment made by rue/us, and apply to any court of competent jurisdiction for injunctive or other relief in order to enforce or prevent any violations of the provisions hereof, without the posting of any bond or any other security. We agree that these provisions are reasonable. If the subscriber is a bank or broker?dealer, the subscriber hereby represents and warrants, when it is acquiring Shares on behalf of clients for investment purposes, that such clients are not US. Persons, that it will notify the Fund if it shall come to its knowledge that any such client is or has become a U. Person, that it will not at any time knowingly transfer or deliver the Shares or any part thereof or interest therein to a U. S. Person, and that it will not make any transfer thereof 1n the United States of Amenca, its territories or possessions. Hwe declare that in subscribing for Shares' in the Fund, I/each of us am/is a Professional Investor within the meaning of the Mutual Funds Act 1996, as amended in that: [check one or both] My/our ordinary business involves, whether for my/our own account or the account(s) of (an)other(s), the acquisition or disposal of property of the same kind as the property, or a substantial part of the property - which' 1s (or will be) owned by the Company, as detailed 1n the Con?dential O?'ering Memorandum of the Company. My/our net worth (in the case of a natural person, whether individually or jointly with my spouse) . . exceeds 000, 000 or its equivalent' 1n any other law?rlly recognized currency and I/we consent to be treated as a Professional Investor for the purpose of an investment in the Company. Shares will be held' 1n book entry form for the subscriber, following acceptance, by the Administrator, UBS Fund Services (Cayman) Limited. If requested, Share Certi?cates may be issued in the name of a nominee. If this facility is required, please ?ll in name of nominee: The Subscriber hereby designates and appoints UBS Fund Services (Cayman) Ltd, through its authorized of?cers and directors, with ?ill power of subscription, as its true and law?rl Proxy and Attorney-in-Fact for the purpose of voting the shares herein subscribed for as said Proxy may determine on any and all matters which may arise at any annual or special meeting of shareholders and upon which such shares could be voted by shareholders present in person at such meeting. This Proxy may be revoked by the owner of record of the shares hereby subscribed for, either personally or by presentation of a subsequently executed proxy at any annual meeting or special meeting of shareholders, or by written notice to UBS Fund Services (Cayman) Ltd, UBS House, 227 Elgin Avenue, P.O. Box 852, George Town, Grand Cayman, Cayman Islands. Case Document 8-6 Filed 04/01/10 Page 152 of 190 Signature Page for Subscription by an ENTITY SHARES TO BE REGISTERED AS FOLLOWS: ENTITY OWNERSHIP - Check form of organization: [i CORPORATION - Please include certi?ed resolutions (or similar documents) authorizing signature. PARTNERSHIP - Please include a copy of the partnership agreement (or similar document) authorizing signature, Govern mm+ 95?" a? ma? - Please include a copy of the trust agreement.(mu a? Val BANK or BROKER-DEALER See Page A-z (Please print all information exactly as you wish it to appear on the Company's records 6L bud-cc \i?f in? HM (Name of Subscriber) (E-Mail Address) abl lit-rdAve. gvs'icge'o Seal?; Will . 20C: C9 g'l?ilq (Address) 8/3 7/ (Telephone- Days) (Facsimile) ease act, #1354? S753 Geo (Country of Formation) (Telephone - Evenings) The undersigned trustee, partner or officer warrants that he has full power and authority from all bene?ciaries or partners or from the board of directors of the entity named below to sign this Share Application Form on behalf of the entity and that'a purchase of Shares in Epsilon Global Active Value Fund II Ltd. is not prohibited by the governing documents of the entity. rDated: OW Signatures of Entity Subscriber(s) (Please print name below each signature): Qe?id?tmcw'i $4954 oriz teo . i gLTegoir?i?s EKS. (Name and Title) By. - (Trustee, partner or authorized corporate of?cer (Name and Title) A . .. Case 04/01/10 Page 153.0f 190 SUBSCRIPTION INFORMATION SHARE REGISTRATION INFORMATION . MAILING (POST) INFORMATION (if otherthan address of registration) \ayce'r? wtyw?g?im Name I S?m 771:?: Ave. Sam Ron Address Ska/We. QFWV ?03 A Country of Residence - 20g- 4132/sz Telephone ems-:33 an) Telephqne (Evenings) REMITTING BANK BANK FOR TRANSFERS in case of redemptions (if other than Name Sr. Address ofRemitting Bank): w, i I Ema Name . ?151 A 03A 90% ?f Country of Residence we (78% mar?20., yam-IR Telephone . - f4 {Tr cf. Se Telephone (Evenings) Fax Case ?Document 0:6 Filed 04/01/10 . Epsilon References Epsilon Investor References: Mr. James Manley President . Atlantic-Paci?c Capital, Inc. 411 West Putnam Avenue, Suite 340 Greenwich, CT 06830, USA (203) 862?9182 Mr. Kevin Hite UBS Financial Services Inc. 1285 Avenue Of Americas New York, NY (212)713-8854 MI. Vicente Zaragoza The Pentium Fund 3857 Birch Street, Suite 213 Newport Beach, CA 92660, USA (714) 751-1624 Professional References: Mr. Gordon McDonnell Executive Vice President Ie?eries Company 11100 Santa Monica Blvd., 11th Floor Los Angeles, CA 90025, USA (310)914-1155 Mr. Bruce Tolbert Prudential Securities Inc. 880 Munson, Suite PO. Box 1286 Traverse City, MI 49686, USA (231) 929-4700 Mr. Jim Glanzer BNP Paribas 787 Seventh Avenue New York, NY 10019, USA (212) 841~2623 Page 154 of 190 Case Document Filed 04/01/10 Page 155 of 190 EPSILON GLOBAL ACTIVE VALUE FUND II LTD. REDEMPTION REQUEST FORM - This form should be saved and may be used by a sharehoider wishing to redeem Shares in the Fund. Redeeming shareholders should complete and return this form. TO: EPSILON GLOBAL ACTIVE VALUE FUND II LTD. c/o Equinoxe Alternative investment Services (Ireland) Limited Equinox: House Marina Village Mulahidc County Dublin lreltmd cfo Epsilon Investment Management L.L.C. Grand Rue 3 1820 Mo ntreux Switzerland Fax to nt: (353) 1-8 i6-S722; and Fax to the Fund at?. 4t-21?962-880l 26 .30? Dear Sits: hereby request redemption. as de?ned in and subject to all] of the terms and conditions of the Con?dential Offering Memorandum of Epsilon Global Active Value Fund II Ltd. ("the Fund"). as it may be amended, of b11155 Shares, representing [par@oi? my Shares in the Company. I understand that redemption will? only be effective as of the close of business on the last day of a calendar quarter (the ?Redemption Date?), upon at least forty-?ve (45) days prior written notice to both the Fund and the Administrator. I understand that once I have provided my redemption request to the Fund and the Administrator via facsimile: the original signed redemption request must be received by the Administrator prior to the Redemption Date; and (2) I must receive written con?rmation from the Administrator that the faxed redemption request has been received by the Administrawr. Except as otherwise provided in the Con?dential Offering Memorandum. payment of 90% of the redemption proceeds will be made within thirty (30) days after the effective date of redemption with balance being paid within ?fteen days nFIer receipt by the Fund of its unnuui audited statements for such fiscal year. If I have been issued share certi?cates, I enclose my Share certi?cates. duly endorsed for hereby represent and warrant that i am the owner of Shares ofthe Company with full power and authority to request redemption of the Shares which are the subject if this request: (ii) I um not a Person" (as that term is de?ned in the Information Memorandum) or i um 21 quali?ed employee bene?t plan within the meaning of ERISA and exempt from 1.1.8. taxation under IRC sec. 40ltasimilar plan exempt from U.S. taxation under sec. 408, or I am an organization described in' IRC sec. and am exempt from us. taxation under IRC sec. 501(a). Such Shares are not subject to any pledge or otherwise encumbered in any ?tshion. . EXHIBIT Case Document 8-6 Filed 04/01/10 Page 156 of 190 acknowledge this I cannot make a partial redemption of less than 1135100000 of Shares as the Net Asset Value is de?ned in the Con?dential Offering Memorandum is computed as the date of redemption and if I am making a partial redemption. that my redemption request will be honored only if it does not reduce the Net Asset Value of my remaining Shares below the minimum subscription amount required of new the shareholders of the Fund. I understand that my redemption request. once received by the Fund and the Administraton is revocable only with the consent of the Investment Manager, which may withhold its consent for any reason in its sole discretion. My signature has been guaranteed by a commercial bank acceptable to the Fund. C-3 tr Case Document 8-6 Filed 04/01/10 Page 157 of 190 REDEMPTION REQUEST FORM (Continued) WIRE IONS (to be completed by redeeming shareholder): Bank name and address; Wg?j I .3an Account: 000 2.73 (3?0 I AccoumName: DH af? 52?!er . Account No: L115 3' 55 1 SIGNATURES MUST BE IDENTICAL TO IN WHICH SHARES ARE REGISTERED Sem?Ht Oh Ra?vammf Susl'Cm #20 3'71 Ava, 'Sfc. 1000 PRINT: Name 01 Oxwlr of Shares Address SCHIHE, WA 63104 ENTITY SHAREHOLDER (OR ASSIGNEE) INDIVIDUALSHAREHOLDEMS) CORPORATION OR (OR ASSIGNEE) Sggf?c 0% aMfmfaga? ch??M 53311444 g; I [Signalmuc 01' purulcrn (Signature of individual at assigned) carpal-ale of?cer or trustee Lemma derw FyewhveDwecI?or Numc :uId Tillc [Signulum of individual or assigncc(Signulun) of partner. unlhonzcd carpnrulc of?cer or lrusloc ?Th/es? M. MM: magma Wimr Name and Title Signatur?s) guaranteed by: C-4 Case Document 8-6 Filed 04/01/10 Page 158 of 190 REDEMPTION INFORMATION SHARE REGISTRATION INFORMATION gea?lt BWet?' Name me Are. {000 ,Swm @5104 0.3.A. Country of Residence mu. (018'. NM Telephone 2.00. 255. Tcicphonc (Evcnings) 200. 3?80. Hob Fax BANK FOR TRANSFER OF REDEMPTION am: L120 wuw? Liam 51-. 5cm Wusw .- 0A W003 0.8.24. Country of Residence Telephone (Evenings) Fax C-S MAILING (POST) INFORMATION (if ozher man address ofregisu'mion) Name Address County of Residence Te] ho nc TelePhone (Evenings) Fax Case Document 8-6 Filed 04/01/10 Page 159 of 100 City of cattle - m) Seattle City Employees? Retirement System 720 Third Avenue, Suite 1000, Seattle, WA 93104, Phone: (206) 386-1292, Fax: (206) 386-1506 Cecelia M. Carter, Executive SEATTLE CITY RETIREMENT SYSTEM SEATTLE, WASHINGTON BESQLHILQN BE l'l? RESOLVED, that the Executive Director, Cecelia Carter, with the Finance and Operations Manager, Michael K. Akiyama, 01 the Investment Strategic Advisor, '1 eresa M. Wells, of the Seattle City Employees Retirement System be authorized and empowered to endorse on behalf of the members of the Seattle City Employees' Retirement System Board of Administration for transfer, assignment and sale, any certi?cate of stock, registered bonds, or othel securities, belonging to the Seattle City Employees' Retirement System, or make purchases or acquisition on behalf of the Seattle City Employees' Retirement System. The above authorization is pursuant to guidelines approved by the SCERS investment Committee and Board of Administration This authorization includes establishing and maintaining one 01 more accounts for the purpose of purchasing, selling, and trading in 881? 500 futures contiacts, and (2) opening futures accounts and implementing obligations with respect thereto, and In conjunction therewith to transfer deposit, pledge, rollover, close or make or take deliVery of cash, securities and futures contracts. BE IT FURTHER RESOLVED, that the Executive Directm, Cecelia Carter, 01 the Finance and Operations Manager, Michael Akiyama, or the Investment Strategic Adviser, Teresa M. Wells, of the Seattle City Employees' Retirement System be authorized to vote proxies. 1, Mark McDermott, Secretary of the Seattle City Employees' Retirement System Board of Administration, hereby certify that the foregoing is a true and complete copy of a resolution duly adopted by the Board of Administration at a meeting held on the 3- day of December 2009, at which a quorum was present, and that said resolution has not been repealed or amended and remains in full force and effect. BOARD OF ADMINISTRATION SEATTLE CITY RETIREMENT SYSTEM W. meme? Mark McDermo tt, Secretary Filed 04/01/10 P53199460 . City of Seattle Seattle City Employees? Retirement System 720 Third Avenue, Suite 1000, Seattle, WA 98104, Phone: (206)386?1292, Fax: (206) 386-1506 Cecelia M. Carter, Executive Direrior FORM OF INCUMBENCY CERTIFICATE The undersigned, being the Secretary of the Seattle City Employees Retirement System a city retirement system organized under the Seattle Municipal Code and the laws of the State of Washington (the "Company"), does hereby certify on behalf of the Company that the persons named below and that the signature at the right of said name, respectively, is the genuine signature of said persmi and that the persons listed below are each an authorized signatory for the Company. Cecelia Mi Carter Executive Director Michael K. Akiyama Finance and OperatiOns Manager ?7 Teresa M. Wells investment Strategic Adviser 1M- {Jr/?q IN WITNESS the undersigned has he] eunto set his hand as of the lhday of December 2009. Mark McDermott, Secretary 7 MM- THE UN DERSIGNED, Dwight Dively, the duly authorized Treasurer, does hereby certify that Mark McDermott is a duly authorized of?cer of Seattle City Employees' Retirement System and that the signature set forth abOVe is his true and correct signature. 1N WITNESS WHEREOF, the undersigned has executed this certi?cate as ofthe day of December 2009. Dwight Dively Treasurer ?e . . Case Document 8-6 Filed 04/01/10 Page 161 of 190 Epsilon Investment Management Grand rue 3, CH-1820 Montreux, Switzerland Tel: +41-21~966-7900 Fax: +41?21-962?8801 February 4, 2010 Memorandum to Epsilon Global Active Value Fund Epsilon Global Active Value Fund II Ltd. Epsilon Structured Strategies Fund ., Westford Special Situations Fund Ltd., and Westford Special Situations Fund ll Ltd. Epsilon 8: Westford' Versus Selected lndices 2005 Last Correlation 2nd Quarter 3rd Quarter 4th Quarter YTD 24 months EGAVF EGAVF ll ESSF WSSF Epsilon Gobal Active Value Fund Ltd? 1.23% (0.40% 1.67% 1.77% 6.78% Epsilon Gobal Active Value Fer It 2.05% 0.08% 2.18% 3.55% 10.04% Epsilon Structued Strategies Ltd" (1 (1 (2.60% 26.50% Special Situations Fund 219% 0.50% 2.04% 5.26% 17.72% Vtestfortl Special Situations I 1.03% 0.59% 1.63% 1.63% 500 hdax 1 5.91% 15.59% 5.04% 26.47% (20.31)% 0.03 (0.1 1) (0.05) (0.06) MSCI Global EAFE hdex 15.92% 14.52% 3.33% 24.72% (25.51% (0.04) (0.14) (0.00) (0.03) CSFB Washable Hedge I'dex 3.85% 4.60% 3.29% 16.62% (14.06)% 0.14 0.07 (0.04) 0.13 Merrill Ly'm hueslment Grade Bond hdex 8. 61% 7. 04% 1 33% 16. 27% 10. 76% (0. 06) (0. 01) (0.03) 0.06 Returns are net of fees. Fund was launched on July 1. 2009 YTDI ?gures are inception to date Correlation data is not relevant due to limited history. We set forth above our quarterly performance summary for the second, third and fourth quarters. As ourresults re?ect, during 2009, as throughout the history of our Funds, we have made no attempt to capture short?term market rallies, but instead have focused consistently, with the success that our longer term results re?ect, on providing attractive risk?adjusted returns with no correlation to the broader markets. Particularly because we believe markets globally appear poised at the edge at what may, at least in retrospect, be regarded as an historically signi?cant in?ection point, we would be remiss if we did not afford our investors the opportunity to evaluate our profound skepticism regarding the sustainability of current market valuation levels Following theburst of the" technology bubble in 2000, the reached its bottom nearly three years later, in March 2003. From the daily low close in March of 2003, it took no fewer than 793 days for the index to rally 60%. By way of comparison, from the daily low close in March of 2009 (the generally accepted ?bottom" of this bear market), the has rallied 60% in less than one-fourth that time thus recording one of history?s most rapid market rallies. A great many market observers have pointed to the bear market rally of 1929? 30 as an instructive contrast, and have contended that since the current rally has persisted for more than six months without nosing over, we are in a new bull market. To us, however the more compelling historical analogy is the behavior of the Nikkei following the burst of the Japanese asset bubble in 1989. in a manner anticipating the current extraordinary central bank and government interventions, no one has built more bridges or paved more riverbeds than the Liberal Democratic Party of Japan. Whether or not as a result since 1990 the Nikkei has managed no fewer than four 50%+ rallies and six 20%+ rallies. Yet the Nikkei is down over 74% from 1990 through 2009. These are the grim hallmarks of deflationary credit collapse. - Case Document 8-6 Filed 04/01/10 Page 162 of 190 The US consumer continues to deleverage at a pace unseen since the Great Depression. During 2009, total consumer credit shrank 3.7% during the year and 3.95% from its peak, and has contracted in 11 of the past 12 months. During theithird quarter, weekly hours worked in the US fell to an allv'time low of 33 hours. The unemployment rate is 10%, less than 1% below the postwar high seen in 1982. For 23 consecutive months, the longest such stretch in data going back to 1929, US non?farm payrolls have contracted. Never before have we experienced a 60% rally in risk assets while also losing 2.7 million jobs. The rally in investment grade credit has been remarkable. For prime borrowers, spread levels have now returned to levels unseen since the Federal Reserve arranged the shotgun marriage between JP Morgan and Bear Stearns?although for other borrowers the credit markets remain highly dislocated and volatile. Since that time, the US has lost 6.1 million jobs. Markets are pricing in GDP growth of but when 70% of the world?s largest economy is the consumer, and said consumer has seen his working hours shrink to the lowest level in history, and his credit contract at a record pace to a level that has now reached we believe the only rational conclusion is intense skepticism that current equity and credit market valuations are sustainable for any length of. time. We are also writing to apprise you of important decisions that we are taking regarding the Epsilon and Westford Funds. In part, these decisions are motivated by our concern, as discussed above, regarding the persistence and possible intensi?cation of credit market dislocation and volatility. As discussed below, certain other developments also have contributed to these decisions. All of these decisions have been reached after painstaking consideration on our part and, in the case of the offshore Funds, each such Fund?s Board of Directors. All of these decisions reflect our (and the Boards?) dedication to the best interests of the Funds and their investors, and our (and their) conviction that these decisions will best serve those interests. First, effective as of the date of this letter, all of the Epsilon and Westford Funds are being closed to new subscriptions. Second, effective as of the date of this letter, we are temporarily suspending the redemption 'of shares or limited partnership interests, as the case may be, in three of our Funds: Epsilon Global Active Value Fund (LP Ltd.) (?Epsilon Epsilon Global Active Value Fund II (LP Ltd.) ("Epsilon and Westford Special Situations Fund (LP Ltd.) (?Westford We take this second step with great reluctance, for the reasons discussed below. For Westford in particular, the decision to suspend redemptions stems largely from the ongoing lack of suf?cient liquidity in both the credit markets and the Westford portfolio, and what we see as the diminishing prospect that credit market liquidity will recover meaningfully in the near future, as we had previously anticipated. During 2005-07, prior to the market crash, as equity?oriented investment strategies performed well, Westford endured substantial redemptions, which the Fund was able to meet in full through disposition of portfolio securities. Beginning in late 2007, as credit market liquidity sharply diminished and then, in 2008, virtually collapsed, Westford was no longer able to meet redemptions in full. Redemptions. fell off sharply in early 2008 and have remained light, and during 2008-09 WSSF has made ?ve pro rata partial payments of redemption proceeds to redeemed investors. Currently, the four largest positions in Westford are direct lending positions representing approximately 63% of Westford l?s portfolio assets. These positions consist of fully secured credit extensions to certain distressed issuers, in furtherance of a distressed lending/loan?to- own strategy along the longer investment horizon characteristic of this strategy. The Manager is a very experienced and skilled practitioner of this strategy, and we believe that all of these investments offer the prospect of highly attractive investment returns. We are pursuing de?nite ?harvesting? strategies for all of these investments, and we are highly con?dent that, given the time and opportunity to bring these strategies to fruition, as we are in the best position to do, we Case Document 8-6 Filed 04/01/10 Page 163 of 190 will both secure for the Westford Funds the attractive returns that we have anticipated from these investments and, of course, complete payment of the remaining unpaid'Westford redemption proceeds. Another factor in?uencing our decision to suspend redemptions in the three Funds named above is that we have not yet received ?nal audited ?nancial statements for the Epsilon and Westford Funds for their ?scal years ended December 31, 2008, from PricewaterhouseCoopers Accountants N.V. the Funds' independent accountants since 1998. Until December of 2009, we had expected the audited statements to be released before the end of 2009. However, we have been advised by that the release of the audited statements has been delayed because of contacts to from the Staff of. the US. Securities and Exchange Commission (the in connection with a private and con?dential order of investigation relating to Westford, which was delivered'to us by the Staff in May of 2009. We understand that the investigation has come to focus largely on matters relating to the valuation of the direct loan investments in the Westford portfolio discussed above. These are fully collateralized loans that, in accordance with industry and accounting convention, are valued simply at'face' value plus accrued interest. From the beginning of the 2008 audits, we and have gone to unusual including independent audits and valuations of several of these investments by leading independent accountants and valuation experts, all for the purpose of determining beyond reasonable doubt whether each of these investments was unimpaired and thus correctly valued. We are therefore con?dent that our positions in this regard will be sustained. To date, the SEC has not advised us of any conclusions from its investigation, nor have we been charged with any wrongdoing. We believe we have at all times conducted ourselves appropriately. We have been cooperating fully with the Staff in this investigation. During the next few days, we shall be reaching out to each of you individually to discuss these matters with you. We very much appreciate the trust and con?dence you have placed In us, and very much hope that you will remain steadfast In these challenging times. Sincerely, Steve G. Stevanovich Case Document 8-6 Filed 04/01/10 Page 164 of 190 Carter, Cecelia ?rom: Carter, Cecelia . ant: Friday, February 12, 2010 3:22 PM 0: 'Karen Tomblin'; 'George Rudman' Cc: 7 Welis, Teresa; Seu, Carlton . Subject: Seattle CERS Epsilon Conference Call 02.12.2010 George Karen; i want to thank you both, and your compliance of?cer? Ed Bergman, Esq. again for taking time to speak with the representatives of Seattle City Employees? Retirement System (SCERS) this morning myself, Teresa Wells, and Carlton Seu, Esq. Both Ms. Wells, Mr. Seu. and myself found the dialogue to be most informative and very productive. The conversations helped further our understanding of the position the Epsilon Global Value Fund II (the "Fund?) is in. We look forward to receiving a formal statement from thefFund of December 31, 2009 holdings as a percentage of the entire Fund. We further understand the current gating of redemption request is a business decision and not a mandatory, statutory, or contractual requirement. That said; i would like to reiterate on behalf of the Seattle City Employees? Retirement System our Notice for full redemption of our share of the Fund?s assets as outlined in the two subscription documents executed on behalf? Notice, which was made to the Fund January 28, 2010. We await your re-evaiuation of the Fund?s position with regards to this request. Alternatively, we ask for the Fund'to consider redeeming 85% ofthe position within the subscription documents timeline and hold back 15% pending completion of the Funds 2008 audit, or other event-driven circumstance providing a full release of held back monies. We await your evaluation of. this ?quest as well. We would greatly appreciate feedback from you regarding these request by close of business Tuesday, .bruary 23, 2010. in the meantime; we certainly look forward to your update communications regarding this Fund as things unfOld; the more communication the better. Best Regards, Cecelia M. Carter Executive Director Seattle City Employees' Retirement System 720 Third Avenue, Suite 1000 Seattle, WA 98104 Office Telephone: 206.386.1292 City Mobile Number: 206.255.4117 Office Fax: 206.386.1506 NOTICE: This communication may Contain privileged or other con?dential communications. If you have received this message in error, please advise the sender by reply email and immediately delete the message and any attachments without copying or disclosing the contents. Thank you. . Tracking: EXHIBIT Case Document 8-6 Filed 04/01/10 Page 165 of 190 Investor Statement Cecelia Carter Email: Seattle City Employees Retirement System 720 Third Avenue Suite 1000 Seattle WA 98104 UNITED STATES Investor Id: 001063 Investor?Name: SEATTLE CITY EVIPLOYEES RETIREMENT SYSTEM ren . --.: Class USD Lll'cii?gi?Summag?sg, 7. 7 l. Haiti}: - Valua?on=? . Openin'g Position: 01/12/2009 142,674.58 . 174.12 24,842,497.87 Addltions In the period: 0.00 0.00 Subtractions in the period: 0.00 0.00 Closing Position: 31/12/2009 142,674.50 174.221 24,856,765.33 Market Value Variation: 14,267.46 Valuation Change: 0.0574026 Should you have any questions please feel free to contact David Barry at dbarw?equinoxeaiscom or David McCom'Iack at: dmocormack@equinoxeais.com. QM Page 1 of 1' Document 8-6 Filed 04/01/10 Page 166 of 190 From: Carter, Cecelia Sent: Monday, March 08, 2010 3:19 PM To: 'Karen Tomblin'; 'George Rudman' Cc: Wells, Teresa; Seu, Carlton Subject: Epsilon Global Active Value Fund II . Importance: High Dear George and Karen, We haven?t heard back from you with respect to the February 12, 2010 email from me regarding our alternative redemption request of 85%. Please let us know by the end of this week whether Epsilon will agree to the alternative redemption request. . Further, I must insist and therefore request that you provide us with additional information regarding position in the Epsilon Global Active Value Fund II Ltd. in Mr. Stevanovich's February 4, 2010 memorandum/correspondence, the justi?cations provided for gating redemptions are all related to issues with the Westford funds, not Epsilon Global Active Funds. Speci?cally, the two reasons set forth by Mr. Stevanovich for gating were: (1) lack of liquidity in Westford; and (2) PwC's failure to provide audited ?nancial statements because . of an ongoing investigation by the SEC into Westford. From our perspective neither of these reasons justify: the withholding of audited ?nancial statements for Epsilon Global Active Value Fund ll or associated ?nancial records if the audited ?nancial statements for Epsilon are not complete; and refusing to redeem shares in Epsilon Global Active Value Fund II Ltd. As a result, 1 would like to meet with you at our of?ces on Monday, March 15 2010 at 9 a. or 10am. At this meeting, please be prepared to provide SCERS with: (1) the 2008 audited ?nancial statement if it exist; (2) all underlying documents provided to for the purposes of preparing the 2008 audited ?nancial statement; and (3) an accounting of 5 December 31, 2009 holdings as a percentage of the entire Epsilon Global Active Fund 11 (as requested in our February 12 2010 email). Please con?rm directly back with me your meeting with us on March 15th and the time more convenient for your travels. As you know we are a public pension plan; and thus we appreciate your assistance and understanding of the necessity for transparency in all SCERS investments. 1 look forward to hearing from you soon. Best Regards, Cecelia M. Carter Executive Director Seattle City Employees' Retirement System 720 Third Avenue, Suite 1000 Seattle, WA 98104 Of?ce Telephone: 206.386.1292 City Mobile Number: 206.255.4117 3/14/2010 . . Of?ce Fax: 206.386.1506 NOTICE: This communication may contain privileged or other confidential communications. If you have received this message 'in error, please advise the sender by reply email and immediately delete the message and any attachments without copying or disclosing the contents. Thank you. EXHI :r Case Document 8-6 Filed 04/01/10 Page 167 of 190 Epsilon Global Active Value Fun-d ll Ltd. Road Town, Tortola British Virgin Islands Directors? report and financial statements for the year ended December 31, 2007 Case Document 8-6 Filed 04/01/10 Page 168 of 190 Contents Directors and general information 2 Directors and general information 3 Directors? report 4 Directors? report . 5 Financial statements 6 Balance sheet as at December 31, 2007 7 income statement for the year ended December 31, 2007 8 Statement of changes in net assets attributableto holders of redeemable participating shares for the year ended December 31, 2007 9 Cash flow statement for the year ended December 31, 2007 10 Notes to the ?nancial statements 1 1 Auditor's report 22 Epsilon Global Active Value Fund Ltd, Road Town, Tortola, British Virgin Islands 1 Case Document 8-6 Filed 04/01/10 Page 169 of 190 Directors and general information Epsilon Global Active Value Fungi If Ltd, 2 Road Town, Tortola, British Virgm Islands Case Document 8-6 Filed 04/01/10 Page 170 of 190 Directors and general information Board of directors investment manager Steve G. Stevanovich Epsilon Global Asset Management Ltd. PO. Box 309 Alberto C. d'Abreu de Paulo - George Town, Grand Cayman Cayman islands Registered office Auditors Epsilon Global Active Value Fund ll Ltd. PricewaterhouseCoopers Accountants N-.V. Craigmuir Chambers PO. Box 8800 PO. Box 7'1 8009 AV Rotterdam Road Town, Tortola The Netherlands British Virgin islands Legal counsel Monahan Biagi. P.L.L.C. 701 Filth Avenue. Suite 2800, Registrar and transfer agent (up to November 30, 2006) USS Fund Services (Cayman) Ltd. UBS House . Seattle, Washington 98104 227 Elgin Avenue United States of America PO. Box 85?. George Town; Grand Cayman Cayman islands Custodian and prime broker Goldman Sachs Co One New York Plaza New York, NY 10004 United States of America Epsilon Global Active Value Fund ll Ltd, Road Town, Tortola, British Virgin Islands Administrator, registrar and transfer agent (as of December 1, 2006) . JPMorgan Hedge Fund Services (lreland) Limited Newenham House Northern Cross Malahide Road Co. Dublin lreiand mu, n.1vyqum Case Document 8-6 Filed 04/01/10 Page 171 Of 190 Directors? report 7 Epsilon Global Active Vaiue Fund Ltd, . 4 Road Town, Tortola, British Virgin Islands Case Document 8-6 Filed 04/01/10 Page 172 of 190 Directors? report Results for the year ended December 31, 2007 were satisfactory. The Fund had total investment income of USD 2.908.452 and net income of USD 2,575,547. Total investment income included interest income of USD 100.171 and net gains on ?nancial assets and liabilities at fair value through pro?t or loss of USD 2,808,281. Expenses totaled USD 332,905 for the year. The largest expense was attributed to the management fee of USD 308,928. - Epsilon Global Active Value Fund ii Ltd. and its sister fund. Epsilon Global Active Value Fund LP. are organised into a masterlfeeder? structure with their Master Fund. Epsilon Global Master Fund ll LP. (the ?Master Fund?). The Master Fund employs a global opportunistic and event driven investment strategy, investing in a variety of securities. These include but are not limited to, equities. bonds. bank debts, trade claims, options, swaps. futures. Credit Default Swaps (CD35), Collaterailsed Debt Obligations (CDOs), Collateralised Loan Obligations (CLOs). direct lending and structured products. in conjunction with this strategy. the Master Fund seeks to minimise risk, opportunistically employing hedging strategies for speci?c investments. As a result of the global opportunistic and event driVen investment strategy. the Master Fund's results frequently do not correlate signi?cantly with global stock and bond indioes. The Master Fund requires securities markets to operate with adequate liquidity in order to meet its investment objectives. The Fund began trading in December 2001 and its assets have grown from that date to USD 29.2 million by December 31-; 2007. Due to the nature of the Fund's investments and its global perspective, the directors believe that the Fund has signi?cant capacity for growth. This capacity is further enhanced by thecapabilities and depth oi the Fund?s management team. The investment manager Currently employs twenty investment professionals with considerable investment and trading experience. The Master Fund has thus far employed borrowed funds in the form of margin to establish short positions in both stocks and bonds. For the most part these short positions are used to hedge speci?c related long positions, although there are instances where the Master Fund may sell short a security it views to be overvalued. Steve G. Stevanovich Alberto C. d?Abreu de Paulo July 15. 2008 Epsilon Global Active Value Fund ll Ltd, . Road Town, Tortola, British.Virgin islands 5 Case Document 8-6 Filed 04/01/10 Page 173 of 190 Financial statements Epsilon Global Active Value Fund ll Ltd, 6 Road Town, Tortola, British Virgin Islands C?sl?v,? .. . Case Document 8-6 Filed 04/01/10 Page 174 of 190 Baiance sheet as at December 31, 2007 Notes 2001 2006 USD USD Assets - Financial assets at fair value through profit or loss 3 24,139,222 59,398,416 Other receivables 4,168 Distributions receivable 3,826,033 3,920,069 Other amount receiVable from related entity 68,281 . Other amounts receivable from the Master Fund . - 96,510 - Cash due from banks 1,219,918 249 Total assets 29,354,132 63,318,734 Liabilities - Equalisation shares . . 7 284 Deferred distributions 3,826,034 3,920,069 Other amounts payable to related entity 1,287,602 Fees payable and accrued expenses 6 18,083 225,798 Liabilities (excluding net assets attributable to holders of redeemable. participating shares) 5,131,726 4,146,151 Net assets attributable to holders of redeemable participating shares 7 24,222,406 59,172,583 Total liabilities 29,354,132 63,318,734 Net asset value per share (in USD) I 158.77 149.95 The accompanying notes are an integral part of these ?nancial statements. Epsiion Global Active Value Fund ii Ltd., Road Town, Tortola, British Virgin islands 7 Case Document 8-6 Filed 04/01/10 Page 175 of 190 Income statement for the year ended December 31, 2007 redeemable participating shares from operations Notes 2007 2006 U80 U80 Revenue interest income 100,171 40,826 Other income - 3,750 Depreciation deposit earned - 22,797 Net gains on ?nancial assets and liabilities at fair value through pro?t or loss 2,808,281 5,906,810 Total anestme'nt income 2,908,452 5,974,183 . Expenses Management fees 8 308,928 1,011,950 Administration fees 3 15,890 - Legal and professional fees - 85,642 Other expenses 8.087 10.758 Total expenses 332,905 1,108,350 increase in net assets attributable to holders of 2,575,547 4,865,833 The accompanying notes are an integral part of these ?nancial statements. Epsilon Global Active Value Fund ll Ltd., Road Town, Tortola, British Virgin islands Case Document 8-6? Filed 04/01/10 Page 176 of 190 Statement of changes in net assets attributable to holders of redeemable participating shares for the year ended December 31, 2007 Net assets attributable to holders of redeemable participating shares at January 1, 2006 Subscriptions of redeemable participating shares Redemptions of redeemable participating shares increase in net assets attributable to holders of redeemable participating shares from operations? Net assets attributable to hoiders of redeemable participating shares at December 31, 2006 Subscriptions of redeemable participating shares Redemptions of redeemable participating shares increase in net assets attributable to holders of redeemable participating shares from operations Net assets attributable to holders of redeemable participating shares at December 31, 2007 Number of USD shares 1,543,705 217,221,325 11,349 1,600,000 (1,135,429) (154,514,575) 4,865,833 394,625 59,172,583 2 1,765 (242,065) (37,527,489) 2,575,547 152,562 24,222,406 The accompanying notes are an integral part of these ?nancial statements. Epsilon Gioba! Active Value Fund II Ltd, Road Town, Tortola, British Virgin islands . Case Document 8-6 Filed 04/01/10 Page 177 of 190 Cash flow statement for the year ended December 31, 2007 2007 2006 uso' 080 Cash ?ow from operating activities Increase in net assets attributable to holders of redeemable participating shares from operations 2,575,547 4,865,833 Adjustments. for: Interest income (100,171) (40,828) Operating pro?t before working capital changes 2.475.376 4,825,007 Net decrease in ?nancial assets at fair value through pro?t or loss 35,259,194 158,837,852 Net decrease in other receivables - 56,957 Net increase in other amounts receivable from the Master Fund (96,510) - Net increase in other receivables from and payabtes to related entities 1,21 9,321 - Net decrease in fees payable and accrued expenses (207,715) (804,017) 38,649,666 162,915,799 interest received 96,003 40,826 Net cash from operating activities 38,745,669 162,956,625 Cash flows from financing activities Proceeds from subscriptions of redeemable participating shares 1,488 - Distribution-s paid (37,527,488) (184,588,330) Net cash used in ?nancing activities (37,622,510) (164,588,330) Net increaselidecrease) in cash and cash equivalents 1,219,669 (1,631,705) Cash and cash equivalents at beginning of the year 249 1,631,954 Cash and cash equivalents at end of the year 1,219,918 249 The accompanying notes are an integrai part of these ?nanciai statements. Epsilon Global Active Value Fund Ii Ltd, Road Town, Tortola, British Virgin islands 10 Case Document 8-6 Filed 04/01/10 Page 178 of 190 Notes to the financial statements 1 General Epsilon Global Aetive Value Fund li Ltd. ('the Fund?) was incorporated in the British Virgin islands under the international Business Companies Act (Cap. 291) on October 30, 2001 and commenced operations on December 1, 2001. All assets of the Fund are. and the proceeds from the sale of additional ordinary shares in the Fund will be, invested through a masterifeeder fond structure in Epsilon Global Master Fund ii LP. (?the Master Fund'). a limited partnership formed under the laws of the Cayman islands. in addition to the Fund, the other Limited Partner in the Master Fund, Epsilon Global Active Value Fund L.P.. a Delaware limited partnership. also invests in the Master Fund and other vehicles may be formed in the future to invest in the Master Fund as a Limited Partner. Each such investment vehicle will invest in the Master Fund on substantially the same terms and conditions as the Fund and therefdre will generally be allocated a proportionate share of the Master Fund's gains, losses and expenses based on their interest in the Master Fund, adjusted for any differences in fees. Shares of the common stock of the Fund are offered only to investors who are neither citizens nor residents of the United States of America (natural persons) and to a limited nUmber of United States investors consisting primarily of taxwexempt entities. The declaration of dividends on the shares will be in the discretion of the board of directors, and dividends may be declared only out of retained earnings. The Fund does not presently intend to pay dividend on its shares. The Fund has no employees. The Fund's ?nancial statements were authorised for issue on July 15, 2008, and signed on its behalf by the board of directors. - Mr Steve G. Stevanovich . Mr Alberto C. d'Abreu de Paulo 2 Accounting policies The principal accounting policies adopted in the preparation of these ?nancial statements are set out below. These policies have been consistently applied to all years presented. unless otherwise - stated in the following text, Basis of preparation 7 The ?nancial statements are prepared in accordance with international Financial Reporting Standards The ?nancial statements are prepared under the historical cost convention as modi?ed by the" revaluation of ?nanciai'assets-and ?nancial liabilities held at fair value through pro?t or loss. The preparation of ?nancial statements in conformity with requires the use of accounting estimates. it also requires management to exercise its judgment in the process of applying the Fund's accounting policies. The areas involving a higher degree ofjudgment or complexity, or areas where assumptions and estimates are signi?cant to the ?nancial statements are discios ed in note 4.. Epsilon Global Active Value Fund l! Ltd., Road Town, Tortola, British Virgin islands - 11 Case2:10-cv-00555-RAJ Document 8-6 Filed 04/01/10 Page 179 of 190 . m. uni-unr- These ?nancial statements are the non?consolidated ?nancial statements of the Fund. Separate ?nancial statements have been prepared for the Master Fund and may be obtained from the investment manager of the Fund. New standards and amendments to published standards e?ecthe in 2007 The following standards and amendments are applicable to the und-?s operations and mandatory for the Fund?s accounting period beginning on January 1. 2007 and have been adopted on January 1, 2007: - 7. Financial instruments: Disclosures. and the complementary Amendment to ms 1, Presentation of Financial Statements: Capital Disclosures, effective January 1, 2007 and The Amendment to HAS 1. Presentation of Financial Statements: Capital Disclosures, effective January 1. 2007. The Fund has also applied this new standard and amendment to 2006. 7 introduced new disclosures relating to ?nancial instruments. This standard does not have any impact on the classification and valuation of the Fund's financial instruments. In accordance with the requirements of the Amendment to 1A8 1. additional disclosures have been provided on the Fund's obiect'rves and policies for its capital. which is represented by the net assets attributable to the holders of redeemable participating shares. Amendments not yet effective and which have not been early adopted by the Fund The following amendments to existing standards applicable to the Fund have been published that are mandatory for the accounting periods beginning on or after January 1. 2008 but that the Fund has not early adopted; - - Amendments to 1A8 32 Financial instruments: Presentation. effective January 1. 2009 and Amendments to 1 Presentation of ?nancial statements revision. effective January 1. 2009. Amendments to ms 32 may affect the classi?cation of the redeemable participating shares issued by the Fund in the balance sheet of the Fund. The Fund issues redeemable participating shares. which are redeemable at the holder?s option. Redeemable participating shares can be put back to the Fund at any time for cash equal to a proportionate share of the Fund?s net asset value. The redeemable participating share is carried at the redemption amount that is payable at the balance sheet date if the holder exercises the right to put the share back to the Fund. At December 31. 2007. redeemable participating shares are classi?ed as liabilities in terms of 32 before this amendment. it is expected that the amendment to this standard may result in the classi?cation of redeemable participating shares as equity in the balance sheet of the Fund. 1A8 ?l affects the presentation of owner changes in equity and of comprehensive income. it does not change the recognition. measurement or disclosure of speci?c transactions and other events required by other standards. Standards and interpretations to existing standards that are not yet effective and not relevant for the Fund?s Operations The'foil'owing standards and interpretations-to existing-standards have been. published that are mandatory for the Fund's accounting periods beginning on or atter?l January 2008 or later periods but are not relevant for the Fund's operations: 12. Service Concession Agreements (effective from January 1. 2008); 13, Customer Loyalty Programmes (effective from July 1. 2008); Epsilon Global Active Value Fund ll Ltd, Road Town, Tortola. British Virgin islands 12 Case Document 8-6 Filed 04/01/10 Page 180 of 190 ?14. 1A5 19 The Limit on a De?ned Bene?t Asset, Minimum Funding Requirements and their interaction (effective from January 1. 2008) and 8, Operating segments (effective January 1. 2009). Ail references to net. assets throughout this document refer to net assets attributable to holders of redeemable participating shares uniess otherwise stated. The balance sheet presents assets and liabilities in increasing order of liquidity and does not distinguish between current and non?current items. All the Fund?s assets and liabilities are held for the purpose of being traded or are expected to be realised within one year, with the exception of redeemable participating shares. Foreign currency translation Functional and presentation currency . The ?nancial statements are prepared in United States dollar (USU), this being the Fund's functional currency. Management determined USD as the functional and presentation currency for the Fund to re?ect the fact that the issued ordinary shares of the Fund are denominated in and most of the Fund's investments are denominated in USD. Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates'of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year?end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. When a gain or loss on a non-monetary item is recognised in pro?t or less, any exchange compdnent of thatgai-n or loss shall be recognised in pro?t or loss. Translation differences on non-monetary items such as ?nancial assets held at fair value through pro?t or loss are reported as part of the fair value gain or loss. Financial assets and liabilities at fair value through pro?t or loss a Classi?cation: . All ?nancial assets and liabilities categorised as ?nancial assets and liabilities at tair'vaiue through profit or loss are held for trading. Financial assets or liabilities held for trading are acquired or incurred principally for the purpose of selling or repurchasing in the short term. Recognitionlderecognition: Regular-way purchases and sales of investments are recognised on trade date - the date on which the Fund commits to purchase or sell the asset. investments are initially recognised at fair value. investments are derecognised when the rights to receive cash flows from the investments have expired or the Fund has transferred substantially ail risks and rewards of ownership. - Measurement: Investments are initially recognised at fair value. Transaction costs for all ?nancial assets and ?nancial liabilities carried a't'fair ?value ?th?rough?pro?t or loss-are expensed in theinceme- statement as part of net gains/losses .on ?nancial assets and liabilities at fair value through pro?t or loss as incurred. Epsilon Globai?Actrve Value Fund :1 Lint, Road Town, Tortola, British Virgin islands 13 In an mun-an: I Case Document 8-6 Filed 04/01/10 Page 181 of 190 - Fair value estimation: The Fund follows the following measurement hierarchy when determining the fair value of ?nancial assets and liabilities at fair value through pro?t or loss: a. For instruments traded in active markets, quoted prices are used; b. For instruments for which there is not an active market. recent market transactions are used and c. For instruments for which there is neither an active market nor a recent market transaction. valuation techniques are used. Unlisted securities are valued at their fair values as determined by management in consultation with the investment manager in accordance with recognised accounting and ?nancial principles. in this respect, investments in other investment companies are valued at fair value which is the net asset value per share on the clay of valuation as calculated by the related administrators. unless the directors are aware of good reasons why such valuation would not be the most appropriate indicator of fair value, The fair value of investments is based on available information and does not necessarily re?ect the amounts which might ultimately be realised. Such realisation depends upon future events and circumstances. Due to the inherent uncertainty of valuations. these estimated values may differ materially from the values that would have been used had a ready market for the investments existed. Determination of, gains or losses on ?nancial assets and liabilities at fair value through pro?t or loss Both realised and unrealised gains and losses on ?nancial assets and liabilities at fair value through pro?t or loss are taken as income and expenses as incurred. Realised gains and losses on sales of ?nancial assets and liabilities at fair value through pro?t or loss are calculated on a ?rst in ?rst out basis. Other fair values For all other categories than ?nancial assets and liabilities at fair value through pro?t or loss. at December 31. 2.007 and December 31, 2006, the carrying amount of all financial assets and liabilities approximates their fair values. - Offselfing ?nancial instruments Financial assets and liabilities are offset and the net amount is reported in the balance sheet when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis. or realise the asset and settle the liability simultaneously. Other receivables Receivables are non-derivative ?nancial assets with'fixed or determinable payments that are not quoted in an active market. Receivables are recognised initially at fair value plus transaction costs that are directly attributable to their acquisition or origination. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. Dismal-Jams receivable Distributions receivable represent a receivable from the Master Fund for accepted redemptions made in the Master Fund during the year. not yet received at year-end. Other amounts receivable from related entity Other amounts receiVable from related entity'represent amounts receivable from Epsilon Global Master Fund L.P. Epsilon Global Active Value Fund ll Ltd., . Road Town, Tortola. British Virgin Islands . 14 Case Document 8-6 Filed 04/01/10 Page 182 of 190 Other amounts receivable from the Master Fund Other amounts receivable from the Master Fund represent amounts receivable from Epsilon Global Master Fund ll L.P., the Master Fund of the Fund. Cash and cash equivalents . i For the purpose of the cash flow statement, cash and cash equivalents include cash in hand. deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less. and bank overdraits. Equallsation shares Equalisation shares represent the amount issuable in redeemable participating shares to investors to equalise timing differences between individual investors with respect to the accrual of performance fees. Deferred distributions Deferred distributions represent amounts payable to shareholders for: 90% of the redemption requests received: and accepted by the Fund in the last 30 days before the ?nancial yeanend and a retained portion of 10% of the value of redemption's received and accepted during the year, both of which-are payable to the redeeming shareholders within 15 days of the date of distribution of these audited ?nancial statements to the Fund. Interest on deferred distributions which is charged at the month-end interest overdraft rate as used by the Fund's main broker. Goldman Sachs Co. The interest is accrued and paid when the applicable deferred distribution is paid to the shareholder. Other amounts payable to related entity Other amounts payable to related entity represent amounts payable to Epsilon Global Active Value Fund ll L.P., the other feeder fund of?the Master Fund of the Fund. Fees payable and accrued expenses Fees payable and accrued expenses are recognised initially at fair value and subsequently stated at amortised cost. The difference betweenthe proceeds and the amount payable is recognised over the period of the payable using the effectiVe interest method. The effective interest method is a method of calculating the amortised cost of a ?nancial asset or financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts throughout the expected life of the ?nancial instrument, or a shorter period where appropriate, to the net carrying amount of the ?nancial asset or ?nancial liability. When calculating the effective interest rate. the Fund estimates cash flows considering all contractual terms of the ?nancial instrument (for example. prepayment options) but does not consider future credit losses. The calculation includes all fees and points paid or received between parties. to the contract that are an integral part of the effective interest rate. transaction costs and all over premiums or discounts. Redeemable participating shares . The redeemable participating shares oi the Fund are redeemable at the holder?s option. and are classi?ed as ?nancial liabilities. Epsilon Global Active Value Fund ll Ltd, - Road Town, Tortola, British Virgin islands 15 Case Document 8-6 Filed 04/01/10 Page 183 of 190 A Each ordinary redeemable participating share carries one vote. They are entitled to participate ratably, on a share for share basis, with all outstanding shares, in the earnings and assets of the Fund. The Fund offers its shares on a continuous basis at a price per share equal to the Net Asset Value (the per share as of date of issuance, plus any applicable subscription charges. A deposit to an incentive Fee Reserve may be required in certain circumstances, and further adjustments to the number of shares may be required in accordance with an equalisation credit. Subscriptions received during any period will ordinarily be accepted as of the ?rst day of the following period, subscriptions received between March 1 and March 31 will be accepted as of April 1. The Fund may, in its discretion, accept subscriptions on a day other than the first day of a month. The Fund will issue number of shares by dividing subscription amount by per share price rounded to 2 decimal places. Subscriptions received during any period will ordinarily be accepted as of the ?rst day of the following period. The Fund may, in its discretion. accept subscriptions on a day other than the ?rst day of a month. The minimum subscription for shares is USU 2,000,000, subject to the Fund's discretion to accept lesser amounts. Upon 45 days? prior written notice to the Fund, each shareholder may request that the Fund redeems all or part of sueh shareholder's shares as of the close of business on the last day of the. calendar quarter. With respect to any partial redemption, a shareholder may not make a partial redemption of less than USD 100,000 and may not reduce such shareholder?s unredeemed shares to an amount less than the minimum investment than required of new shareholders. Also, in order to be considered a partial redemption. the redemption cannot exceed 90% of a shareholder?s total capital account. in any case. the redemption price shall be the net asset value of the redeemed shares. as calculated at the end of the applicable measurement period. The investment manager also has the right to force the complete redemption of any shareholder at any time at the investment manager?s sole discretion. The net asset value of the shares is calculated by dividing the value of the assets, less the liabilities and appropriate reserves, by the total number of shares outstanding on the valuation date. interest income and expense interest income is recognised on an accruals basis for those securities for which collection is probable. Recognition on an accruals basis approximates the effective interest rate method for the type of debt instruments held by the Fund. Once a financial asset or a group of similar ?nancial assets has been written down as a result of an impairment loss, interest income is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. Expenses . Expenses are accounted for on an accrual basis and are charged to the income statement. Taxation Under current laws of the British Virgin islands, there are no income. estate, transfer, sales or other British Virgin isiand taxes payable by the Fund. Generally, the Fund intends to conduct its affairs so as not to be liable to taxation in any other jurisdiction; however, the Fund ?may invest in securities whose income is subject to non?refundable foreign withholding taxes. Epsilon Global Active Value Fund II Ltd, Road Town, Tortola, British Virgin islands 18 Case Document 8-6 Filed 04/01/10 Page 184 of 190 3 Financial assets at fair value through profit or loss At December 31. 2007. the portfolio of ?nancial assets at fair value through pro?t or loss comprised long positions in Epsilon Global Master Fund ti LP. for a total market value of USD 24.139222 (2006: USD 59,398,416). The Fund has not sold or re?pledged any collateral during the year. . Dec 31, 2007 Dec 31, 2006 USE) USD Partnership interest held- for trading 24,139,222 - 59,398,416 Total ?nancial assets at fair Value through pro?t or loss 24,139,222 59,398,416 4 Accounting estimates and judgments in applying accounting policies The Fund makes estimates and assumptions that affect the reported amounts of its unlisted investment in the Master Fund'within the next ?nancial year. Estimates are continually evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and assumptions that have a signi?cant risk of causing a material adjustment to the carrying amounts of its investment in the Master Fund. within the next ?nancial year. are disclosed in the ?nancial statements of the Master Fund. which are available on request from the investment manager of the Fund. 5 Financial risk management The Fund's investment activities expose it to the various types of risks taken by the Fund and the money managers of funds. which are associated with the ?nancial instruments and markets in which they inVest. The following summary is not intended to be comprehensive of all risks and investors should refer to the Con?dential Offering Memorandum tor a more detailed discussion of the risks inherent to investing in the Fund. The investment objective of the Feeder Fund is to invest in the Master Fund. The investment objective is capital appreciation with risk control. The Master Fund employs a global opportunistic and event driven investment strategy. investing in a variety of securities. These include but are not limited to. equities. bonds. bank debts1 trade claims. options. swaps, futures, Credit Default Swaps (CDSs). Collateralised Debt Obligations (CDOs). Coliateraiised Lean Obligations (CLOs), direct lending and structured products. in coniunclion with this strategy, the Master Fund seeks to minimise risk, Opportunistlcally employing hedging strategies for speci?c investments. As a result of the global opportunistic and event driven investment strategy. the Master Fund?s results frequently do not correlate significantly with global stock and bond indices. - The Master Fund requires securities markets tooperate with adequateiiquidity. in order to meet its investment objectives. Based on the Fund's activities. it maybe exposed to a variety of ?nancial risks which include market risk. credit risk and liquidity risk. Epsilon Global Active Value Fund 1! Ltd. Road Town, Tortola, British Virgin islands 17 .- Case Document?8-6 Filed 04/01/10 Page 185 of 190 The disclosures below are in respect of the Fund only and are not done on a look-through basis to the level of the Master Fund. Disclosure on ?nancial risk management employed by the Master Fund is disclosed in the ?nancial statements of the Master Fund which are available on request from the investment manager of the Fund. Market risk Other price risk . Other price risk is the risk that the fair value or future cash ?ows of a ?nancial instrument will ?uctuate because of changes in market prices (other than those arising from interest rate risk. . currency risk. market credit risk or correlation risk). whether those changes are caused by factors speci?c to the individual ?nancial instrument or its issuer. or factors affecting all similar ?nancial instruments traded in the market - The Fund's investments and ?nancial instruments are susceptible to other price risk arising from uncertainties about future prices of the instruments. The Fund's overall market positions are monitored on a daily basis by the Fund's manager. Changes in market prices can occur extremely sudden due tonumerous factors and may have an adverse impact on the results of the Fund. The maximum other price risk resulting from ?nancial instruments is determined by the fair value of the ?nancial instruments. As at December 31. 2007 and December 31. 2006. the Fund only invested in the Master Fund. At 31 December 2007. should equity prices of the MasterFund on average have increased or decreased by with all other variables remaining constant, the increase or decrease in net assets attributable to holders of redeemabie participating shares for the year would amount to approximateiy USD 241,392 (2006: USD 593.984). Refer to the ?nancial statemenst of the Master Fund for speci?c risk factors affecting the equity prices of the Master Fund. interest rate risk - All of the Fund's financial assets and liabilities, with the exception of cash and cash equivalents. are non-interest hearing: as a result. the Fund is not subject to signi?cant amounts of risk due to ?uctuations in the prevailing levels of market interest rates. Any excess cash and cash equivalents are invested at short?term market interest rates. Credit risk Credit risk is the risk that an issuer or counterparty will be unable or unwilling to meet a commitment that it has entered into with the Fund. Financial assets. which potentially expose the Fund to credit risk. consist principally of investments made in the Master Fund. deferred distributions receivable from the Master Fund and cash due from?banks. The Fund's cash balances are primarily with high credit quality. well established ?nancial institutions. The extent of the Fund's exposure to credit risk in respect of these ?nancial assets approximates their carrying value as recorded in the Fund's balance sheet Liquidity risk Liquidity risk is de?ned as the risk that the Fund may not be able to meet its obligations on time or must secure them at excessive cost. The Fund is exposed to quarterly cash redemptions oi redeemable participating shares. A lack of liquidity may also result from limited trading opportunities of the Master Fund. To manage this risk. the Fund invests in the Master Fund from which the Fund may redeem on an annual basis after a notice of 60 days. Epsilon Global Active Value Fund II Ltd, Road Town. Tortola, British Wrgr'n islands 18 nu: Case Document 8-6 Filed 04/01/10 Page 186 of 190 Currency nisk The Fund may invest in assets denominated in currencies other than its reporting currency, the USD. Consequently, the Fund is exposed to risks that the exchange rate of the USD reiative to other currencies may change in a manner, which has an adverse effect on the reported vatue of that portion of the Fund's assets, which are denominated in currencies other than the USD. As at December 31, 2007 and December 31, 2006, all assets and liabilities of the Fund were denominated in USD. Capital risk management The capital of the Fund is represented by the net assets attributable to the holders of redeemable I participating shares. The Fund does not have any externai requirements in respect of capital risk management and therefore does not perform any such activities. 6 Fees payable and accrued expenses Dec 31, 2007 Dec 31, 2006 USD USD Management fees . 12.958 192,231 Legal and professional fees . 33,567 Administration fees 5,125 . - 18,083 225,798 7 Redeemable participating shares The authorised share capital of Epsilon Global Active Value Fund ll Ltd. amounts to USD 100,000, divided into 10,000,000 ordinary shares of USD 0.01 each. As at December 31, 2007, 152,562 (2006: 394,625) of the ordinary shares were issued and fully paid. 8 Fees Management fees . Under the terms of the management agreement, the investment manager receives an annual fee of 2% of the gross asset value of the Fund as of the last day of each quarter. adjusted for subscriptions and redemptions occurring within the quarter and computed without regard to the incentive fee. To the extent that the management fee is paid by Epsilon Global Master Fund ll LP. (Master Fund) for investments made into the master FUnd? by the Fund, such management fee amounts will not be charged to investors at the Fund ievei. it is decided by the board of directorsof the Fund and the General Partner of the Master. Fund that the management fee of the two feeder funds, for the years ended December 31, 2007 and Epsilon Global Active Value Fund :1 Ltd., Road Town. Tortola. British Virgin Islands 19 Case Document 8-6 Filed'O4/01/1O Page 187 of 190 December 31, 2006. will be charged at the feeder level. therefore. the fees stated in these ?nancial statements relate to the Fund only. incentive fees The General Partner receives an incentive fee for each ?scal year or otherwise determined upon the redemption of any ordinary shares. with respect to such redeemed ordinary shares respectively, {each a ?Performance Period?) equal to 20% of the amount. if any, of the net appreciation of the Fund's net assets during that Performance Period. I To the extent that the incentive fee is paid by Epsilon Globei Master Fund ll L.P. (Master Fund). with regard to investments made into the Master Fund by the Fund. such incentive fee amounts wili not be charged to investors at the Fund ievel. If the Fund incurs a net loss during a ?scal year, the General Partner may not receive any incentive fees from the Fund in a subsequent ?scal year unless and untii the amount of such net loss appiicable to each'and every share which experienced such net loss (and which remains outstanding at the time the subsequent pro?t occurs) has been recouped in full. it is decided by the board of directors of the Fund and the General Partner of the Master Fund that the incentive fee of both tseder funds. for the years ended December 31. 2007 and December 31. 2006. wiil be charged at the Master Fund level. therefore. no such fees are stated in these ?nancial statements. Directors? fees - The listing of the members of the board of directors is shown on page 3. In 20 07 an amount of USD 6.230 (2006: USD 6.395) was paid to Alberto C. d?Abreu de Pauio as remuneration and no - .fees were paid to Steve G. SteVanovich. Administration fees The administrator of the Fund is JPMorgan Hedge Fund Services (lrel?and) Limited, The Fund pays a fee to the administrator based on the average of the trading net asset value of the Fund. calculated and payable in arrears. The fee is subject to an annual minimum fee. Additionally. fees are charged for feeder servicing and corporate secretarial services. The administrator is also the Fund's transfer agent for which fees are paid included in fees mentioned above. Audit expenses - Professional and other expenses in the income Statement for the year ended December 31. 2006 is an amount of USD 21.537 for audit fees. ltwas decided by the board of directors of- the Fund and the General Partner of the Master Fund that audit fees of both feeder funds. for the year ended December 31. 2007 will be charged at the Master Fund ievel; therefore. no audit fees are included in the incomes tatement of these ?nancial statements for the year ended December 31. 2007. 94 Related parties: Parties are considered to be related if one party has the ability to control the other party or ekercise signi?cant in?uence over the other party in making ?nancial or operational decisions. The Fund is managed by Epsilon Global Asset Management Ltd. an investment management company incorporated in the Cayman islands. Epsilon Giobal Asset Management Ltd. receives Epsilon Global Active Value Fund Ltd, . Road Town. Tortola, British Virgin islands 20 Case Document 8-6 ?Filed 04/01/10 Page 188 of 190 from the Fund a fee based on the gross asset value of each aisles of fund payable quarterly using the annual rate of Total management fees for the year, including the outstanding accrued fees due to Epsilon Global Asset Management Ltd. at the end of the year, are detailed below. Dec 31, 2007 Dec 31, 2006 USD USD Management fees for the year 308,928 1.011.950 Accmed at the end of the year 12,958 192,231 As at December 31. 2007 and December 31, 2006. Steve G. Stevanovlch had direct interests in the Fund through shares held in the Fund. - The directors are entitled to be reimbursed for ail expenses incurred by them in attending and returning from meetings of the directors or any other meetings in connection with the business of the Fund. Refer to note 8 for more information in respect of directors fees paid during the year. As at December 31. 2007 and December 31. 2006, the Fund had amounts receivable from and payable to parties related to the investmentmanager as disclosed on the face of the balance sheet. 10 Subsequent events There were no post-balance~sheet events. Epsilon Global Active Varue Fund 11 Ltd, - Road Town, Tortola, British Virgin Islands 21 . .. Case Document 8-6 Filed 04/01/10 Page 189 of 190 PricewaterhouaeCoopers Accountants MN. Fascinatio Boulevard 350 3065 WB Rotterdam To the Board of Directors of - no. sex 3800 Epsilon Global Active Value Fund ll Ltd. 3009 AV Wield? The Netherlands Telephone +31 (10) 407 55 00 Facsimile +31 (10) 456 43 33 Auditor?s report We have audited the accompanying ?nancial statements of Epsilon Global Active Value Fund ll Ltd. ('the Fund?) as set out on pages 7 to 21 which comprise the balance sheet as at December 31, 2007 and the income statement, statement of changes 'in net assets attributable to holders of redeemable participating shares and the cash flow statement for the year then ended and a summary of signi?cant accounting policies and other explanatory notes. The directom' responsibility for the ?nancial statements The directors are responsible for the preparation and fair presentation of the financial statements in accordance with international Financial Reporting Standards. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the ?nancial statements that are free from material misstatement, whether due to fraud or error. selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances. Auditor?s responsibility Our responsibility is to express an: opinion on the ?nancial statements based on our audit. We conducted our audit in accordance with international Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance . about whether the ?nancial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the ?nancial statements. The proceditres selected depend on the auditor's judgment. including the assessment of the risks of material misstatement of the ?nancial statements. whether due to fraud or error. in making those risk assessments, the auditor considers internal control relevant to the Fund's preparation and fair presentation of the ?nancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund?s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the ?nancial statements. We believe that our audit provides a reasonable basis for our-audit. opinion. is the trade name of among others the following companies: PricewaterhouseCoopers Accountants N.V. (Chamber oi Commerce 34180285), PricewaterhouseCoopers N.V. (Chamber of Commerce 34180284). FricewatsrhouseCoopers Advisory N.V. {Chamber of Commerce 34180287) and PrioewalerhouseCoopers B.V. (Chamber oi Commerce 34180289). The services rendered by these companies are governed by General Terms at Conditions. which include provisions regarding our liability. Those General Terms it Conditions are ?led with the Amsterdam Chamber oi Comoros and can also be viewed at . Case 2i10-cv-00555-RAJ Document 8-6 Filed 04/01/10 Page 190 of 190 Audit opinion . In our opinion. the accompanying ?nancial statements present fairly, in all material- respects, the ?nancial position of Epsiion Global Active Value Fund ll. Ltd. as at December 31. 2007 and its ?nancial performance and its cash ?ows for the year then ended in accordance with International Financial Reporting Standards. Emphasis of matter The Fund is the feeder fund of Epsilon Global Master Fund ll LP. (?the Master Fund?) and- invests only in the Master Fund. The ?nancial statements of the Master Fund are available on request from the investment manager of the Partnership. We draw attention to the emphasis of matter included in the Auditor's report relating to the ?nancial statements for the year ended December 31. 2007 of the Master Fund. Our opinion is not quali?ed in respect of this matter. Rotterdam, July 15, 2008 PricewatemouseCoopers Accountants N.V. H.F. . Gertsen RA