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SOF III - 1081 Southern Financial LLC
the Offshore Feeder Fund, the Investment Funds or to the Investors will not occur. See
"Regulatory and Tax Considerations."
Prospective Investors should consult their own tax advisors regarding the tax consequences
of an investment in the Onshore Feeder Fund or the Offshore Feeder Fund.
Phantom Income. The Investment Manager will not be obligated to cause the Onshore
Feeder Fund to make distributions to the Investors in order to enable such Investors to pay
all or a portion of their current tax obligation with respect to their investment in the
Onshore Feeder Fund. The Onshore Feeder Fund may make certain investments or employ
an over-commitment strategy or reinvest distributions received from the Master Fund, such
that Investors will be allocated income without corresponding cash to pay taxes on such
income. No assurances can be made that distributions during any given taxable period will
be sufficient to cover the tax obligations of any Investor. See "Regulatory and Tax
Considerations."
Taxation of the Fund in Non-U.S. Jurisdictions. The Feeder Funds or the Investors
could be subject to tax and tax return filing obligations in non-U.S. jurisdictions in which
the Feeder Funds or the Master Fund directly or indirectly invest. In addition, income from
investments held directly or indirectly by the Feeder Funds or the Master Fund could be
reduced by withholding taxes or other taxes imposed by non-U.S. countries in which the
Feeder Funds or the Master Fund directly or indirectly invests, and there can be no
assurance that any tax credits may be claimed with respect to such non-U.S. taxes incurred.
FATCA and Tax Information. An Investor will be required to comply with procedures
as may be required under the provisions of the rules related to the FATCA provisions of
Hiring Incentives to Restore Employment Act, and will be required to provide information
to the Onshore Feeder Fund or the Offshore Feeder Fund, as applicable. The failure of an
Investor to comply with these provisions may result in adverse consequences applying to
such Investor, including pursuant to the LP Agreements, or if the Investor is a non-U.S.
person, may result in withholding on payments to the Investor. In addition, amendments
may be made to the LP Agreements to address the implementation of tax regulations
including regulations related to FATCA, and compliance with such tax regulations may
increase the Master Fund's and the Feeder Funds' operating expenses. Furthermore, even
if the Master Fund, the Feeder Funds and the Investors comply with the requirements of
FATCA, Withholdable Payments made to an Investment Fund may be subject to the 30%
withholding tax if the Investment Fund fails to comply with the provisions of FATCA, and
the Feeder Funds cannot ensure that Investment Funds will meet their obligations under
FATCA.
Investors are urged to consult their tax advisors regarding the potential
application of FATCA to their investment in a Feeder Fund.
Compliance with Anti-Money Laundering Requirements. To ensure compliance with
statutory and other generally accepted principles relating to anti-money laundering, the
General Partner, the Investment Manager, and the Feeder Funds may require detailed
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CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e)
DB-SDNY-0108201
CONFIDENTIAL
SDNY GM_00254385
EFTA01451540