4 c r rv-A, r tr, le) N -1.`O‘,7,2

4 c r rv-A, r tr, le) N -1.`O‘,7,2 BEAR STEARNS HIGH-GRADE STRUCTURED CREDIT STRATEGIES ENHANCED LEVERAGE FUND, L.P. (FOR USE BY INVESTORS IN BEAR STEARNS HIGH-GRADE STRUCTURED CREDIT STRATEGIES FUND, L.P., THAT WISH TO EXCHANGE ALL OR A PORTION OF THEIR INTEREST THEREIN FOR AN INTEREST IN THE PARTNERSHIP) SUBSCRIPTION AGREEMENT for Limited Partnership Interests BEAR STEARNS ASSET MANAGEMENT INC. General Porn er 383 Madison Avenue New York, New York 10179 Attention: Alternative Fund Services Telepbone: 212-272.1630 Facsimile: 917449.3018 4'9 EFTA01118520 The Investor hereby agrees as follows: 1. SUBSCRIPTION FOR AN INTEREST Subscription Amount: Please specify whether you wish to request the withdrawal of all or a portion of your interest in the High-Grade Fund as of the Transaction Effective Date (as defined in the interest Exchange Agreement) and to contribute the proceeds of such withdrawal to the Partnership as of the Transaction Effective Date in exchange for an Interest in the Partnership having a value equal to the value of the withdrawn portion of your interest in the High-Grade Fund immediately prior to the effectiveness of such withdrawal. ALL or (A) The Partnership will offer Interests generally as of the opening of business of the first Business Day of each month (each, a "Subscription Date") The Investor agrees to become a limited partner in the Partnership (as so admitted, hereinafter sometimes individually referred to as a "Limited Partner" and collectively with the other limited partners as the "Limited Partners"), and in connection therewith subscribes for and agrees to make a capital contribution to the Partnership in the amount set forth on page 4 hereof, on the temp and conditions described herein and in the Interest Exchange Agreement attached as Appendix II to this Subscription Agreement (the "Interest Exchange Agreement"), and in the Memorandum, and the Partnership's Limited Partnership Agreement (collectively, the "Partnership's Documents"). (B) The Investor acknowledges and agrees that it is not entitled to cancel, terminate, or revoke this subscription, power of attorney, or any agreements of the Investor hereunder, except as otherwise set forth in (i) the Memorandum or (ii) applicable law, and such subscription and agreements and power of attorney shall survive changes in the transaction, documents, and instruments described in the Memorandum. (C) The Investor hereby irrevocably constitutes and appoints Bear Steams Asset Management Inc. or its designee (and any substitute or successor general partners) of the Partnership) (the "General Partner") as its true and lawful attorney in its name, place, and stead, (i) to arrange for payment to the Partnership on behalf of the Investor, to the extent set forth in this Subscription Agreement, all funds received hereunder, (ii) to complete or correct, on behalf of the Investor, all documents to be executed by the Investor in connection with the investor's subscription for an Interest, including, without limitation, filling in or amending amounts, dates, and other pertinent information, (iii) as applicable, to execute, acknowledge, swear to, and file: (a) any counterparts of the Partnership's Limited Partnership Agreement (the "Limited Partnership Agreement") to be entered into pursuant to this Agreement and any amendments to the Limited Partnership Agreement, (b) any agreements or other documents relating to the obligations of the Partnership as described in the Partnership's Documents, (c) any certificates of limited partnership required by law and all amendments thereto, (d) all certificates and other instruments necessary to qualify, or continue the qualification of, the Partnership in the states where it may be doing business, (e) all assignments, conveyances, or other instruments or documents necessary to effect the dissolution of the Partnership, (1) all other filings with agencies of the federal government, of any state or local government, or of any other jurisdiction, which the General Partner considers necessary or desirable to carry out the purposes of this Agreement, the Limited Partnership Agreement, and the business of the Partnership, and (iv) to file, prosecute, defend, settle, or compromise litigation claims or arbitrations on behalf of the Partnership (other than proceedings in which the Partnership and the General Partner are adversaries). This power of attorney shall be deemed coupled with an interest, shall be irrevocable, and shall survive the transfer of the Investor's Interest. (D) The Investor agrees that as of the date of the acceptance of this subscription and the Investor's Subscription Amount by the General Partner, the Investor shall become a Limited Partner of the Partnership, and it hereby agrees to each and every term of the Limited Partnership Agreement, as if the Investor's signature were subscribed thereto, and of the Memorandum. By execution of this Subscription Agreement, the Investor agrees that it shall be deemed to have executed the Limited Partnership Agreement. 4 EFTA01118521 Nontaxable exchanges Code Sec. 1031(a)(1) 1963. of a corporative which was a foreign mental Padang company for in most recent uutabk yeas ending before the date of the decedette s death stall be iceatased by its ptOpanionate sham Of ay Federal cute tat atrib- uuble to the net apemen-lance in yoke of all of suds than and woman deetnnired as provided in this section. lb) PlefOrkellle thee. 'For wpm, of abjection (U. the proportionate than of a share of oak or of • security is du: amours which bears the sane radio to the ag- stepte Scream determined ander subsection (SO) as the atsreciatian taut of such dun or security bean to the aggregate appeetimen IS value of al such shares and securities hating appreciation in value. lc/Spend nab and Ielleitiont- lor purposes of this section — 11) Federal estate tax. The term 'Federal estate tax' mean only the tar imposed by section 2001 or 2101 toasted by any credit allowable wish (e- xpect to co puce Inman by section 5)13 or 2102. 12) Fatal estate tat auribembk ro net appreciatioe m vane. The Fed. eat estate tax manhood,* to the nee appreciation in sae of all shares of stock and securities to which subsection (a) applies is that amoont .hick hears the same Moo to the Fenced estate tax in them appreciation in rake of alt of loch sham sod menthes bears 40 the sake of the grew es- tate as determined under chapter 11 (socleding section 2032. relanta to eh femme val.-won) Net *erratum The mi vermouth in sane of all sheets and se. Mace to Ala' subsection (a) thaws is the amount by which the fair mates vase of all seek thorn and Kamenn exceeds the adjusted boas of such papery in the hada of the decedent. IS Fast market value For puposes of Om mom. the term 'fair market vane mass (aa market value elnenemed wader chapter I I Oneading sec- tion 2032. relating to thiroare valuation). 1c9 Limitaions, 11tis section shall not awn to any fortign personal bolding company related to r semen 342(a)a).- le 1964, P.L. 811272. See, 225(0, added Cede Sec 1022, effective for de- adems dyke after 12/3U6S. See. 1023. Cross references. (I) For certain distributions by a corporation which are applied in reductioh of basis of stock, see section 301(cX2). (2) For basis in case of construction of new vessels. sec chapter 533 of tick 46. United States Code. In 2456, PL 109-30. Stu. I7(04). subuileted "alma 533 ef title 46. Cased States Cede- for "earn SI I of the Mochas< Marine Act. 1936 as unaided (46 LS S.0 Fl60" in pat (2). enacted I 005/2636. In 140. PL 96-50. Sec 66)(4). deleted pan (2) and redesignated pan 0) as Para (21. effective. io(n9. except fee any proceeding undo the Bankreixey Act berm before 101179. Soc. ny.) of this Act provides: 15) Denison. 'Ter papaws of this section — ll) BaritniptCy case. The term "IdalrIPIL7 ease' amaat any cue ander Ode 11 of the United Stales (de (as recodillid by PL. 95491) 12) Sienna tudscul proeceJaeg. The team 'sundae jutbria proceedteg' amass a reariverstip. foreclosure. or wales proceeding m • Federal or Sum cows In meddled by section 363(a)(3•11) of the lemma Revenue Code of 1954)7 •- Prue to deletion para. (2) rod in follows "(2) For Sus of propcny in case of certain reorganizations and arrangc• menu mar the Badauptcy Act. See WIXOM 270. 396. and 522 of nut Aci. as amended ( II U. S C. 670. 796. 922) - -PL 96-221. Sec 401(a). repealed Sec. 2C05(a)(2) of P L 94-455 and the scenarists mode by Sec. 2005(a)(21 effective for decedents droll are 76 (see hang Sec- 401(b) of PL 94223 provides as follows: 1$ Revival of Prix law. 'Except to the client necessary to cony out subsection td). the Internal Revenue Code of 1954 shall be applied and administered as if the prow. sans repealed by setweetioa (a). and the actors made by those Prom noes. had not been enacted" la OM PL 94-455. Sec. 1901(1)(127). deleted para. (4). effective for tea yas. tett after '76. Not to deletion. pan (4) real al follows 14) For mks applicable us case of payments u violation of Defense Pro. diction Act el 1950. as treaded we faili). 40 of that ALL —P.L. 94.455. See N05(02). rcdesiSOalcd Code Sec- 1023 as Code Sec 1024 ad added new Code Sec. 1023. Ma Sec 2005(1)(2) was repealed by See. 401(a) of Pt 96.223 Ism Sava the Code Sec 1023 added by Sec. 2005(4)(2) see cane for SIX- 401(5) of PL. 96.223 followin Cabe Sec 1014 In 1964. redesignated Code Sec. 1022 at Code Sec. 1023. . PART M.—COMMON NONTAXABLE EXCHANGES See. 1031. Exchange of property held for productive use or in. VeStMent. 1032. Exchange of stock for property. 1033. Involuntary conversions. 1034. Repealed. 1035. Certain exchanges of insurance policies. 1036. Slack for stock of same corporation. 1037. Certain exchanges of United States obligations. 1038. Certain reacquisition* of real properly. 1039. Repealed. WM Transfer of certain (ann. etc.. real property (effective before 1/02010). 1010. Use of appreciated carryover basis property as satisfy • pecuniary bequest (effective after 12/3I(2009)- 1041. Transfers of property between spouses or incident to divorce. 1042. Sales of stock to employee stock ownership plans or certain cooperatives. 1043. Sale of property to comply with conflict.of-interest re. quiremeats. 1044. Rollover of publicly traded securities pin into sm• cialized small business investment cothpanies. 1045. Rollover of gain from qualified small business stock to another qualified small business stock lit 2111. PL 10716, Sec 542(d)(21. amended Una 1040. Pier to aromadmeat. item 1040 read as follows: 100. Transfer of enemies fan. eat real propeny.- . le 1997. PI- 10544, Sec 312(005). deleted item 1034... Sec. 31301(3). added item 1015. In 1993, P.1.- 103.66. Sec 13114(c). added item 1044. lm IWO, P.L I01-508, Sec. IS01(:001). deleted kern 1039. Prim m deletion. item 1079 read at follows: "1039. Ceuta tam of low-income housing projens.- In 150), PL. 101-194, Sec 502(bX3). added nem 1043. In 1115, P L. 99.314. Sec II0MaX12). amended lean 1012. PM m aMeNdrOtat. Sent 1042 toad as follows: -1042. Saks of stoat to neck ownership plans or certain ceoperamet- la 1954, P.L 98.369. Sec. 42fte), same item 1011..., See. 541(a). added item 1082. In 19111, PL 97.34, Sec. 4210X2XCL amended Min 1040 Ham to arnadmeot item 1040 read as fathom "100. Use of fa etc.. real preptuy to tautly pee navy 14214" 4" In INS. Pt. 96.223. Sec. 40602103). revised Table, part III. Sara 0. ch. Ito mad "See. 1040. Use of farm, etc.. real popery to satisfy pane. an bequest ". In aspen of decedents Stag after 12/31/76. Prior to revision the table sad as follows: Use of Milan appreciated carryover bases property to tautly pectin. ay request." In thin Pl. 954(0, Sec 405442). amended kem 1034. Prim to amendment mere 1034 lead as follows -Silt or excluoge of reside:me." I. 1976, P.L. 94.455. Sec. 2005(02). added loan 1040. L 190, P.L. 91.172. Sec. 1110(c). added tam 1039 la 1961, inserted item 103$. le I90, added rem 1037. Sec. 1031. Exchange of property held for productive use or Investment. (a) Nonrecognition of gain or loss from exchanges solely In kind. (1) In general. No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged 2.759 EFTA01118522 Code Sec. 1031(a)(1) Nontaxable exchanges solely for property of like kind which is to be held either for productive use in a trade or business or for investment. —, (2) Exception. This subsection shall not apply to any ex- change of — (A) stock in trade or other property held primarily for sale. --- • - • —., (B) stocks, bonds, or notes. (C) other securities or evidences of indebtedness or in- i kraal. interests in a partnership. (E) Certificates of trust or beneficial interests. or (F) choses in action. For purposes of this section. an interest in a partnership which has in effect a valid election under section 761(a) to be excluded from the application of all of subchapter K shall be treated as an interest in each of the assets of such partnership and not as an interest in a partnership. (3) Requirement that property be Identified and that exchange be completed not more than 180 days after transfer of exchanged property. For purposes of this subsection. any property received by the taxpayer shall be treated as property which is not like-kind property if — (A) such property is not identified as property to be re- ceived in the exchange on or before the day which is 45 days after the date on which the taxpayer transfers the property relinquished in the exchange. or (B) such property is received after the earlier of — (i) the day which is 180 days after the date on which the taxpayer transfers the property relinquished in the exchange. or (ii) the due date (determined with regard to exten- sion) for the transferor's return of the tax imposed by this chapter for the taxable year in which the transfer of the relinquished property occurs. (b) Gain from exchanges not solely In kind. If an exchange would be within the provisions of subsec- tion (a). of section 1035(a). of section 1036(a), or of section 1037(a), if it were not for the fact that the property received in exchange consists not only of property permitted by such provisions to be received without the recognition of gain, but also of other properly or money, then the pin, if any. to the recipient shall be recognized. but in an amount not In excess of the sum of such money and the fair market value of such other property. (c) 146.5 from exchanges not solely In kind. If an exchange would be within the provisions of subsec- tion (a), of section 1035(a). of section 1036(a). or of section 1037(a). if it were not for the fact that the property received in exchange consists not only of property permitted by such provisions to be received without the recognition of gain or loss. but also of other property or money, then no loss from the exchange shall be recognized. (d) Basis. If property was acquired on an exchange described in this action. section 1035(a), section 1036(a), or section 1037(a), then the basis shall be the same as that of the property ex- changed, decreased in the amount of any money received by the taxpayer and increased in the amount of gain or de- creased in the amount of loss to the taxpayer that was recog- nized on such exchange. If the property so acquired con- sisted in part of the type of property permitted by this section, section 1035(a), section 1036(a). Of section 1037(a), to be received without the recognition of gain or loss, and in part of other property, the basis provided in this subsection shall be allocated between the properties (other than money) 2,760 received, and fee the purpose of the allocation there shall be assigned to such other properly an amount equivalent to its fair market value at the date of the exchange. For purposes of this section, section I035(a). and section 1036(a), where at part of the consideration to the taxpayer another party to the exchange assumed (as determined under section 357(d)) a liability of the taxpayer, such assumption shall be consid- ered as money received by the taxpayer on the exchange. (e) Exchanges of livestock of different sexes. For purposes of this section, livestock of different sexes are not properly of a like kind. (t) Special rules for exchanges between related persons. (I) In general. If— • (A) a taxpayer exchanges property with a related per- son, (B) there is nonrecognition of gain or lOss to the tax- payer under this section with respect to the exchange of such property (determined without regard to this sub. section). and (C) before the date 2 years after the date of the Iasi transfer which was part of such exchange— (i) the related person disposes of such properly. or (ii) the taxpayer disposes of the property received in the exchange from the related person which was of like kind to the property transferred by the taxpayer. there shall be no nonrecognition of gain or loss under this section to the taxpayer with respect to such exchange; ex- cept that any gain or loss recognized by the taxpayer by reason of this subsection shall be taken into account as of the date on which the disposition referred to in subpara- graph (C) occurs. (2) Certain dispositions not taken into account. For pur- poses of paragraph (I)(C). there shall not be taken info 2C- COUnt any disposition — (A) after the earlier of the death of the taxpayer or the death of the related person, (B) in a compulsory or involuntary conversion (within the meaning of section 1033) if the exchange occurred before the threat or imminence of such conversion. or (C) with respect to which it is established to !he satis• faction of the Secretary that neither the exchange nor such disposition had as one of its principal purposes the avoidance of Federal income tax. (3) Related person. For purposes of this subsection, the term "related person" means any person bearing a rela- tionship to the taxpayer described in section 267(b) or 707(b)(l). (4) Treatment of certain transactions. This section shall not apply to any exchange which is part of a transaction (or series of transactions) structured to avoid the purposes of this subsection. (g) Special rule where substantial diminution of risk. (1) In general. If paragraph (2) applies to any property for any period. the running of the period set forth in sub- section (f)(IXC) with respect to such property shall be suspended during such period. (2) Properly to which subsection applies. This paragraph shall apply to any property for any period during which the holder's risk of loss with respect to the property is substantially diminished by — (A) the holding of a put with respect to such property. (B) the holding by another person of a rig$ to acquire such property. or (C) a short sale or any other transaction. EFTA01118523