Memorandum No.:

UBS Memorandum No.: AlphaKeys European Real Estate Opportunities Fund II, L.L.C. ER305378-MAXWELL CONFIDENTIAL UBSTERRAMAR00001774 EFTA00237405 UBS Memorandum No.: AlphaKeys European Real Estate Opportunities Fund II, L.L.C. Important Information This Confidential Offering Memorandum and any amendments and supplements thereto (for the avoidance of doubt, excluding any appendices attached hereto, this "Memorandum") is being furnished to selected qualified investors on a confidential basis for their consideration in connection with the private offering of limited liability company interests (the "interests") in AlphaKeys European Real Estate Opportunities Fund II, L.L.C. (the "AlphaKevs Fund"). Prospective investors should read this Memorandum carefully before deciding whether to purchase Interests and should pay particular attention to the information set forth in "Section III. Risk Factors and Other Considerations" and "Section IV. Conflicts of Interest." The AlphaKeys Fund will invest substantially all of its capital in limited partner interests in Blackstone Real Estate Partners Europe V L.P., a Cayman Islands exempted limited partnership (the "Underlying Fund"). For a more detailed description of the Underlying Fund, see the Confidential Private Placement Memorandum of the Underlying Fund attached hereto as Appendix A (as amended, restated or supplemented from time to time, each as provided by Blackstone, collectively, the "Underlying Fund Memorandum"). Notwithstanding the foregoing or anything to the contrary herein, investors in the AlphaKeys Fund will not be limited partners in the Underlying Fund and an investment in the Interests is not an investment in the Underlying Fund. By its acceptance hereof, each recipient agrees that this Memorandum may not be reproduced or distributed to others (except to the recipient's professional advisors) without the prior written consent of the AlphaKeys Fund, and that the recipient and his or her professional advisors will keep permanently confidential all information contained in this Memorandum not already in the public domain and will use this Memorandum for the sole purpose of evaluating a possible investment in the AlphaKeys Fund. No person has been authorized to make any statement concerning the AlphaKeys Fund or the offering being made by this Memorandum, other than as set forth herein, and any such statements, if made, may not be relied upon. The AlphaKeys Fund is member-managed. UBS Fund Advisor, L.L.C., a Delaware limited liability company (the "Administrator") has been appointed as Administrator to the AlphaKeys Fund. Further, under the LLC Agreement (as defined below), the Members of the AlphaKeys Fund appoint UBS Fund Advisor, L.L.C. ("UBSFA") as Member Designee (as defined in the LLC Agreement). The Administrator is a direct, wholly owned subsidiary of UBS Americas, which, in turn, is a direct, wholly owned subsidiary of UBS AG (together with its affiliates, "UBS"). Prospective investors should not construe the contents of this Memorandum as legal, investment, tax or other advice. Prospective investors should conduct their own investigation and evaluation of the investment offered hereby. Each prospective investor should consult and rely on his or her own attorneys, business and tax advisors as to legal, business, tax and related matters concerning this offering and its suitability for such prospective investor. Each investor will be required to stipulate in his, her or its Investor Application (as defined below) relating to its investment in the AlphaKeys Fund that he, she, or it has not relied upon the AlphaKeys Fund, UBS Financial Services Inc., the Underlying Fund, the Underlying Fund General Partner, the Underlying Fund Adviser or any of their affiliates, for tax or legal advice and that the investor has relied only on his, her or its own advisor for tax and legal advice. My losses by the AlphaKeys Fund will be borne solely by the Members (as defined below) and not by the Administrator, or its affiliates; therefore, UBSFA's and its affiliates' or subsidiaries' losses in the AlphaKeys Fund will be limited to losses attributable to the Interests in the AlphaKeys Fund held by UBSFA and its affiliates or subsidiaries in their capacity as members in the AlphaKeys Fund. An investment in the AlphaKeys Fund is speculative and involves significant risks and conflicts of interest. cc 'S,E.ction Ir. is: t 7Ctcr< zit Other Considerations" and "Section IV. Conflicts of Interest" below. Both CONFIDENTIAL UBSTERRAMAR00001775 EFTA00237406 the AlphaKeys Fund and the Underlying Fund are intended for long-term investors who can accept the significant risks associated with investing in illiquid assets. Accordingly, an investment in the AlphaKeys Fund should only be considered by persons who can afford a loss of their entire investment and Members should maintain sufficient liquid assets to meet capital call obligations and manage short-term and long- term cash needs. No assurance can be given that the investment objectives of the AlphaKeys Fund or the Underlying Fund will be achieved. Investors should understand the risks associated with an investment in the AlphaKeys Fund and have the financial ability and willingness to accept such risks for an indefinite period of time. Tax-exempt investors may recognize a significant amount of unrelated-business taxable income ("UBTI") as defined in Section 512 of the Internal Revenue Code of 1986, as amended (the "Code") as a result of an investment in the AlphaKeys Fund and, accordingly, are strongly urged to consult their own tax advisors regarding the advisability of an investment in the AlphaKeys Fund. See "Section V. Certain Material U.S. Federal Income Tax Considerations" below. The information contained in this Memorandum has been prepared by the AlphaKeys Fund. None of the Underlying Fund, the Underlying Fund General Partner or the Underlying Fund Adviser (each as defined in the "Introduction" below), or The Blackstone Group L.P. and/or its affiliates ("Blackstone") or their respective affiliates (i) has participated in the offering of interests of the AlphaKeys Fund or (ii) is responsible for such offering of interests of the AlphaKeys Fund, the operation of the AlphaKeys Fund or the contents of this Memorandum, the AlphaKeys Fund's governing documents, the AlphaKeys Fund's Investor Application (as defined below), related agreements and instruments or any accompanying sales documentation, each as amended or supplemented. Purchasers of the interests offered hereby will not be limited partners of the Underlying Fund, will have no voting rights or direct interest in the Underlying Fund and will have no standing or recourse against the Underlying Fund, the Underlying Fund General Partner, the Underlying Fund Adviser, Blackstone, their respective affiliates or any of their respective general partners, investment advisers, officers, directors, employees, partners or members. Purchasers of the interests will not be parties to the operating documents of the Underlying Fund (as amended, restated or supplemented from time to time, the "Underlying Fund Operating Document") and, will not have any rights thereunder and may not bring a direct action on their own behalf against the Underlying Fund, the Underlying Fund General Partner, the Underlying Fund Adviser, Blackstone, any of their respective affiliates or any of their respective general partners, investment advisors, officers, directors, employees, partners or members for any breach thereof. The interests offered hereby are interests in the AlphaKeys Fund, not the Underlying Fund, and the offering of interests in the AlphaKeys Fund does not constitute, and should not be considered, a direct or indirect offering of interests in the Underlying Fund. Although the AlphaKeys Fund is being established to invest in the Underlying Fund, it is not an affiliate of the Underlying Fund and will be administered solely by the Administrator or its affiliates. Potential purchasers of interests should note that none of the AlphaKeys Fund, the Administrator, UBS or any of their respective affiliates have the power to legally bind or commit the Underlying Fund, the Underlying Fund General Partner, the Underlying Fund Adviser, Blackstone, or their respective affiliates. All statements in this Memorandum regarding the Underlying Fund and its terms, the Underlying Fund General Partner or the Underlying Fund Adviser are qualified in their entirety by reference to the Underlying Fund Memorandum, which is subject to change. The terms of the Underlying Fund may be subject to continuing negotiation with prospective investors who invest directly in the Underlying Fund and may be different from those summarized herein or provided in the materials referenced herein. A prospective investor should not invest unless it is able to sustain the loss of all or a significant portion of its investment. Offers of interests will be made only pursuant to this Memorandum. Offering literature in any form whatsoever employed in connection with the offering and sale of interests is subject to, and is superseded by, this Memorandum and, to the extent applicable with respect to any terms applicable to the Underlying ER305378-MAXWELL CONFIDENTIAL UBSTERRAMAR00001776 EFTA00237407 Fund, the Underlying Fund Operating Document. In the event of any conflict between this Memorandum or the Underlying Fund Operating Document, on the one hand, and any other offering literature, on the other hand, this Memorandum (or with respect to any terms applicable to the Underlying Fund, the Underlying Fund Operating Document) shall control. No person has been authorized to give any information or to make any representation other than those contained in this Memorandum, and, if given or made, such information should not be relied upon as having been authorized by the AlphaKeys Fund, the Member Designee, the Administrator, the Underlying Fund, the Underlying Fund General Partner, the Underlying Fund Adviser or any of their respective affiliates. The information regarding the AlphaKeys Fund and the Underlying Fund contained herein is provided on a confidential basis and by accepting delivery of this Memorandum and the Underlying Fund Memorandum attached hereto, the recipient agrees to keep such information confidential and to use it solely for the purpose of evaluating an investment in the AlphaKeys Fund. Notwithstanding anything else in this Memorandum to the contrary, the Members may disclose to any and all persons, without limitation of any kind, information regarding the tax treatment, tax structure and tax strategies of the AlphaKeys Fund, the offering of its interests and its transactions all within the meaning of U.S. Treasury Regulation § 1.6011- 4(b)(3). For the avoidance of doubt, this authorization is not intended to permit disclosure of the names of, or other identifying information regarding, the participants in this offering, or of any information or the portion of any materials not relevant to the tax treatment, tax structure or tax strategies of the offering. Certain information contained in this Memorandum relating to Blackstone, the Underlying Fund, the Underlying Fund General Partner, the Underlying Fund Adviser and their affiliates has been derived by UBS Financial Services Inc. from materials furnished on behalf of the Underlying Fund. Such information (a) has not been independently verified by the AlphaKeys Fund, the Member Designee, the Administrator or any of their respective affiliates and (b) does not necessarily reflect the views or opinions of UBS. Moreover, none of the AlphaKeys Fund, the Member Designee, the Administrator or any of their respective affiliates has the right to participate in the control, management or operations of the Underlying Fund, nor has any discretion over the management of the Underlying Fund. None of the Underlying Fund, the Underlying Fund General Partner, the Underlying Fund Adviser or any of their respective affiliates make any representation or warranty (whether express or implied) regarding, and expressly disclaims any liability or responsibility for the fairness, correctness, accuracy, reasonableness or completeness of any of the information set forth herein other than with respect to the Underlying Fund Memorandum. None of the Underlying Fund, the Underlying Fund General Partner, the Underlying Fund Adviser or any of their respective affiliates are responsible for the formation or operation of the AlphaKeys Fund. None of Blackstone, the Underlying Fund, the Underlying Fund General Partner, the Underlying Fund's investment advisor, agents or affiliates nor any of their respective officers, directors, employees, partners or members are affiliates of the AlphaKeys Fund, the Member Designee or the Administrator or have endorsed or make any recommendations of the AlphaKeys Fund. Descriptions of any rights, benefits and effects described in the Underlying Fund Memorandum will inure to the benefit of, and/or apply to, the AlphaKeys Fund as a whole and not to the Members in the AlphaKeys Fund. Actual realized returns on unrealized investments will depend on, among other factors, future operating results, the value of the assets, and market conditions at the time of disposition, legal and contractual restrictions, any related transaction costs, and the timing and manner of sale, all of which may differ from the assumptions and circumstances on which the valuations used in the prior performance data contained in the Underlying Fund Memorandum are based. Accordingly, the actual realized returns on these unrealized investments may differ materially from the returns CONFIDENTIAL UBSTERRAMAR00001777 EFTA00237408 indicated therein. In considering any performance information contained therein, prospective investors should bear in mind that past performance is not necessarily indicative of future results, and there can be no assurance that the Underlying Fund or the AlphaKeys Fund will achieve comparable results or that the Underlying Fund will be able to implement its investment strategy, achieve its investment objectives or avoid substantial losses. This Memorandum and the Underlying Fund Memorandum contain forward-looking statements. Forward- looking statements are statements that are not historical facts, including statements about beliefs and expectations. Any statement in this Memorandum or the Underlying Fund Memorandum that contains intentions, beliefs, expectations or predictions (and the assumptions underlying them) is a forward-looking statement. These assumptions are based on plans, estimates, and projections, as they are currently available. Forward-looking statements therefore speak only as of the date they are made, and none of the Underlying Fund, the Underlying Fund General Partner, Blackstone, the Underlying Fund Adviser, the AlphaKeys Fund, the Member Designee, the Administrator or any of their respective affiliates undertakes to update any of them in light of new information or future events. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could therefore cause actual results of the AlphaKeys Fund or the Underlying Fund to differ materially from those contained in any forward-looking statement. See "Section III. Risk Factors and Other Considerations" and "Section IV. Conflicts of Interest." As used in this Memorandum, an "affiliate" of any person or entity will include any person controlling, controlled by or under common control with such person. The Underlying Fund Memorandum includes a variety of performance information relating to the Underlying Fund and other investment vehicles managed by the Underlying Fund General Partner and/or the Underlying Fund Adviser. Information presented about other funds or selected investments made by the Underlying Fund General Partner and/or the Underlying Fund Adviser, while informative regarding the experience of the Underlying Fund General Partner and/or the Underlying Fund Adviser, are not indicative of, and in some cases may be irrelevant to, an assessment of the potential performance or investments of the AlphaKeys Fund (in connection with its investment in the Underlying Fund). While reviewing the performance information set forth in the Appendix to the Underlying Fund Memorandum, investors should pay particular attention to the net return information provided in the endnotes to such Appendix. PERFORMANCE SHOWN IN THE UNDERLYING FUND MEMORANDUM IS NOT THAT OF THE ALPHAKEYS FUND. THE PERFORMANCE SHOWN IS NOT NET OF ADDITIONAL FEES THAT WILL BE CHARGED AT THE ALPHAKEYS FUND LEVEL. The returns of the AlphaKeys Fund will be lower, and may be materially lower than the returns at the Underlying Fund level. Performance shown in the Underlying Fund Memorandum does not include AlphaKeys Fund-level Fees and Expenses or the Placement Fee (if charged), as each is defined below. Such fees will reduce returns. Returns for the AlphaKeys Fund may also differ from the returns of the Underlying Fund as a result of funds invested in Temporary Investments (as defined below) by the AlphaKeys Fund and delayed distributions by the AlphaKeys Fund to its investors. No representation or warranty is being made herein as to the past or future investment performance of the AlphaKeys Fund or the Underlying Fund. Only those particular representations and warranties that may be made by the AlphaKeys Fund in a definitive investor application ("Investor Application") relating to the purchase of Interests, when and if one is executed, and subject to such limitations and restrictions as may be specified in such Investor Application, will have any legal effect. Interests are being offered exclusively to investors who meet the qualification standards set forth in this Memorandum, with a minimum Capital Commitment (as defined below) of $250,000, CONFIDENTIAL UBSTERRAMAR00001778 EFTA00237409 subject to the discretion of the Member Designee to accept lesser amounts or raise the minimum Capital Commitment, as described herein. Except where otherwise indicated, the information contained in this Memorandum has been compiled as of the date set forth in this Memorandum, and information regarding the Underlying Fund is as of the date set forth in the Underlying Fund Memorandum. None of the AlphaKeys Fund, the Underlying Fund, the Underlying Fund General Partner, the Underlying Fund Adviser, the Member Designee, the Administrator or any of their respective affiliates has any obligation to update any portion of this Memorandum. Under no circumstances should the delivery of this Memorandum, irrespective of when it is made, create any implication that there has been no change in the affairs of the AlphaKeys Fund, the Underlying Fund, the Member Designee, the Administrator or any of their respective affiliates since such date. This Memorandum is not an offer to sell or a solicitation of an offer to buy an Interest, nor will any Interest be offered or sold, to any person in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. Accordingly, the Interests may not be offered or sold, directly or indirectly, and this Memorandum may not be distributed in any jurisdiction, except in accordance with the legal requirements applicable to such jurisdiction. The AlphaKeys Fund reserves the right to modify any of the terms of the offering and the Interests described herein. This Memorandum will remain the property of the AlphaKeys Fund. The AlphaKeys Fund reserves the right to require the return of this Memorandum at any time from prospective investors who do not purchase Interests in the AlphaKeys Fund. This Memorandum is intended for investors who are U.S. Persons within the meaning of Section 7701(aX30) of the Code (as described below). IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ALPHAKEYS FUND AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE SECURITIES OFFERED HEREBY HAVE NOT BEEN RECOMMENDED OR APPROVED BY ANY U.S. FEDERAL OR STATE SECURITIES COMMISSION OR ANY OTHER GOVERNMENTAL AUTHORITY AND NONE OF THE FOREGOING AUTHORITIES HAVE PASSED UPON THE ACCURACY OR ADEQUACY OF THIS MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. NONE OF THE ALPHAKEYS FUND, THE MEMBER DESIGNEE, THE ADMINISTRATOR OR ANY OF THEIR RESPECTIVE AFFILIATES MAKES ANY ENDORSEMENT OR RECOMMENDATION OF THE UNDERLYING FUND AND THE ESTABLISHMENT OF THE ALPHAKEYS FUND TO INVEST IN THE UNDERLYING FUND DOES NOT CONSTITUTE SUCH ENDORSEMENT OR RECOMMENDATION. IT IS ANTICIPATED THAT THE OFFERING AND SALE OF THE INTERESTS OFFERED HEREBY WILL BE EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE VARIOUS STATE SECURITIES LAWS, AND THAT THE ALPHAKEYS FUND WILL NOT BE REQUIRED TO REGISTER UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED. THE INTERESTS OFFERED HEREBY HAVE NOT AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OR ANY OTHER SECURITIES LAWS, AND WILL BE OFFERED AND SOLD FOR INVESTMENT ONLY TO QUALIFYING RECIPIENTS OF THIS MEMORANDUM PURSUANT TO THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT PROVIDED BY SECTION 4(A)(2) THEREOF AND IN COMPLIANCE WITH ANY OTHER APPLICABLE SECURITIES LAWS. THE INTERESTS MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND THE APPLICABLE STATE OR OTHER SECURITIES LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. IN ADDITION, SUCH INTERESTS MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED, IN WHOLE OR IN PART, EXCEPT AS PROVIDED IN THE LIMITED LIABILITY COMPANY AGREEMENT REFERRED TO HEREIN. ACCORDINGLY, INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS Eyktinnis alisItyffiliffECERIOD OF TIME. THERE WILL BE NO PUBLIC MARKET FOR THE CONFIDENTIAL UBSTERRAMAR00001779 EFTA00237410 INTERESTS, AND THERE IS NO OBLIGATION ON THE PART OF ANY PERSON TO REGISTER THE INTERESTS UNDER THE SECURITIES ACT OR ANY STATE SECURITIES LAW. REQUIRED SECURITIES ACT DISCLOSURE. PURSUANT TO RECENT AMENDMENTS TO RULE 506 OF REGULATION D UNDER THE SECURITIES ACT (THE "RULE"), THE ALPHAKEYS FUND IS REQUIRED, AMONG OTHER THINGS, TO DISCLOSE CERTAIN DISCIPLINARY EVENTS, IN RESPECT OF VARIOUS ENTITIES AND/OR INDIVIDUALS, THAT OCCURRED PRIOR TO THE RULE'S EFFECTIVE DATE OF SEPTEMBER 23, 2013, AND SUCH DISCLOSURE IS ANNEXED HERETO AS APPENDIX C. INTERESTS ARE NOT DEPOSITS IN, OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, THE MEMBER DESIGNEE, THE ADMINISTRATOR OR ANY OF THEIR AFFILIATES, ANY U.S. OR NON-U.S. DEPOSITORY INSTITUTION, ARE NOT INSURED BY THE FEDERAL RESERVE BOARD OR ANY OTHER U.S. OR NON-U.S. GOVERNMENTAL AGENCY. INTERESTS ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, AND ARE NOT DEPOSITS, OBLIGATIONS OF, OR ENDORSED OR GUARANTEED IN ANY WAY, BY ANY BANKING ENTITY. INTERESTS ARE SUBJECT TO INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF THE ENTIRE AMOUNT INVESTED. THE ADMINISTRATOR IS REGISTERED AS A "COMMODITY POOL OPERATOR" WITH THE COMMODITY FUTURES TRADING COMMISSION ("MC") AND IS A MEMBER OF THE NATIONAL FUTURES ASSOCIATION ("NFA") IN SUCH CAPACITY UNDER THE U.S. COMMODITY EXCHANGE ACT, AS AMENDED. WITH RESPECT TO THE ALPHAKEYS FUND, THE ADMINISTRATOR HAS CLAIMED AN EXEMPTION PURSUANT TO CFTC RULE 4.13(A)(3) AS A "COMMODITY POOL OPERATOR" BASED ON THE ALPHAKEYS FUND'S LIMITED TRADING IN COMMODITY INTERESTS, AND WILL OPERATE THE ALPHAKEYS FUND AS IF THE ADMINISTRATOR WERE EXEMPT FROM REGISTRATION WITH THE CFTC AS A REGISTERED "COMMODITY POOL OPERATOR." PURSUANT TO THE EXEMPTION UNDER CFTC RULE 4.13(A)(3), THE ADMINISTRATOR IS NOT REQUIRED TO DELIVER A DISCLOSURE DOCUMENT OR A CERTIFIED ANNUAL REPORT TO INVESTORS. * * * JANUARY 2016 ER305378-MAXWELL CONFIDENTIAL UBSTERRAMAR00001780 EFTA00237411 TABLE OF CONTENTS I. INTRODUCTION 1 II. SUMMARY OF PRINCIPAL TERMS OF THE ALPHAKEYS FUND 3 III. RISK FACTORS AND OTHER CONSIDERATIONS 23 IV. CONFLICTS OF INTEREST 32 V. CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS 36 VI. REGULATORY CONSIDERATIONS 49 APPENDIX A: CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM, AND SUPPLEMENTS THERETO, OF BLACKSTONE REAL ESTATE PARTNERS EUROPE V S A-1 APPENDIX B: LIMITED LIABILITY COMPANY AGREEMENT OF ALPHAKEYS EUROPEAN REAL ESTATE OPPORTUNITIES FUND II, L.L.0 B-1 APPENDIX C: REQUIRED SECURITIES ACT DISCLOSURE OF ALPHAKEYS EUROPEAN REAL ESTATE OPPORTUNITIES FUND II, L.L.0 C-1 ER305378-MAXWELL CONFIDENTIAL UBSTERRAMAR00001781 EFTA00237412 I. INTRODUCTION AlphaKeys European Real Estate Opportunities Fund II, L.L.C. (the "AlphaKeys Fund") a newly formed Delaware limited liability company, is a private investment fund established by UBS Fund Advisor, L.L.C., the AlphaKeys Fund's member designee (the "Member Designee") to invest substantially all of its capital in limited partnership interests in Blackstone Real Estate Partners Europe V M. (the "Underlying Fund"). Blackstone Real Estate Associates Europe V M. serves as the Underlying Fund's general partner (the "Underlying Fund General Partner") and Blackstone Real Estate Advisors M, has been appointed to provide advisory and management services to the Underlying Fund (the "Underlying Fund Adviser"). The AlphaKeys Fund will invest in the Underlying Fund. There can be no assurance that the investment objectives of the AlphaKeys Fund or the Underlying Fund will be achieved, that such funds will be able to implement their respective investment strategies, or avoid substantial losses. For a more detailed description of Blackstone, the Underlying Fund, the Underlying Fund General Partner and the Underlying Fund Adviser, see the Confidential Private Placement Memorandum of the Underlying Fund, attached hereto as Appendix A (as the same has been amended, restated or supplemented from time to time, each as provided by Blackstone, collectively, the "Underlying Fund Memorandum"). None of the Underlying Fund, the Underlying Fund General Partner, the Underlying Fund Adviser, Blackstone and their respective affiliates are responsible for the formation or operation of the AlphaKeys Fund. The offering of interests in the AlphaKeys Fund should not be considered an offering of interests in the Underlying Fund. None of the Underlying Fund, the Underlying Fund General Partner, the Underlying Fund Adviser, Blackstone or any of their respective affiliates, officers, directors, employees, partners or members have endorsed or make any recommendations of the AlphaKeys Fund. None of the AlphaKeys Fund, the Member Designee, the Administrator or any of their respective affiliates makes any endorsement or recommendation of the Underlying Fund and the establishment of the AlphaKeys Fund to invest in the Underlying Fund does not constitute such endorsement or recommendation. Each investor admitted to the AlphaKeys Fund (each a "Member") at a closing (a "Closing") will be required to make an initial payment on or prior to the Initial Closing or upon a Subsequent Closing or as otherwise determined by the Member Designee equal to a percentage of its capital commitment to the AlphaKeys Fund (a "Capital Commitment") as specified by the Member Designee as will enable the AlphaKeys Fund to fund its initial capital contribution and other obligations with respect to the Underlying Fund and to pay organizational expenses and other fees and expenses incurred by the AlphaKeys Fund. Thereafter, the Member Designee may make calls for the remaining portion of the Capital Commitment of each Member and capital calls with respect to Excess Contributions (as defined below) on not less than five (5) calendar days' prior notice, provided however, to the extent the Underlying Fund calls for a contribution to the Underlying Fund on less than five (5) calendar days notice, the AlphaKeys Fund may call capital from its investors on less than five (5) calendar days notice to satisfy its obligations to the Underlying Fund. Capital Commitments and calls for Excess Contributions (as defined below) will be denominated in U.S. dollars. A Member may be required to make capital contributions to the AlphaKeys Fund ("Capital Contributions") in an amount in excess of its Capital Commitment (a) in the event the AlphaKeys Fund has to make capital contributions or other payments to the Underlying Fund in excess of the AlphaKeys Fund's capital commitment to the Underlying Fund, (b) for any AlphaKeys Fund-level fees and expenses applicable to such Member at the AlphaKeys Fund level, including, without limitation, the administrative fee paid to UBSFA as described under "Administrative Fee" below) and other Fund Expenses (as defined under "Other Fees and Expenses" below) (collectively, the "AlphaKeys Fund-level Fees and Expenses") or (c) any tax payments made by the AlphaKeys Fund on behalf of such Member (or interest or penalties associated therewith). In addition, it is expected that each Member will be ER305378-MAXWELL -1- CONFIDENTIAL UBSTERRAMAR00001782 EFTA00237413 required to make contributions to the AlphaKeys Fund in excess of its Capital Commitment to pay the management fee charged by the Underlying Fund as set forth in the Underlying Fund Memorandum (the "Underlying Fund Management Fee") and certain Underlying Fund organizational expenses, as set forth in the Underlying Fund Memorandum. The excess Capital Contributions described above are referred to herein as "Excess Contributions." The AlphaKeys Fund may invest all Capital Commitments in the Underlying Fund. As a result, the extent to which a Member will be required to make certain Excess Contributions will depend on the percentage of aggregate capital commitments called by the Underlying Fund (for example, if the Underlying Fund calls 100% of commitments, each Member's share, if any, of applicable AlphaKeys Fund-level Fees and Expenses and the Underlying Fund Management Fee and Underlying Fund organizational expenses would be in addition to such Member's Capital Commitment). In addition, a Member may also be required to pay a Placement Fee (as defined below), as discussed in further detail below. Pending investment in the Underlying Fund or as the Member Designee otherwise determines is necessary or prudent in its sole discretion, including for payment of fees and expenses (as described herein), the AlphaKeys Fund may invest in Temporary Investments (as defined below). Investor Applications The offering made hereby of limited liability company interests (the " nterests") in the AlphaKeys Fund is made only to the person to whom this Memorandum has been delivered provided such person is a UBS client and an Eligible Purchaser (as defined below). Each Member ordinarily will be required to make a Capital Commitment of not less than $250,000 to the AlphaKeys Fund, subject to the discretion of the AlphaKeys Fund to accept Capital Commitments of a lesser amount or raise the minimum Capital Commitment. The AlphaKeys Fund may vary the investment minimums from time to time. The AlphaKeys Fund reserves the right to accept or reject any investor application ("investor Molicatiork") for Interests or the application of any Member wishing to increase its existing Capital Commitment. Charitable remainder trusts will not be admitted to the AlphaKeys Fund and generally, the AlphaKeys Fund will not accept Capital Commitments from any Individual Retirement Accounts. An "Eligible Purchaser" must be: (i) a qualified purchaser under the Investment Company Act (as defined below), (ii) an accredited investor under the Securities Act (as defined below), and (iii) a U.S. Person within the meaning of Section 7701(a)(30) of the Code (as described below), unless otherwise permitted by law. Members will be charged by the Placement Agent (as defined below) a Placement Fee (as defined below) of two percent (2%) of the Members' respective Capital Commitments, subject to waiver by the Placement Agent in limited circumstances. The Placement Agent may reallocate all or a portion of such Placement Fee to a Member's financial advisor or other securities dealers participating in the placement of Interests. The Placement Fee will be in addition to any Capital Contributions a Member is required to make to the AlphaKeys Fund and will not reduce its Capital Commitment, including for the purposes of determining such Member's Sharing Percentage (as defined below). Notwithstanding anything to the contrary contained herein, any Member who is a client of UBS Financial Services Inc. ("UBSFS") and invests in the AlphaKeys Fund through an Advisory Program (as defined below) will be issued Advisory Class limited liability company interests and will not be charged a Placement Fee or an Administrative Fee (as defined below). Each Member (including permitted transferees) will be obligated to agree to be bound by all of the terms of the LLC Agreement. Each potential investor also will be obligated to represent and warrant in the Investor Application, among other things, that such investor is purchasing an Interest for its own account, and not with a view to the distribution, assignment, transfer or other disposition of such Interest. ER305378-MAXWELL -2- CONFIDENTIAL UBSTERRAMAR00001783 EFTA00237414 II. SUMMARY OF PRINCIPAL TERMS OF THE ALPHAKEYS FUND The following is a summary of the principal terms of AlphaKeys European Real Estate Opportunities Fund ll, C.L.C. (the "AlohaKevs Fund"). This summary is qualified in its entirety by reference to the Limited Liability Company Agreement of the AlphaKeys Fund (as amended from time to time, the "L(C Agreement") and the investor application (the "Investor Application"), both of which should be reviewed carefully prior to making an investment decision. The offer made hereby is subject to modification, prior sale and withdrawal. Certain information contained in this Memorandum relating to Blackstone, the Underlying Fund, the Underlying Fund General Partner and the Underlying Fund Adviser has been derived by UBS Financial Services Inc. from materials furnished on behalf of the Underlying Fund. For a more detailed description of Blackstone, the Underlying Fund, the Underlying Fund General Partner and the Underlying Fund Adviser, see the Confidential Private Placement Memorandum of the Underlying Fund and any supplements thereto, attached hereto as Appendix A (collectively, the "Underlying Fund Memorandum). The AlphaKeys Fund Investment Objective and Operations Classes of Interests AlphaKeys European Real Estate Opportunities Fund II, L.L.C., a Delaware limited liability company (the "AlphaKeys Fund") a newly created entity. The AlphaKeys Fund has been organized to invest substantially all of its capital in limited partner interests in Blackstone Real Estate Partners Europe V M, a Cayman Islands exempted limited partnership (the "Underlying Fund"). For a more detailed description of the Underlying Fund, see the Underlying Fund Memorandum. The Underlying Fund may offer multiple classes of interests. The AlphaKeys Fund may allocate to any dass of interests in the Underlying Fund in the sole discretion of the Administrator without prior notice or consent. The Underlying Fund may, in its sole discretion, require the AlphaKeys Fund to hold its interest in the Underlying Fund through a separate alternative investment vehicle, parallel fund or feeder fund that would have substantially similar terms as the Underlying Fund, as further described in the Underlying Fund Memorandum attached hereto as Appendix A. The AlphaKeys Fund will invest in the Underlying Fund. As more fully described in the Underlying Fund Memorandum, the principal investment objective of the Underlying Fund is to make control-oriented "opportunistic" real estate investments, primarily in Europe, by investing in equity, debt or other interests in, or relating to, real estate assets of any type or real estate companies and real- estate related companies. There can be no assurance that the investment objectives of the AlphaKeys Fund or the Underlying Fund will be achieved, that such funds will be able to implement their respective investment strategies or avoid substantial losses. The Underlying Fund Memorandum should be read carefully by all prospective investors. The AlphaKeys Fund currently offers two classes of limited liability company interests; the Brokerage Class and the Advisory Class. Members that invest through the UBS "Institutional Consulting Program" or another UBS investment advisory program that is approved for investment into the AlphaKeys Fund by UBSFA (an "Advisory Program"), and pursuant to which UBS or its affiliates will receive a fee directly from such investor for the investment in the AlphaKeys Fund, will be Members of the Advisory Class. All other Members will be admitted into the Brokerage Class. Unless otherwise specified herein, references to "Members" shall indude Members of both the Brokerage Class and the ER305378-MAXWELL -3- CONFIDENTIAL UBSTERRAMAR00001784 EFTA00237415 Advisory Class. The AlphaKeys Fund may, in its sole discretion and from time to time, establish additional dasses of interests that may differ in terms of, among other things, the timing and amount of fees charged, distribution rights and other terms. In particular, the AlphaKeys Fund may establish an additional class of preferred equity interests (which may be held by the Member Designee (as defined below) or an affiliate thereof) that may differ in terms of, among other things, a priority with respect to distributions and in dissolution, the right to a preferred return, the right to receive certain cash proceeds, different voting rights, the timing and amount of fees charged and withdrawal rights. Administrator The AlphaKeys Fund is member-managed for purposes of Delaware law. and Member Pursuant to the LLC Agreement, the investors have appointed UBS Fund Advisor, Designee L.L.C., a Delaware limited liability company, to act as "Member Designee" (in such capacity, the "Member Designee") and, accordingly, have delegated all of their rights, powers, duties and obligations to manage and control the business and affairs of the AlphaKeys Fund to the Member Designee; provided, that the investors have not delegated (i) their rights to vote on amendments to the LLC Agreement, to the extent applicable, (ii) their right under the LLC Agreement to call a meeting of the investors; or (iii) their rights under the LLC Agreement to vote to terminate the Administrative Services Agreement and/or to revoke the delegation of rights and powers to the Member Designee (as further described herein). In addition, UBS Fund Advisor, L.L.C. has been appointed by the investors to provide certain administrative and support services to the AlphaKeys Fund (in such capacity, the "Administrator") pursuant to an administrative services agreement with the AlphaKeys Fund (the "Administrative Services Agreement"). One or more affiliates of the Administrator and the Placement Agent (as defined below) and third parties will be engaged to provide certain services to the AlphaKeys Fund at the expense of the AlphaKeys Fund. The Administrator and its affiliates provide certain administrative and investment advisory services to registered and unregistered investment funds and individual accounts. The Administrator or an affiliate may hold a nominal Interest in, and may be an investor of, the AlphaKeys Fund. The Administrator is a direct, wholly owned subsidiary of UBS Americas, Inc. ("UBS Americas") which, in turn, is a wholly owned subsidiary of UBS AG, a Swiss bank. The Placement Agent, a wholly owned subsidiary of UBS Americas, is registered as a broker-dealer under the U.S. Securities Exchange Act of 1934, as amended (the "1934 Act") and is a member of the New York Stock Exchange, Inc. and other principal securities exchanges. The offices of the Administrator are located at 1285 Avenue of the Americas, New York, New York 10019, and its telephone number is (800) 486-2608. The Administrator may, directly or indirectly, assign all or any part of its rights and duties under the Administrative Services Agreement to any individual or entity, with the prior approval of the AlphaKeys Fund. In the event of an assignment of the Administrative Services Agreement, the Member Designee of the AlphaKeys Fund is authorized to grant consent on behalf of the AlphaKeys Fund. The Member Designee will provide written notice to the Members in the event that it grants consent to an assignment. Because the Member Designee and the Administrator are currently the same entity, it is unlikely that the Member Designee will withhold consent to an assignment proposed by the ER305378-MAXWELL -4- CONFIDENTIAL UBSTERRAMAR00001785 EFTA00237416 Administrator. In addition, the Administrator may resign as Member Designee of the AlphaKeys Fund and cause another individual or entity to be appointed as the replacement member designee of the AlphaKeys Fund with (i) the prior consent of the AlphaKeys Fund, or (ii) prior notice to the AlphaKeys Fund and, to the extent consistent with applicable law, without the prior consent of the AlphaKeys Fund. The Administrator may be removed as the Member Designee of the AlphaKeys Fund and/or the Administrative Services Agreement may be terminated upon the vote of at least a majority-in-interest of Members who are not affiliates of the Administrator ("Unaffiliated Members") at a meeting of the Members called for such purpose as further described in the LLC Agreement; provided, however, that the Members must first arrange to delegate such rights and powers to manage the AlphaKeys Fund to a Qualified Replacement (as defined in the LLC Agreement) approved by the Administrator. A substitute member designee and/or administrator may be appointed upon the vote of at least a majority-in- interest of the Unaffiliated Members. In certain circumstances, the LLC Agreement permits the Administrator to reduce a Member's voting or approval rights. Administrative Pursuant to the Administrative Services Agreement, the Administrator will receive Fee an annual fee (the "Administrative Fee") commencing on the initial closing date of the AlphaKeys Fund (the "Initial Closing Date") with respect to each Member equal to (a) 1.00% of such Member's Capital Commitment if such Member's Capital Commitment is less than $3 million, (b) 0.75% of such Member's Capital Commitment if such Member's Capital Commitment is $3 million or more but less than $10 million, or (c) 0.50% of such Member's Capital Commitment if such Member's Capital Commitment is $10 million or more, calculated as if each Member were admitted to the AlphaKeys Fund as of the Initial Closing Date. After the expiration of the Underlying Fund Investment Period (as defined below) (the "investment Period Expiration Date") the Administrative Fee payable by the AlphaKeys Fund will be computed based on the percentages described above attributable to each Member's Capital Commitment, but with such percentage applied to each Member's Capital Contributions used to fund investments by the AlphaKeys Fund that have not been sold or otherwise disposed of (directly or indirectly through the Underlying Fund) and the proceeds thereof that have not been returned by the Underlying Fund to the AlphaKeys Fund. For purposes of calculating the Administrative Fee after the Investment Period Expiration Date, each Member may be deemed to have made Capital Contributions in respect of binding commitments to make investments. The Administrative Fee is not paid to the Administrator by those Members of the Advisory Class, from whom UBSFS or its affiliates will receive a fee directly. If, at any time, a Member terminates its participation in an Advisory Program and therefore, UBSFS or its affiliates no longer receive a fee from such Member in respect of such Member's ownership of Interests (as defined below) in the AlphaKeys Fund, then the AlphaKeys Fund may convert that Member's Interests in the Advisory Class into Brokerage Class Interests and the Administrative Fee payable in respect of such Member may, as of the date of the termination of such Advisory Program, be calculated as described above for Members of the Brokerage Class. For purposes of calculating the Administrative Fee, any amount contributed by a ER305378-MAXWELL -5- CONFIDENTIAL UBSTERRAMAR00001786 EFTA00237417 Member in excess of its Capital Commitment will not be included in such Member's Capital Commitment or the calculation of such Member's Capital Contributions. The Administrative Fee will be in addition to the fees and expenses charged by the Underlying Fund (including without limitation the Underlying Fund Management Fee and the Underlying Fund Carried Interest Distribution (each as defined below)). The Administrator may, in its sole and absolute discretion, defer or waive all or any portion of the Administrative Fee with respect to a Member, including employees, officers and directors of the Administrator and its affiliates. The Administrator may also vary the terms of the Administrative Fee with respect to a particular class of Interests, in the Administrator's sole discretion. The Administrative Fee will not apply to any Capital Commitments made by the Administrator or its affiliates. The Administrative Fee is in addition to and separate from the amounts payable by the AlphaKeys Fund to other third parties engaged on behalf of the AlphaKeys Fund. The Administrator will be responsible for the payment of its own ordinary operating expenses relating to its duties under the Administrative Services Agreement, including salaries of its employees, occupancy costs and other general overhead, but not including the fees and expenses of any consultants that the Administrator may hire on behalf of the AlphaKeys Fund. The AlphaKeys Fund will reimburse the Administrator or its affiliates for any expenses incurred by the Administrator or its affiliates in connection with the Administrator's services under the Administrative Services Agreement. Placement Fee A Member will be charged a placement fee by UBS Financial Services Inc., an affiliate of the Administrator (the "Placement Agent") of two percent (2%) in the aggregate of such Member's Capital Commitment (the "Placement Fee") subject to waiver by the Placement Agent in limited circumstances. The Placement Agent may reallocate all or a portion of the Placement Fee to a Member's financial advisor or other securities dealers participating in the placement of Interests. The Placement Fee will be in addition to any Capital Contributions such Member is required to make to the AlphaKeys Fund and will not reduce such Member's Capital Commitment, induding for purposes of determining such Member's Sharing Percentage (as defined below). Notwithstanding anything to the contrary contained herein, an Advisory Class Member will not be charged a Placement Fee. The Administrator and the Placement Agent intend to compensate the Placement Agent's financial advisors, as well as others, for their ongoing servicing of clients with whom they have placed Interests. Such compensation will be payable out of the Administrative Fee. Organizational The AlphaKeys Fund will bear all legal and other costs and expenses incurred in and Offering connection with the organization of the AlphaKeys Fund and the offering of Expenses Interests (including certain costs and expenses of the Placement Agent as further described in the LLC Agreement). Other Fees and The AlphaKeys Fund will pay (and the Members will bear) all costs, expenses and ER305378-MAXWELL -6- CONFIDENTIAL UBSTERRAMAR00001787 EFTA00237418 Expenses Underlying Fund Management Fee; Other Fees Underlying Fund Carried Interest Distributions Term liabilities in connection with its operations and the investment of its assets, including, without limitation: organizational, offering and related expenses; fees, costs and expenses related to the purchase, holding and sale of investments in the Underlying Fund (which will involve the payment of fees and expenses in addition to the Administrative Fee), and Temporary Investments (as defined below); interest and other expenses related to any AlphaKeys Fund borrowings, costs of compliance with any applicable federal or state laws; taxes; tax preparation fees; fees and expenses of consultants, accountants and legal counsel; all costs and expenses of computing the value of the AlphaKeys Fund's assets, induding any appraisal and valuation services provided by third parties; investor servicing and accounting expenses; fees and expenses related to maintenance of books and records (including investment reporting), insurance or mailings; printing costs; marketing expenses; extraordinary expenses (such as litigation and indemnification of the Member Designee, the Administrator and their affiliates); costs and expenses of any feeder vehicle organized to invest in the AlphaKeys Fund, including any organizational expenses thereof; any other out-of-pocket fees and expenses incurred by the Member Designee, the Administrator and any service providers; any amounts necessary to fund a Defaulting Member's Defaulted Amount (each as defined below) (including the amount of any borrowing) and any costs associated with the foregoing in the event the AlphaKeys Fund is unable to recover such amounts from the Defaulting Member (see "—Default" below)) (all of the foregoing together, the "Fund Expenses"). In addition to the foregoing Fund Expenses, Members will bear, directly or indirectly, the cost of the AlphaKeys Fund's pro rata share of the fees and expenses of the Underlying Fund as described below in "Underlying Fund Management Fee; Other Fees." As described in detail in the Underlying Fund Memorandum, during the Underlying Fund Investment Period (as defined below), the Underlying Fund Adviser will be entitled to receive a management fee (the "Underlying Fund Management Fee"), payable quarterly, at an annual rate of (i) until the end of the Underlying Fund Investment Period, 1.5% of the AlphaKeys Fund's capital commitment and (ii) thereafter (or upon the occurrence of certain other triggering events, whichever occurs first), 1.5% of the AlphaKeys Fund's capital contributions with respect to portfolio investments that have not been disposed of as of the first day of the relevant quarter or during the preceding quarter. In addition to the Underlying Fund Management Fee, each Member of the AlphaKeys Fund will be required to pay their pro rata portion of other fees and expenses charged at the Underlying Fund-level as further described in the Underlying Fund Memorandum (collectively, the "Underlying Fund-level Fees and Expenses"). As described in detail in the Underlying Fund Memorandum, the Underlying Fund General Partner is entitled to receive "carried interest" distributions equal to 20% of the Underlying Fund's net profits, subject to an eight percent (8)% preferred return with a full catch up provision for the Underlying Fund General Partner (the "Underlying Fund Carried Interest Distribution"). The actual amount of any such carried interest payment is based in part upon the Underlying Fund's achievement of certain returns. This is a long-term investment and Members have no right to withdraw from the AlphaKeys Fund prior to its dissolution. Both the AlphaKeys Fund and the ER305378-MAXWELL -7- CONFIDENTIAL UBSTERRAMAR00001788 EFTA00237419 Underlying Fund are intended for investors who can accept the significant risks associated with investing in illiquid assets. Accordingly, an investment in the AlphaKeys Fund should only be considered by persons who can afford a loss of their entire investment and Members should maintain sufficient liquid assets to meet capital call obligations and manage short-term and long-term cash needs. The term of the AlphaKeys Fund is expected to end as soon as practicable after the termination of the Underlying Fund. In the event that the Member Designee determines for any reason, in its sole and absolute discretion, not to invest in the Underlying Fund, including, without limitation, due to an insufficient amount of Capital Commitments, the Member Designee may cause the AlphaKeys Fund to be wound up as soon as is reasonably practicable. Underlying The investment period for which the Underlying Fund may generally call capital Fund to fund new investments (the "Underlying Fund Investment Period") will expire Investment upon the earlier of five and a half (5.5) years from the effective date of the Period Underlying Fund or upon the occurrence of certain other events described in further detail in the Underlying Fund Memorandum. In addition, the Underlying Fund may call capital after the expiration or termination of the Underlying Fund Investment Period for certain investments and fees and expenses of the Underlying Fund, all as described in detail in the Underlying Fund Memorandum. Notwithstanding the foregoing, the Member Designee may make capital calls throughout the term of the AlphaKeys Fund. Eligible Interests are being offered exclusively to persons that are UBS clients and Purchasers "Eligible Purchasers," as defined below. The AlphaKeys Fund reserves the right to accept or reject the application of any investor wishing to make a Capital Commitment. In order to be considered an "Eligible Purchaser " an investor must be: (i) a qualified purchaser (a "Qualified Purchaser") under the Investment Company Act of 1940, as amended (the "Investment Company Act"), (ii) an accredited investor (an "Accredited Investor") under the Securities Act of 1933, as amended (the "Securities Act"), and (iii) a U.S. Person (a "U.S. Person") within the meaning of Section 7701(a)(3O) of the Internal Revenue Code of 1986, as amended (the "Code") unless otherwise permitted by law. As a result, an investment in the AlphaKeys Fund will generally be limited to individuals owning at least $5 million in investment securities ($25 million in the case of institutions). For more descriptive definitions of Qualified Purchaser, Accredited Investor, and U.S. Person, see "Section VI. Regulatory Considerations" and "Section V. Certain Material U.S. Federal Income Tax Considerations". Charitable remainder trusts will not be admitted to the AlphaKeys Fund and generally, the AlphaKeys Fund will not accept Capital Commitments from any Individual Retirement Accounts ("IRAs"). Potential investors seeking to invest through an IRA should speak to their financial advisor. Capital The minimum capital commitment to be made to the AlphaKeys Fund (a "Capital Commitments Commitment") by any investor is $250,000, subject to the discretion of the AlphaKeys Fund to accept a Capital Commitment of a lesser amount or impose a higher minimum Capital Commitment. In addition to the Capital Commitment set forth in each Member's investor application, each Member will be required to make additional Capital Contributions as described in "Capital Calls" below. Subscriptions The initial closing of the sale of Interests in the AlphaKeys Fund will occur on ER305378-MAXWELL -8- CONFIDENTIAL UBSTERRAMAR00001789 EFTA00237420 and Closings such date as the Member Designee may determine (the "Initial Closing"). The Member Designee may from time to time after the Initial Closing elect to hold one or more additional dosings (each a "Subsequent Closing" and together with the Initial Closing, "Closings") as necessary, to accommodate the admission of additional Members. Subsequent Each Member that is admitted to the AlphaKeys Fund or increases its Capital Closings Commitment in a Subsequent Closing (each, a "Subseauent Member") will generally participate in all investments previously made by the AlphaKeys Fund, other than Temporary Investments, and will bear its proportionate share of the AlphaKeys Fund-level Fees and Expenses and the Underlying Fund-level Fees and Expenses, other than those related to such Temporary Investments, as though such Subsequent Member had been admitted at the Initial Closing. Notwithstanding the foregoing, to the extent that, as a result of the admission of a Subsequent Member to the AlphaKeys Fund, (i) the AlphaKeys Fund increases its capital commitment to the Underlying Fund and (ii) the Underlying Fund precludes the AlphaKeys Fund from increasing its participation in the Underlying Fund's existing investments as a result of such increased capital commitment, the Member Designee may, in its sole and absolute discretion, cause such Subsequent Member not to participate in the portion of the AlphaKeys Fund's capital commitment to the Underlying Fund that relates to the Underlying Fund's existing investments. In connection with its admission or increase in its Capital Commitment, a Subsequent Member will make a Capital Contribution to the AlphaKeys Fund as described under "Capital Calls" below. To the extent that, as a result of the admission of a Subsequent Member to the AlphaKeys Fund, the AlphaKeys Fund increases its commitment to the Underlying Fund and the AlphaKeys Fund incurs costs associated with such increased commitment to the Underlying Fund, including any interest payable to the Underlying Fund or their investors, each Member will bear its share of such additional costs irrespective of whether such Member was admitted to the AlphaKeys Fund at a Closing prior to the Subsequent Closing at which such Subsequent Member was admitted to the AlphaKeys Fund; provided that, the Member Designee may, in its sole discretion, determine to specifically allocate any such costs to the Member in respect of which such costs were incurred in which event the Member Designee also may elect to allocate any interest received from the Underlying Fund relating to such Subsequent Members to the Members that made contributions for such investments. Such additional costs will be in addition to the AlphaKeys Fund's capital commitment to the Underlying Fund and therefore each Member may be required to make Excess Contributions (as defined below) in respect of such amounts. Furthermore, to the extent the Underlying Fund admits additional limited partners after the admission of the AlphaKeys Fund to the Underlying Fund, the admission of such subsequent limited partners may have an impact on the AlphaKeys Fund, for example, by diluting the interests held by the AlphaKeys Fund. The Member Designee will adjust each existing Member's Capital Account (as defined below) with such items as necessary to reflect the arrangement set forth in the preceding paragraph with respect to Subsequent Closings. Capital Calls Each investor admitted to the AlphaKeys Fund (each, a "Member") will be required to fund its Capital Commitment (as defined above) relating to such ER305378-MAXWELL -9- CONFIDENTIAL UBSTERRAMAR00001790 EFTA00237421 Member's limited liability company interest in the AlphaKeys Fund (each, an "Interest") through the Initial Payment (as defined below) and upon subsequent capital calls, as described herein. The AlphaKeys Fund may from time to time hold some of its assets in cash (not earning interest) or invest in money market securities, cash equivalents, short-to- medium term federal tax-exempt debt obligations and similar securities of governmental and private issuers, including funds that normally invest primarily in such securities ("Temporary Investments") (i) pending investment in the Underlying Fund or as the Member Designee determines is necessary or prudent, in its sole discretion; and/or (ii) pursuant to the retention of appropriate reserves (as determined in the sole discretion of the Member Designee) for the payment of AlphaKeys Fund-level Fees and Expenses. Subject to the foregoing, substantially all of the AlphaKeys Fund's assets are expected to be invested in the Underlying Fund. As a result of the AlphaKeys Fund-level Fees and Expenses (including the Administrative Fee) and the need to reserve amounts to pay AlphaKeys Fund obligations, the amount of each Member's indirect investment in the Underlying Fund will be less than it would have been had such Member invested directly in the Underlying Fund. Income from Temporary Investments is subject to reinvestment. Capital Contributions may also be held in an escrow or similar account pending the Initial Closing or Subsequent Closings at the discretion of the Member Designee. It is possible that such an escrow account would not earn interest. The Member Designee may make calls for capital contributions to the AlphaKeys Fund ("Capital Contributions") on not less than five (5) calendar days' prior notice; provided however, to the extent the Underlying Fund calls for a contribution to the Underlying Fund on less than five (5) calendar days notice, the AlphaKeys Fund may call capital from its investors on less than five (5) calendar days notice to satisfy its obligations to the Underlying Fund. Each Member will be required to make an initial payment (the "Initial Payment") on or prior to the Initial Closing or upon a Subsequent Closing or as otherwise determined by the Member Designee equal to a percentage of its Capital Commitment as specified by the Member Designee. A Member may be required to make Capital Contributions to the AlphaKeys Fund in an amount in excess of its Capital Commitment (a) in the event the AlphaKeys Fund has to make capital contributions or other payments to the Underlying Fund in excess of the AlphaKeys Fund's capital commitment to the Underlying Fund, (b) for any AlphaKeys Fund- level Fees and Expenses or (c) any tax payments made by the AlphaKeys Fund on behalf of such Member (or interest or penalties associated therewith). In addition, it is expected that each Member will be required to make contributions to the AlphaKeys Fund in excess of its Capital Commitment to pay the Underlying Fund Management Fee and certain Underlying Fund organizational expenses, as set forth in the Underlying Fund Memorandum. The excess Capital Contributions described above are referred to herein as "Excess Contributions". The AlphaKeys Fund may invest all Capital Commitments in the Underlying Fund. As a result, the extent to which a Member will be required to make certain Excess Contributions will depend on the percentage of aggregate capital commitments called by the Underlying Fund (for example, if the Underlying Fund calls 100% of commitments, each Member's share, if ER305378-MAXWELL -io- CONFIDENTIAL UBSTERRAMAR00001791 EFTA00237422 any, of applicable AlphaKeys Fund-level Fees and Expenses and the Underlying Fund Management Fee and Underlying Fund organizational expenses would be in addition to such Member's Capital Commitment). In addition, a Member may also be required to pay a Placement Fee. Members should maintain sufficient liquid assets to meet capital call obligations. Failure of a Member to satisfy capital call obligations in a timely manner may result in significant adverse consequences, including forfeiture and/or sale of such Member's Interest. See "—Default" below. None of the Member Designee, the Administrator or any of their affiliates has control over when or in what amount the Underlying Fund may call capital from the AlphaKeys Fund. As a result of Underlying Fund-level Fees and Expenses, AlphaKeys Fund-level Fees and Expenses and the Placement Fee (if charged), the aggregate amount of each Member's indirect investment in the Underlying Fund may be less than the amount of its Capital Contributions. Capital The AlphaKeys Fund will establish and maintain a capital account for each Accounts Member that will reflect such Member's investment in the AlphaKeys Fund (a "Capital Account"). Reinvestment During the term of the AlphaKeys Fund, prior distributions of proceeds may be subject to recall and reinvestment by the Administrator in its sole and absolute discretion. Any cash that may otherwise be currently distributable to the Members may be reserved by the Administrator, in its sole and absolute discretion, for the payment of Fund Expenses, the Administrative Fee or projected expenses, or for reinvestment. Distributions All proceeds received by the AlphaKeys Fund generally will be distributed to the Members in accordance with each Member's Sharing Percentage. The amounts received by the AlphaKeys Fund will be net of fees, expenses and reserves. For purposes hereof, a "Sharing Percentage" will mean, with respect to any Member and as of any date, a fraction, expressed as a percentage, (i) the numerator of which is the Capital Commitment of such Member and (ii) the denominator of which is the aggregate amount of Capital Commitments of all Members, in each case as of such date and taking into account any adjustments specified in the LLC Agreement. Proceeds generally will be distributed at such times as the Member Designee will determine in its sole and absolute discretion, provided that the AlphaKeys Fund may reduce such distributions by the amount of Fund Expenses and by any amounts applied as a reserve or in anticipation of future funding in the sole and absolute discretion of the Member Designee. It is anticipated that the Administrator may maintain a reserve of AlphaKeys Fund assets in Temporary Investments. Distributions by the AlphaKeys Fund generally will be made in cash; provided, however, that there is no limitation on the ability of the AlphaKeys Fund to distribute securities (whether marketable or non-marketable) in-kind during the term of the AlphaKeys Fund or upon the winding-up of the AlphaKeys Fund. Items of income, gain, loss and deduction of the AlphaKeys Fund will generally be allocated among the Members in a manner consistent with the foregoing distribution provisions and the requirements of the Code Reserves ER305378-MA. -11- CONFIDENTIAL UBSTERRAMAR00001792 EFTA00237423 and the regulations of the U.S. Treasury Department promulgated thereunder. Return of The AlphaKeys Fund may require the Members (including any former Members) Distributions to return distributions pro rata based on distributions received by each Member from the AlphaKeys Fund relative to distributions received by all Members from the AlphaKeys Fund (a) in order to satisfy the debts, liabilities and obligations of the AlphaKeys Fund (including, without limitation, indemnification obligations and the Administrative Fee), whether such debts, liabilities and obligations arise before or after the last day of the term of the AlphaKeys Fund or, with respect to a Member, before or after such Member's withdrawal from the AlphaKeys Fund, or (b) if the Underlying Fund requires the AlphaKeys Fund to return any amounts previously distributed to the AlphaKeys Fund that the AlphaKeys Fund has, in turn, distributed to the Members (including any former members). Transfers and A Member generally may not sell, transfer or pledge its Interest without the withdrawals consent of the Member Designee, which consent may be withheld in the Member Designee's sole and absolute discretion, including if the Member Designee determines that such sale, transfer or pledge may cause the AlphaKeys Fund to become a publicly traded partnership under Section 7704 the Code. Generally, a Member will not be permitted to sell, transfer or pledge its Interest. A Member generally may not withdraw from the AlphaKeys Fund. However, certain voluntary transfers may be approved in limited circumstances in the Member Designee's sole discretion and subject to the AlphaKeys Fund's compliance with certain tax obligations. In addition, in the event of a Default by any Member or a default with respect to a Member's obligation to indemnify the AlphaKeys Fund for certain taxes paid on its behalf by the AlphaKeys Fund as described in the LLC Agreement, such Defaulting Member (as defined below) may, at the discretion of the AlphaKeys Fund, be subject to certain actions and penalties, including having its Interest sold or transferred to any other person or persons. See "—Default" below. In the event that one or more Members, due to tax, regulatory or other reasons cannot efficiently acquire or maintain an Interest, as an accommodation to such Members or if determined by the Member Designee to be in the interest of some or all of the Members, the Member Designee may establish one or more investment vehicles through which such Members may invest on a side by side basis with the AlphaKeys Fund (any such vehicle, an "Parallel Fund"). Any Parallel Fund will be structured in a manner so that the interests held by such investor, inclusive of rights and obligations, substantially approximates in all material respects, an Interest in the AlphaKeys Fund. If the Member Designee determines that for legal, tax, accounting, regulatory or other reasons it is in the interest of some or all of the Members that the investment in the Underlying Fund be made through one or more Parallel Funds, the Member Designee shall be permitted, without the consent of any Member, to permit or require, in certain circumstances, one or more Members to (i) withdraw from the AlphaKeys Fund and to acquire a substantially equivalent interest in a then-existing Parallel Fund or new Parallel Fund and/or (ii) otherwise convert and/or exchange all or a portion of a Member's Interest into or for an interest in a Parallel Fund. A conversion and/or exchange of all or a portion of a Member's Interest into or for an interest in a Parallel Fund (i) shall include a cancellation of all or an applicable portion of such Member's Interest and (ii) may include a redemption in-kind of such Member's Interest and a contribution to the Parallel Fund of a portion of the assets of the AlphaKeys Fund that the Member Designee determines is Parallel Funds ER305378-MAXWELL -12- CONFIDENTIAL UBSTERRAMAR00001793 EFTA00237424 Alternative Vehicles Cayman Vehicle attributable to such Member's Interest being so converted or exchanged. The Members will be required to make capital contributions directly to each such Parallel Fund to the same extent, for the same purposes and on the same terms and conditions as Members would otherwise be required to make Capital Contributions to the AlphaKeys Fund. If the Member Designee determines that for legal, tax, accounting, regulatory or other reasons it is in the interest of some or all of the Members that all or a portion of the AlphaKeys Fund's investment in the Underlying Fund be made through an alternative investment structure or vehicle (any such structure or vehicle, an "Alternative Vehicle") the Member Designee shall be permitted to structure the making of all or any portion of such investment in the Underlying Fund outside of the AlphaKeys Fund, by requiring any Member (i) to make all or a portion of its indirect investment in the Underlying Fund through a partnership or other vehicle or vehides (other than the AlphaKeys Fund) that is expected to invest on a parallel basis, subject to applicable legal, tax, accounting, regulatory or other considerations, with or in lieu of the AlphaKeys Fund, as the case may be or (ii) to contribute its Interest in the AlphaKeys Fund to an Alternative Vehicle in exchange for an interest in such Alternative Vehicle. The Members will be required to make capital contributions directly to each such Alternative Vehide to the same extent, for the same purposes and on the same terms and conditions as Members would otherwise be required to make Capital Contributions to the AlphaKeys Fund. If the Member Designee determines that for legal, tax, accounting, regulatory or other reasons it is in the interest of some or all of the Members that the AlphaKeys Fund be re-structured as a Cayman Islands exempted limited partnership or other entity formed under the laws of the Cayman Islands (any such entity, a "Cayman Vehicle") the Member Designee may take and/or cause the Members to take all actions necessary and desirable to implement any such re-structuring at the cost of the AlphaKeys Fund. The Members may be required to make capital contributions directly to each such Cayman Vehicle to the same extent, for the same purposes and on the same terms and conditions as Members would otherwise be required to make Capital Contributions to the AlphaKeys Fund. Borrowing The AlphaKeys Fund may borrow money to cover any shortfall in the AlphaKeys Fund's ability to make a capital contribution, to satisfy tax liabilities or for any other purpose the Member Designee reasonably determines to be necessary or appropriate. Borrowings may be secured by assignment of the obligations of the Members to make Capital Contributions. Members will be required to cooperate with the Member Designee in securing the borrowing and to provide the banks with financial information and other documentation reasonably and customarily required to obtain such facilities. Risk Factors An investment in the AlphaKeys Fund involves significant risks, certain of which are described in more detail in the risk factors and conflicts of interest sections in the Underlying Fund Memorandum. Each prospective investor in the AlphaKeys Fund should carefully consider and evaluate such risks prior to purchasing an Interest. The amount actually invested by the Underlying Fund is subject to the ability of the Underlying Fund to identify and fund investments. There can be no assurance as to the amount and timing of the Underlying Fund's investments, nor the associated schedule on which the AlphaKeys Fund will be required to ER305378-MAXWELL -13- CONFIDENTIAL UBSTERRAMAR00001794 EFTA00237425 invest in the Underlying Fund. See "Section III. Risk Factors and Other Considerations" below. The Underlying Fund Memorandum, as provided by Blackstone to the AlphaKeys Fund, sets forth the terms of the Underlying Fund is attached hereto as Appendix A, and should be read carefully by all prospective investors. The terms of the Underlying Fund, including the terms described herein, are subject to change. In the event of any such change to the terms of the Underlying Fund, the AlphaKeys Fund, as an investor in the Underlying Fund, will be subject to such changed terms. The Underlying Fund Memorandum includes a variety of performance information relating to the Underlying Fund and other investment vehicles managed by the Underlying Fund General Partner and/or the Underlying Fund Adviser. Information presented about other funds or selected investments made by the Underlying Fund General Partner and/or the Underlying Fund Adviser, while informative regarding the experience of the Underlying Fund General Partner and/or the Underlying Fund Adviser, are not indicative of, and in some cases may be irrelevant to, an assessment of the potential performance or investments of the AlphaKeys Fund (in connection with its investment in the Underlying Fund). While reviewing the performance information set forth in the Appendix to the Underlying Fund Memorandum, investors should pay particular attention to the net return information provided in the endnotes to such Appendix. Performance shown in the Underlying Fund Memorandum is not that of the AlphaKeys Fund and is not net of AlphaKeys Fund-level Fees and Expenses or the Placement Fee (if charged). The returns of the AlphaKeys Fund will be lower, and may be materially lower, than the returns at the Underlying Fund level. Returns for the AlphaKeys Fund may also differ from the returns of the Underlying Fund as a result of, among other things, funds invested in Temporary Investments by the AlphaKeys Fund and delayed distributions by the AlphaKeys Fund to its investors. Purchasers of Interests will not be limited partners of the Underlying Fund, will have no voting rights or direct interest in the Underlying fund and will have no standing or recourse against the Underlying Fund, the Underlying Fund General Partner, the Underlying Fund Adviser or their respective affiliates. The offering of Interests in the AlphaKeys Fund should not be considered an offering of interests in the Underlying Fund. Moreover, none of the AlphaKeys Fund, the Member Designee, the Administrator or any of their respective affiliates has the right to participate in the control, management or operations of the Underlying Fund, and none of the foregoing has any discretion over the management of the Underlying fund. An investment in the AlphaKeys Fund is a speculative investment that entails significant risks. No representation or warranty is made that the AlphaKeys Fund or the Underlying Fund will achieve its investment objectives, implement its investment strategy or avoid substantial losses. Each Member must have the ability to bear the risk of loss of its entire investment. See "Section lit Risk Factors and Other Considerations" below. Conflicts of An investment in the AlphaKeys Fund involves potential conflicts of interest, ER305378-MAXWELL CONFIDENTIAL UBSTERRAMAR00001795 EFTA00237426 Interest Custodian, Record Keeper and Related Services Involuntary Termination of Member's Interest including that the Placement Agent may charge a Member a Placement Fee. In addition, certain affiliates of the Member Designee or the Administrator may receive investment banking fees from the Underlying Fund's portfolio companies and affiliates thereof and in respect of other transactions in which the Underlying Fund is involved. Moreover, in the regular course of business, certain affiliates of the Member Designee or the Administrator may be engaged to act as a financial advisor to a party or parties competing for the same or similar investments as the Underlying Fund. Furthermore, certain affiliates of the Member Designee or the Administrator may act as a lender to the AlphaKeys Fund, the Underlying Fund or its portfolio companies and, in such capacity, may have a liquidation preference over the Underlying Fund or may have interests that are divergent from the Underlying Fund. See "Section IV. Conflicts of Interest" and "— Other Fees and Expenses" and "— Placement Fee" above. Each prospective investor in the AlphaKeys Fund should carefully consider and evaluate such potential conflicts of interest prior to purchasing an Interest. Additionally, each prospective investor should carefully consider and evaluate such potential conflicts of interest as are described in the disclosure relating to risk factors and conflicts of interest in the Underlying Fund Memorandum (and in particular, should pay careful attention to the description of potential fees charged by the Underlying Fund under "Risk Factors and Potential Conflicts of Interest — Fees for Services" in the Underlying Fund Memorandum). A third party bank will serve as custodian of the AlphaKeys Fund's assets. In addition to the Administrator, the AlphaKeys Fund may, in its sole and absolute discretion, retain other persons (including Ernst & Young LLP and Citi Private Equity Services, Inc. or others) to perform certain administrative, accounting, portfolio, investor and other services for the AlphaKeys Fund at the AlphaKeys Fund's expense, including the preparation of reports to Members and the AlphaKeys Fund's tax returns, including Schedule K-1s. In consideration of such services, the AlphaKeys Fund will generally pay the service provider a fee which may be a flat fee or may be based on the average net assets of and/or the number of investors in the AlphaKeys Fund, subject to a monthly minimum. The AlphaKeys Fund will also reimburse the service provider for any out-of-pocket expenses. Fees paid to the service provider in such capacity will not reduce the Administrative Fee. In addition, the AlphaKeys Fund may engage other administrative service providers. The AlphaKeys Fund may terminate the Interest of any Member if the AlphaKeys Fund determines that the continued participation of such Member in the AlphaKeys Fund would be detrimental to the AlphaKeys Fund (including, without limitation, if the continued participation of such Member would cause the AlphaKeys Fund to be excluded from certain investments by the Underlying Fund). In addition, the AlphaKeys Fund may terminate the Interest of any Member who is a UBS employee if the continued participation of such Member is determined by the Member Designee to subject any of the AlphaKeys Fund, the Member Designee, or their respective affiliates to any adverse consequence under any laws, rules or regulations applicable to any of the AlphaKeys Fund, the Member Designee, or their respective affiliates. In the event of any termination of a Member's Interest, such Member (a) may be paid an amount equal to its Capital Account balance as of the termination date within ninety (90) days or as soon thereafter as the AlphaKeys Fund has available funds as determined by the Member Designee, in its sole and absolute discretion, which amount may be ER305378-MAXWELL -15- CONFIDENTIAL UBSTERRAMAR00001796 EFTA00237427 Death of a Member Amendments; Amendments in Respect of the Underlying Fund Restructuring Fiscal Year Reports significantly less than the amount such Member would receive if it held its Interest through the termination date of the AlphaKeys Fund or (b) may have its Interest sold or transferred to any other person or persons (including an affiliate of the Member Designee or the Administrator or in a transaction in which the Member Designee, the Administrator or one of their affiliates is acting as agent or principal) at whatever price or terms, in the Member Designee's sole and absolute discretion (with the net proceeds, if any, of such sale inuring to the benefit of such Member) and allowing the transferee of such Interest to assume such Member's unfunded Capital Commitment. If a Member dies, the recipient of the Interest of such Member will continue as a successor to such Member, provided, however, that the Member Designee may, in its sole and absolute discretion, terminate such Member's Interest upon five (5) days' prior written notice to such recipient of such Interest. In the event of any such termination of such Member's Interest, such Member (or successor) will be paid as described in "Involuntary Termination of Member's Interest" above. The LLC Agreement may be amended with the approval of (i) the Member Designee, (ii) the Administrator, and (iii) where applicable, a majority-in-interest of the Capital Commitments of non-Defaulting Members. A Member will be deemed to consent to a proposed amendment if the Member has received notice of such amendment and did not object thereto within a reasonable, and specifically disdosed, time period that is consistent with applicable law. Amendments increasing the obligation of any Member to make capital contributions to the AlphaKeys Fund or reducing any Member's capital account (in each case other than as permitted in the LLC Agreement) may not be made without the consent of any Members materially and adversely affected thereby or unless any such Member has received notice of such amendment and, in the case of a Member objecting to such amendment, a reasonable opportunity to withdraw its Interests. Amendments that (i) increase Member rights, including with respect to voting, or (ii) otherwise would not materially and adversely affect Members, will not require Member consent. The terms of the Underlying Fund, including the terms described herein, are subject to change. In the event of any such change to the terms of the Underlying Fund, as an investor in the Underlying Fund, the AlphaKeys Fund will be subject to such changed terms. The Member Designee may in the future, in its sole discretion and without notice to the Members, restructure the AlphaKeys Fund or the Member Designee in order to comply with laws or regulations (including, but not limited to, the Bank Holding Company Act of 1956, as amended (the "BHC Act")) or to reduce or eliminate the impact or applicability of any bank regulatory restrictions to which the Member Designee or the AlphaKeys Fund: (i) are subject, or (ii) will be subject upon engaging in a new business transaction. The AlphaKeys Fund's fiscal year will be the calendar year, unless the Code requires a year other than the calendar year to be used as the taxable year, in which case the fiscal year will be the taxable year required by the Code. The AlphaKeys Fund intends to deliver to the Members audited annual financial reports of the AlphaKeys Fund as soon as practicable after the condusion of the AlphaKeys Fund's fiscal year. Nevertheless, due to (a) a change in accounting rules or interpretations that may make it difficult for the Administrator or costly for the AlphaKeys Fund to provide audited financial reports or (b) the ER305378-MAXWELL -16- CONFIDENTIAL UBSTERRAMAR00001797 EFTA00237428 unavailability of necessary information from the Underlying Fund, the AlphaKeys Fund may deliver unaudited annual financial reports to Members. An annual audit of financial reports may only be completed once the AlphaKeys Fund receives audited financial statements from the Underlying Fund in respect of the same fiscal year. Consequently, the preparation of the AlphaKeys Fund's audited annual financial reports may occur later than would otherwise be the case. If the Underlying Fund is unable to complete its audit (or if the Underlying Fund issues a qualified audit report), the AlphaKeys Fund will be unable to complete its own audit (or the AlphaKeys Fund will have to issue a qualified audit report). In addition, Members may receive periodic reports regarding the AlphaKeys Fund's operations. To the extent that such reports reflect valuations of investments made by the Underlying Fund, such valuations may be based on information provided by the Underlying Fund. Such valuations are subjective in nature and may not conform to any particular valuation standard. Audited financial reports, as well as other financial reports of the AlphaKeys Fund, will be prepared in accordance with such accounting method as the Administrator determines in its sole and absolute discretion is in the best interest of the AlphaKeys Fund, which may not be in accordance with U.S. generally accepted accounting principles. The AlphaKeys Fund will adopt the accrual method for tax accounting purposes or any other accounting method permitted by the Code which the Administrator determines in its sole and absolute discretion is in the best interest of the AlphaKeys Fund. Each Member will be furnished information on Schedule K-1 for preparation of its respective U.S. federal income tax returns. In order for the AlphaKeys Fund to furnish such information and complete its tax reporting obligations, the AlphaKeys Fund must, among other things, receive timely information from the Underlying Fund. The Schedule K-1s will not be available prior to April 15 and accordingly, Members may need to obtain extensions for the filing of their own individual tax returns. See "Section V. Certain Material U.S. Federal Income Tax Considerations." Indemnification None of the Administrator, the Member Designee or their affiliates, or their respective current or former shareholders, directors, officers, trustees, partners, members, employees, managers or agents of any of them (each, a "Covered Person") will be liable to the AlphaKeys Fund or any Member for any act or omission, induding any mistake of fad or error in the performance of services to the AlphaKeys Fund, except for any such act or omission constituting fraud, willful misfeasance, conviction of a felony, willful violation of law, gross negligence, or reckless disregard of duties in the conduct of such person's office, in each case having a material adverse effect on the AlphaKeys Fund ("Dating Conduct"). The AlphaKeys Fund (and not any Covered Person), will (i) be responsible for any losses resulting from "trading" errors and similar human errors, absent willful misfeasance, bad faith, gross negligence or reckless disregard in the performance of the obligations and duties of any Covered Person or (ii) receive the gain from such errors, as the case may be. The AlphaKeys Fund will indemnify Covered Persons against all claims, damages, liabilities, costs and expenses, induding legal fees and expenses, to which they may be or become subject by reason of their activities on behalf of the AlphaKeys Fund or otherwise relating to the LLC Agreement or the Administrative Services Agreement, except to the extent that such claims, damages, liabilities, costs or expenses are finally determined by a non-appealable judgment to have resulted primarily from such person's Disabling Conduct. See ER305378-MAXWELL -17- CONFIDENTIAL UBSTERRAMAR00001798 EFTA00237429 "—Return of Distributions" above. Expenses incurred by a Covered Person in defense or settlement of any claim that may be subject to a right of indemnification hereunder may be advanced by the AlphaKeys Fund to such Covered Person prior to the final disposition thereof upon receipt of an undertaking by or on behalf of such Covered Person to repay such amount if a court of competent jurisdiction determines in a non-appealable judgment that the Covered Person was not entitled to be indemnified hereunder. The right of any Covered Person to the indemnification provided herein will be cumulative with, and in addition to, any and all rights to which such Covered Persons may otherwise be entitled by contract or as a matter of law or equity and will extend to such Covered Person's successors, assigns, heirs and legal representatives. The above will not be construed to provide indemnification for any liability to the extent that such indemnification would be in violation of applicable law or such liability may not be waived, modified or limited under applicable law. In addition, the AlphaKeys Fund, like all other investors of the Underlying Fund, will agree to indemnify the Underlying Fund General Partner, the Underlying Fund Adviser and/or any of their affiliates as more fully described in the Underlying Fund Memorandum. Any costs or liabilities associated with such indemnification will be borne by the AlphaKeys Fund (and thus, the Members). Moreover, the AlphaKeys Fund indemnifies the Placement Agent under certain circumstances, as set forth in the Placement Agreement. Default In the event that the AlphaKeys Fund fails to make a capital contribution (in whole or in part) to the Underlying Fund in a timely manner as a result of the failure of a Member to make a Capital Contribution to the AlphaKeys Fund, (a) such failure could cause the AlphaKeys Fund in its entirety to be in default under the Underlying Fund Operating Document and (b) the Underlying Fund may impose certain remedies, including without limitation, forcing the AlphaKeys Fund to forfeit a portion or all of its interest in the Underlying Fund (the "Fund Defaulted Interest") which may materially and adversely affect non-Defaulting Members in the AlphaKeys Fund. If the AlphaKeys Fund were to forfeit all or any portion of its interest in the Underlying Fund because of one or more Member defaults, all Members in the AlphaKeys Fund could be adversely impacted by (i) losing some or all of their indirect investment in the Underlying Fund or (ii) bearing all or some of the costs of such defaults as Fund Expenses. Notwithstanding the foregoing, in the event that the Underlying Fund takes action in respect of any Fund Defaulted Interest, the Member Designee will have broad discretion to amend the LLC Agreement to attempt to ensure that any action taken by the Underlying Fund in respect of the AlphaKeys Fund Defaulted Interest will only adversely affect the Interest of the Defaulting Member in the AlphaKeys Fund. If any Member fails to make all or any portion of any Capital Contribution when due (a "Default"), then such Member may be designated by the Member Designee as in default under the LLC Agreement (a "Defaulting Member"). Notwithstanding the foregoing, if any Member fails to make all or any portion of such Capital Contribution when due, such Member may be assessed a late fee or other charge (including, without limitation, interest) on such outstanding amount in an amount to be determined in the sole and absolute discretion of the Member Designee, in accordance with commercially reasonable standards, for each day all or any portion of such Capital Contribution is outstanding. With respect to any Capital Contribution (or portion thereof) that is subject to a ER305378-MAXWELL -18- CONFIDENTIAL UBSTERRAMAR00001799 EFTA00237430 Default (the "Defaulted Amount") the Member Designee may (i) increase the Capital Contributions of the Members that have made their corresponding Capital Contributions, pro rata based on the Capital Contributions of the non- defaulting Members, to the extent necessary to fund the Defaulted Amount, (ii) cause the AlphaKeys Fund to obtain (through a borrowing or otherwise) such amounts as are necessary to fund the Defaulted Amount, the cost of which may be assessed to the Defaulting Member provided that, in the event that the AlphaKeys Fund is unable to recover such amounts from the Defaulting Member, the Members may bear such amounts as Fund Expenses. The AlphaKeys Fund will have the right to bring legal action against a Defaulting Member to collect the Capital Contributions due to the AlphaKeys Fund plus legal fees and other costs, expenses and liabilities incurred by the AlphaKeys Fund (including any such costs, expenses and liabilities imposed by the Underlying Fund against the AlphaKeys Fund) in connection with the Default, as well as a late fee on the defaulted amount and any other amounts not timely paid in an amount to be determined in the sole and absolute discretion of the Member Designee in accordance with commercially reasonable standards, for each day all or any portion of such amounts are outstanding. In addition, a Defaulting Member may, at the discretion of the AlphaKeys Fund, with respect to all or some of its Interest, be subject to any (or any combination) of the following remedies: (i) having its Capital Account frozen, (ii) having to bear up to the full amount of any losses incurred by the AlphaKeys Fund due to its Default, to the extent of its Capital Account, but not share in any income or gain, (iii) being prohibited from sharing in any future capital call with respect to its Capital Commitment, (iv) having its Interest sold or transferred to any other person or persons who may be admitted as a substitute Member (induding the Member Designee, the Administrator or one of their affiliates or in a transaction in which the Member Designee, the Administrator or one of their affiliates is acting as agent or principal) at whatever price or terms, in the Member Designee's sole and absolute discretion (with none of the proceeds, if any, of such sale inuring to the benefit of the Defaulting Member) and allowing the transferee of such Interest to assume the Defaulting Member's unfunded Capital Commitment, (v) having its Interest reallocated among non-Defaulting Members on terms established by the Member Designee in its sole and absolute discretion, (vi) having its obligations to pay its pro rata share of organizational and other Fund Expenses continue as if the Default had not occurred, (vii) having its remaining unfunded Capital Commitment accelerated, (viii) having amounts otherwise distributable to it applied in satisfaction of any amounts payable by it, (ix) having its Sharing Percentage reduced to zero, (x) having the amount of such Default withdrawn from any account maintained by it with any affiliate of the Member Designee or the Administrator to the extent of available funds thereof, (xi) having a lender (including the Member Designee, the Administrator and their affiliates) lend to it all or any part of the funds required of the Defaulting Member as further described in the LLC Agreement, (xii) forfeiting its Interest in the AlphaKeys Fund in full, and/or (xiii) being subject to any other remedy available under sections 18-306 and 18-5O2(c) of the Delaware Limited Liability Company Act, 6 Del C. § 18-101 et seq., at law or in equity to the AlphaKeys Fund. The Member Designee reserves the right, in its sole and absolute discretion, to implement any one or a combination of the above remedies, including remedies that may benefit the Member Designee, the Administrator and their affiliates to the exclusion of the AlphaKeys Fund or any non-Defaulting Members. ER305378-MAXWELL -19- CONFIDENTIAL UBSTERRAMAR00001800 EFTA00237431 Power of Attorney Limited Liability Certain Material U.S. Federal Income Tax Considerations Under the LLC Agreement, the Member Designee is granted an irrevocable power of attorney to sign on behalf of each Member (i) any amendments to the certificate of formation of the AlphaKeys Fund, certain amendments to the LLC Agreement, as well as any instruments, documents and certificates as may be required by law from time to time to effect, implement or continue the existence of the AlphaKeys Fund and (ii) any instruments, documents and certificates as may be necessary or advisable to effect or implement the transactions described under "Parallel Funds", "Alternative Vehides" and "Cayman Vehicle" above. Members will be members of a limited liability company as provided under Delaware law. Except as otherwise provided under Delaware law, in the LLC Agreement and under "Return of Distributions" above, a Member will only be liable for the debts, obligations or liabilities of the AlphaKeys Fund to the extent of such Member's Capital Contributions and unfunded Capital Commitment. In addition, each Member (or former Member) will be obligated to make payments to, or return to the AlphaKeys Fund pursuant to the LLC Agreement, any funds wrongfully distributed to the Member (or former Member) or as may otherwise be required under applicable law. The AlphaKeys Fund expects to be classified as a partnership for U.S. federal income tax purposes. Because of this dassification, subject to the discussion under "Tax Returns and Audits" in "Section V. Certain Material U.S. Federal Income Tax Considerations" below, the AlphaKeys Fund generally will not be subject to U.S. federal income tax, and each Member will be allocated its share of the items of income, gain, loss, deduction and credit (including any foreign tax credits) of the AlphaKeys Fund (including the AlphaKeys Fund's allocable shar