ACMEFUND II LP

PRIVATE PLACEMENT MEMORANDUM

September 22, 2020

PRIVATE OFFERING OF LIMITED PARTNER INTERESTS

Minimum Capital Commitment: $500,000

This Private Placement Memorandum is furnished solely for use by prospective investors in evaluating
the offering of Interests in ACMEFund II LP, a Delaware limited partnership (the “Partnership”). The
General Partner of, and Investment Adviser to, the Partnership are ACMEPartners LLC, a Delaware
limited liability company, and ACMEPartners LP, a Delaware limited partnership, respectively. ASDF J.
Smith is the Founder and Managing Director of the Investment Adviser and the General Partner, and is
responsible for making the Partnership’s investments.

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE 1933 ACT OR APPROVED OR
DISAPPROVED BY THE SEC OR BY ANY STATE SECURITIES ADMINISTRATOR, NOR HAS THE SEC
OR ANY STATE SECURITIES ADMINISTRATOR PASSED ON THE ACCURACY OR ADEQUACY OF
THIS PRIVATE PLACEMENT MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

These securities are subject to restrictions on transfer and resale and may not be transferred or resold
except as permitted under the 1933 Act and applicable state securities laws, pursuant to registration or
exemption therefrom.
Pursuant to the exemption from registration provided by Rule 4.13(a)(3) under the CEA, neither the
General Partner nor the Investment Adviser is required to register, and neither is registered, with the
Commodity Futures Trading Commission as a commodity pool operator because among other things, the
Interests are exempt from registration under the 1933 Act and are offered and sold without marketing to
the public in the U.S., and at all times either (a) the aggregate initial margin and premiums required to
establish the Partnership’s commodity interest positions will not exceed 5% of the liquidation value of its
portfolio or (b) the aggregate net notional value of the Partnership’s commodity interest positions will not
exceed the liquidation value of its portfolio. Each of the General Partner and the Investment Adviser has
filed a notice of exemption with the National Futures Association to be eligible for this exemption.
Unlike registered commodity pool operators, the General Partner and the Investment Adviser are not
required to deliver to Limited Partners the disclosure document and certified annual report required by
the CEA and the rules and regulations thereunder.

The information in this Private Placement Memorandum is furnished on a confidential basis exclusively
for your use and retention and, by accepting this Private Placement Memorandum, you agree not to
transmit, reproduce or make available to any other person (other than your legal, tax, accounting and
other advisers) all or any part of this Private Placement Memorandum without the General Partner’s
express written permission. Notwithstanding anything herein to the contrary, you (and each of your
employees, representatives or other agents) may disclose to any and all persons, without limitation of any
kind, the tax treatment and tax structure of (a) the Partnership and (b) any transactions described herein,
and all materials of any kind (including opinions or other tax analyses) that are provided to you relating
to such tax treatment and structure. This Private Placement Memorandum contains certain information
about the Partnership that investors should know before they invest. Please read it carefully and retain it
for future reference.
THESE SECURITIES ARE SUBJECT TO A HIGH DEGREE OF RISK. SEE “RISK FACTORS.”

Name of Offeree: Private Placement Memorandum No.:

FORWARD LOOKING STATEMENTS. THIS PRIVATE PLACEMENT MEMORANDUM

CONTAINS FORWARD-LOOKING STATEMENTS BASED ON THE GENERAL PARTNER’S AND
THE INVESTMENT ADVISER’S EXPERIENCE AND EXPECTATIONS ABOUT THE MARKETS IN
WHICH THE PARTNERSHIP INVESTS AND THE METHODS BY WHICH THE GENERAL
PARTNER AND THE INVESTMENT ADVISER EXPECT TO INVEST IN THOSE MARKETS.
THOSE STATEMENTS ARE SOMETIMES INDICATED BY WORDS SUCH AS “EXPECTS,”
“BELIEVES,” “SEEKS,” “MAY,” “INTENDS,” “ATTEMPTS,” “WILL” AND SIMILAR
EXPRESSIONS. SUCH FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF
FUTURE PERFORMANCE AND ARE SUBJECT TO MANY RISKS, UNCERTAINTIES AND
ASSUMPTIONS THAT ARE DIFFICULT TO PREDICT. THEREFORE, ACTUAL RETURNS COULD
DIFFER MATERIALLY AND ADVERSELY FROM THOSE EXPRESSED OR IMPLIED IN ANY
FORWARD-LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. THE SECTION
ENTITLED “RISK FACTORS” IN THIS PRIVATE PLACEMENT MEMORANDUM DISCUSSES
SOME OF THE IMPORTANT RISKS THAT MAY AFFECT THE PARTNERSHIP’S RETURNS.
PROSPECTIVE INVESTORS SHOULD CONSIDER THOSE RISKS CAREFULLY, IN ADDITION TO
OTHER INFORMATION IN THIS PRIVATE PLACEMENT MEMORANDUM, BEFORE DECIDING
WHETHER TO INVEST IN THE PARTNERSHIP. NONE OF THE GENERAL PARTNER, THE
INVESTMENT ADVISER OR THE PARTNERSHIP UNDERTAKES ANY OBLIGATION TO REVISE
OR UPDATE ANY FORWARD-LOOKING STATEMENT FOR ANY REASON.

SUITABILITY. THIS IS A PRIVATE OFFERING AND IS AVAILABLE ONLY TO

INVESTORS WHO HAVE A NET WORTH IN EXCESS OF $2,100,000 (UNLESS WAIVED BY THE
GENERAL PARTNER) AND ARE “ACCREDITED INVESTORS” UNDER REGULATION D. EACH
SUCH INVESTOR MUST, EITHER ALONE OR TOGETHER WITH A PURCHASER
REPRESENTATIVE THAT IS NOT COMPENSATED BY OR AFFILIATED WITH THE
PARTNERSHIP, THE GENERAL PARTNER OR THE INVESTMENT ADVISER HAVE SUCH
KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT SUCH
INVESTOR IS CAPABLE OF EVALUATING THE MERITS AND RISKS OF THIS INVESTMENT
AND MUST BE ABLE TO BEAR THE ECONOMIC RISKS OF THIS INVESTMENT. THIS IS NOT
AN OFFER TO ANY PERSON WHO HAS NOT FURNISHED TO THE GENERAL PARTNER A
COMPLETED AND SIGNED QUESTIONNAIRE IN THE FORM INCLUDED WITHIN THE
SUBSCRIPTION AGREEMENT APPEARING AS EXHIBIT B TO THIS PRIVATE PLACEMENT
MEMORANDUM, OR INFORMATION OF THE SAME EXTENT AND NATURE AS THAT
REQUESTED BY SUCH QUESTIONNAIRE, AND WHO IS NOT SHOWN BY SUCH
INFORMATION TO MEET THE SUITABILITY STANDARDS FOR THIS OFFERING. SEE
“SUITABILITY STANDARDS” AND EXHIBIT B TO THIS PRIVATE PLACEMENT
MEMORANDUM.

THE INTERESTS HAVE NOT BEEN REGISTERED UNDER THE 1933 ACT, OR
REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES LAWS, AND ARE OFFERED IN
ACME
Fund II LP
Private Placement Memorandum -- Page ii
RELIANCE ON EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION IN
SECTION 4(A)(2) OF AND REGULATION D UNDER SUCH ACT AND SIMILAR PROVISIONS OF
SUCH STATE LAWS. A PURCHASER OF INTERESTS MUST CONTINUE TO BEAR THE
ECONOMIC RISK OF THE INVESTMENT FOR AN INDEFINITE PERIOD BECAUSE INTERESTS
HAVE NOT BEEN SO REGISTERED OR QUALIFIED AND ARE SUBJECT TO RESTRICTIONS ON
TRANSFER PURSUANT TO SUCH ACT AND SUCH STATE LAWS AND OTHERWISE.
INTERESTS CANNOT BE SOLD UNLESS THEY SUBSEQUENTLY ARE REGISTERED UNDER
SUCH ACT AND REGISTERED OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS
OR ARE EXEMPT FROM SUCH REGISTRATION AND QUALIFICATION AND MEET CERTAIN
CONDITIONS. NO MARKET FOR INTERESTS IS EXPECTED TO DEVELOP.

NO RELIANCE ON OTHER INFORMATION. NO PERSON IS AUTHORIZED TO GIVE

ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE
CONTAINED IN THIS PRIVATE PLACEMENT MEMORANDUM IN CONNECTION WITH THE
OFFERING FOR SALE OF INTERESTS AND, IF GIVEN OR MADE, SUCH REPRESENTATIONS
OR INFORMATION MUST NOT BE RELIED ON AS HAVING BEEN AUTHORIZED BY THE
GENERAL PARTNER OR THE PARTNERSHIP. YOU MAY NOT RELY ON ANY STATEMENTS OR
MATERIALS PROVIDED TO YOU (INCLUDING ANY SO-CALLED “PITCHBOOKS”, ANY OTHER
INVESTOR PRESENTATIONS OR ANY VERBAL OR WRITTEN STATEMENTS) OTHER THAN
THE DISCLOSURES IN THIS PRIVATE PLACEMENT MEMORANDUM.

TERMS OF THE OFFERING. THE GENERAL PARTNER MAY ACCEPT OR REJECT ANY
SUBSCRIPTION TO PURCHASE INTERESTS. THIS OFFERING WILL CONTINUE UNTIL THE
FINAL CLOSING DATE. SEE “SUMMARY OF PRINCIPAL TERMS -- ADDITIONAL CLOSINGS.”

THE GENERAL PARTNER WILL RESPOND TO ANY QUESTIONS YOU OR YOUR

ADVISERS MAY HAVE CONCERNING THIS OFFERING AND WILL MAKE AVAILABLE FOR
EXAMINATION BY YOU OR YOUR ADVISERS SUCH RECORDS AND FILES IN ITS
POSSESSION AS MAY BE PERTINENT TO YOUR DECISION WHETHER TO INVEST IN
INTERESTS (OTHER THAN INFORMATION THAT IS CONFIDENTIAL OR PROPRIETARY).

THE TERMS AND CONDITIONS OF THIS OFFERING, THE RIGHTS, PREFERENCES,

PRIVILEGES AND RESTRICTIONS OF INTERESTS AND THE RIGHTS AND LIABILITIES OF
THE PARTNERSHIP, THE GENERAL PARTNER, THE LIMITED PARTNERS AND THE
INVESTMENT ADVISER ARE GOVERNED BY THE PARTNERSHIP’S SECOND AMENDED AND
RESTATED AGREEMENT OF LIMITED PARTNERSHIP AND THE SUBSCRIPTION AGREEMENT
BETWEEN EACH LIMITED PARTNER AND THE PARTNERSHIP, THE FORMS OF WHICH ARE
INCLUDED IN THIS PRIVATE PLACEMENT MEMORANDUM AS EXHIBITS A AND B,
RESPECTIVELY, AND INCORPORATED HEREIN BY THIS REFERENCE, AND THE INVESTMENT
ADVISER AGREEMENT, WHICH IS AVAILABLE ON REQUEST. THE DESCRIPTION OF ANY OF
SUCH MATTERS IN THE TEXT OF THIS PRIVATE PLACEMENT MEMORANDUM IS SUBJECT
TO AND QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH AGREEMENTS. EACH
OFFEREE AND EACH OFFEREE’S LEGAL, ACCOUNTING AND TAX ADVISERS SHOULD
CAREFULLY REVIEW THIS PRIVATE PLACEMENT MEMORANDUM, WHICH INCLUDES ALL
OF THE APPENDICES AND EXHIBITS, BEFORE MAKING ANY DECISION CONCERNING AN
INVESTMENT IN INTERESTS.

THIS PRIVATE PLACEMENT MEMORANDUM IS NOT AN OFFER TO SELL OR A

SOLICITATION OF AN OFFER TO BUY ANY INTERESTS IN ANY STATE TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION IN SUCH STATE.

THE FOLLOWING LEGENDS ARE REQUIRED BY THE LAWS OF THE STATES

ACME
Fund II LP
Private Placement Memorandum -- Page iii
INDICATED IF OFFERED TO PERSONS IN SUCH STATES

NOTICE TO RESIDENTS OF ALL STATES

THE INTERESTS HAVE NOT BEEN REGISTERED UNDER THE 1933 ACT, OR THE
SECURITIES LAWS OF CERTAIN STATES AND ARE BEING OFFERED AND SOLD IN RELIANCE
ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND SUCH
LAWS. THE INTERESTS ARE SUBJECT TO RESTRICTIONS ON TRANSFER AND RESALE AND
MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE 1933 ACT AND
SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE INTERESTS
HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, ANY STATE SECURITIES
COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING
AUTHORITIES PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING OR THE
ACCURACY OR ADEQUACY OF THIS PRIVATE PLACEMENT MEMORANDUM. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
NOTICE TO FLORIDA OFFEREES

THE SECURITIES BEING OFFERED HAVE NOT BEEN REGISTERED WITH THE FLORIDA
DIVISION OF SECURITIES AND INVESTOR PROTECTION. IF SALES OF THESE SECURITIES
ARE CONSUMMATED WITH 5 OR MORE OFFEREES IN THE STATE OF FLORIDA, ANY SUCH
OFFEREE MAY, AT SUCH OFFEREE’S OPTION, VOID ANY PURCHASE HEREUNDER WITHIN 3
DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY THE PURCHASER TO
THE SPONSOR, AN AGENT OF THE SPONSOR, OR AN ESCROW AGENT OR WITHIN 3 DAYS
AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO THE PURCHASER,
WHICHEVER OCCURS LATER.

NOTICE TO OREGON OFFEREES

IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN

EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS
OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES
HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION
OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE
NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE SECURITIES
ARE SUBJECT TO RESTRICTIONS ON TRANSFER AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE 1933 ACT, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY
WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD.

ACME
Fund II LP
Private Placement Memorandum -- Page iv
 TABLE OF CONTENTS

Page

DIRECTORY .............................................................................................................................................................. vi
EXECUTIVE SUMMARY................................................................................................................................................................1
INVESTMENT STRATEGY............................................................................................................................................................4
MANAGEMENT..............................................................................................................................................................................9
SUMMARY OF PRINCIPAL TERMS..........................................................................................................................................11
CO-INVESTMENT PROGRAM...................................................................................................................................................26
RISK FACTORS..............................................................................................................................................................................26
CONFLICTS OF INTEREST.........................................................................................................................................................40
SUITABILITY STANDARDS........................................................................................................................................................42
ERISA AND OTHER PLAN CONSIDERATIONS....................................................................................................................45
SUBSCRIPTION AGREEMENT TERMS AND PROCEDURES..............................................................................................48
FEDERAL INCOME TAX ASPECTS...........................................................................................................................................49
ADMINISTRATOR........................................................................................................................................................................57
LEGAL MATTERS.........................................................................................................................................................................57
ACCESS TO INFORMATION......................................................................................................................................................57

Appendix
-- Glossary
Appendix I

Exhibits

Exhibit A -- Second Amended and Restated Agreement of Limited Partnership

Exhibit B -- Form of Subscription Agreement

ACME
Fund II LP
Private Placement Memorandum -- Page v
 DIRECTORY

General Partner and Investment Adviser Administrator

ACMEPartners LLC - General Partner Investor Services, Inc.

ACMEPartners LP - Investment Adviser 600 Street, Suite 120
San Francisco, California 94107
Telephone: (415)
Email: info@[Link] Legal Advisors to the General Partner and the
Investment Adviser
Auditor
Shaese LLP
Spicer J LLP Plaza, 18th Floor
5251 South c Street, Suite 200 San Francisco, California 94111
Greenwood Village, Colorado 801

ACMEFund II LP
Private Placement Memorandum -- Page vi

EXECUTIVE SUMMARY

Partnership Objectives. ACMEPartners LP (“ACME”, “we” or the “Investment Adviser”)

believes that from an investment perspective, the legal cannabis industry is one of the most inefficient
markets to exist in decades. The split legal status in the US and a lack of large traditional investors has left
an exploitable niche for nimble firms like ACME to invest before the market is saturated with large capital
flows. ACME believes this is an enormous opportunity to apply an institutional-grade investment process
to reap outsized returns.

ACME currently intends to invest in companies that are ancillary to the legal cannabis and hemp
industries. Ancillary companies, the so-called “picks-and-shovels”, provide, in our view, the best
risk/reward profile and potential for liquidity versus companies that either “touch the plant” or invest in
real estate. Ancillary companies do not “touch the plant” (i.e., do not cultivate, process, manufacture,
distribute, test or sell products containing cannabis or extracts as defined by the federal Controlled
Substances Act). Ancillary companies provide the products and services to licensed operators that do
“touch the plant”. These companies help licensed operators lower costs, meet regulations and increase
sales. Ancillary companies are not required to obtain cannabis-related state/local licenses and, because
they do not touch the plant, they can scale across states and even countries. We believe ancillary
companies will also have more options for liquidity, including being acquired more quickly and at higher
multiples by larger private or public companies and listing on reputable public stock exchanges.

Most polling in the US shows a 90+% approval for medical cannabis and a 60+% approval for
adult-use cannabis. ACME intends to invest aggressively as the political environment points to some
form of cannabis legalization being 12-36 months away. The 2018 Farm Bill already legalized hemp
cultivation, and we saw an explosion of new hemp-related businesses appear in 2019. The congress is
currently in the late stages of voting on some form of banking access for the industry, though nearly all
ancillary companies have access to banking. ACME only invests in ancillary technology companies that
have full banking access and typically receive less than 5% of their revenues in cash.
 Why Investors Value ACME. ACME has formed ACMEFund II LP, a Delaware limited
partnership (the “Partnership”) to look and feel like other top venture funds, but remain nimble and
robust enough to operate in the emerging legal cannabis space. ACME brings the same professionalism of
developed venture capital markets to the cannabis space, which to date has had the feel of a frontier
market opportunity. ACME’s Managing Partner and Founder, ASDF J. Smith, is a seasoned investor with
over 18 years of advisory and direct investing experience, including many private deals and hundreds of
millions of dollars per year invested in public names, primarily in the technology, advanced materials and
agricultural-related space. 2020 marks Mr. Smith’s 6th year doing significant research and investing in the
cannabis space. ACME is located in California one of the most popular states for cannabis related start-up
companies. This location gives ACME a significant advantage regarding deal flow and time efficiency in
due diligence and managing the Partnership’s investments. These key areas differentiate ACME from
other investment firms, many of which do not have the same level of relevant educational, investing or
industry experience or ACME’s geographic advantage. ACME also has partnered with key advisors as
well as leading law firms, fund administrators and accountants that routinely work with traditional
venture capital firms and other investment managers but also have experience with the cannabis industry.

Most importantly is the fact that the investment funds in the cannabis space are now of sufficient
size to fill out entire investment rounds for the best ancillary cannabis companies. Thus the companies
with the best potential and performance are rarely being offered to direct investors like large family offices
(FOs) – who have been increasingly interested in making direct investments. As these FOs see fewer and
fewer of the high quality deals, they are instead placing some or all of their capital in funds like the ACME
Funds to gain access to these top-notch deals, glean research ideas from fund managers and open up the
option for co-investments.
Why Entrepreneurs Value ACME. ACME can provide tremendous value to the Partnership’s
Portfolio Companies. ACME’s deep investing experience gives entrepreneurs a finely-tuned outlook for
the industry as it evolves and professionalizes. ACME’s financial acumen derived from decades of
business experience and time spent at numerous start-ups gives companies a quantitative and qualitative
perspective to better guide their company trajectory. While ACME does not always take board seats for
its investments, our partners and advisors will spend the time to help advance the progress of our
portfolio companies, bring in other high-quality investment funds and sources of capital, and provide
contacts, advice and support to the best of our ability.

In addition, ACME believes that entrepreneurs will value ACME’s role in fighting alongside them
toward the same goals many of them have struggled to achieve for decades. ACME has seen first-hand
the difficulties that federally prohibition has created for cannabis entrepreneurs, people with medical
needs, the under-privileged and minorities. ACME intends to continue to support them, and will donate
or otherwise contribute a minimum of 5% of its Carried Interest Distributions for legalization efforts,
nonprofit medical research, and efforts for expungement of non-violent cannabis convictions especially in
minority populations, which have been disproportionally affected by prohibition. ACME is a member of
the National Cannabis Industry Association (NCIA) and the Marijuana Policy Project (MPP) and ACME’s
principals have made contributions organizations like The Hood Incubator, which transitions
underground cannabis entrepreneurs to legal markets by translating and augmenting their existing
capacities.

Ste J. Sch -- Founder and Managing Director of ACMEPartners LP

humn is the Managing Director of ACMEPartners LP (“ACME”, “we” or the “Investment

Adviser”), a venture investment firm he founded in 2017 that focuses on building the best ancillary
cannabis and hemp companies. Mr. Smith has 18 years of public and private equity investment experience
in technology, advanced materials, and agriculture, and spent an additional 5 years in agriculture-related
manufacturing. 2020 marks Mr. Smith’s 6th year doing significant research and investing in the cannabis

ACME
Private Placement Memorandum -- Page 1
space. From 2010-2016, Mr. Smith was a Senior Analyst and Portfolio Manager for Passport Capital, LLC,
a multi-billion dollar investment management firm headquartered in San Francisco. Prior to Passport, Mr.
Smith was a Senior Sell-Side Equity Analyst at Prudential Equity Group
covering the agriculture and chemical industries. He has worked for Fortune 100 corporations as well as
multiple start-up companies. He has invested hundreds of millions of dollars annually on behalf of
clients, and has extensive experience managing private capital and delivering results.

Mr. Smith received a B.S. in Chemical Engineering from The Ohio State University in 1995 and an
MBA from The Haas School of Business at the University of California at Berkeley in 2002, where he was
a Mayfield Venture Capital Fellow.
Summary of Terms. The following information is only a summary of certain information
contained in this Private Placement Memorandum and is qualified in its entirety by reference to the
remainder of this Private Placement Memorandum, including but not limited to the more detailed
description of the Partnership’s Second Amended and Restated Agreement of Limited Partnership (the
“Agreement”) in “Summary of Principal Terms” and the Agreement itself, which is attached as an Exhibit
A to this Private Placement Memorandum. Capitalized terms below are defined in the Agreement.
Partnership Target Size $50,000,000
$500,000
Minimum
Capital Commitment
Closing Dates
Initial Closing Date: April 15, 2019

Final Closing Date: December 31, 2020 (unless extended to June 30, 2021
by the General Partner)

Commitment Period 3 years (from Final Closing Date)

Term 7 years (from Initial Closing Date), plus two 1-year extensions at the
General Partner’s election
Carried Interest 20% of all distributions to the Limited Partners that exceed their Capital
Contributions
Management Fee Through the end of the calendar quarter in which the Commitment
Period ends, 2% per year of the Limited Partners’ Capital Commitments
(calculated and paid quarterly)
Thereafter, the greater of $100,000/year and 1.5% per year of Limited
Partners’ Remaining Capital (calculated and paid quarterly)
Certain investors may prepay a portion of their Management Fees on the
Partnership’s initial capital call.

INVESTMENT STRATEGY

The Cannabis Market: Larger Than Corn and Soy Beans Combined?

The U.S. cannabis industry’s actual size is becoming clearer as state-legal operations now report
sales data directly to state regulators and pay taxes at the local, state and federal levels. New Frontier
Data reported 2019 global legal cannabis sales of $15.3 billion and projects 2022 sales of $20.4 billion. The
growth rates are in the double digits and recent data show no sign of slowing. Sales growth is a

ACME
Private Placement Memorandum -- Page 2
combination of organic sales growth, as more consumers try and use cannabis, and inorganic as new
states and countries come on-line with legal medical and adult use approvals.

The data collected by legal states also gives the best picture as to the ultimate size of the U.S.
market should the federal cannabis prohibition be repealed. Data from the three most mature adult-use
states (Washington, Oregon, and Colorado) provides an indication of cannabis per capita consumption in
states where anyone over the age of 21 can legally purchase cannabis without a medical recommendation.
Four years into their adult use legalizations, Colorado reported cannabis consumption of approximately $
330 per capita according to Colorado Department of Revenue. This per capita value implies, should
prohibition be lifted or every state legalizes adult use, that the total U.S. demand is roughly $105 billion
annually. This would make cannabis demand larger than corn and soy bean combined, which are
currently the largest and second-largest agricultural commodities in the U.S.

The U.S. market could grow much larger than $105 billion if we add in the opportunity for
nonpsychoactive CBD-based products – some estimate that CBD-only products could eclipse total
cannabis sales. Even with state legalization, there remains an illicit cannabis market, though it is clearly
shrinking. New Frontier Data estimates that the illicit market still accounts for 50% of sales. Assuming
this is uniform across the U.S., the total market size could be significantly larger than the $105 billion
estimate. Finally, the per capita-based estimates above use state-level data and ACME believes some
citizens will not use cannabis until they see federal prohibition repealed, implying the market could be
again even larger.

Partnership Objectives

ACME believes that from an investment perspective, the legal cannabis industry is one of the
most inefficient markets to exist in decades. The split legal status in the US and a lack of large traditional
investors has left an exploitable niche for nimble firms like ACME to invest before the market is saturated
with large capital flows. ACME believes this is an enormous opportunity to apply an institutional-grade
investment process to reap outsized returns.

ACME currently intends to invest in companies that are ancillary to the legal cannabis and hemp
industries. Ancillary companies, the so-called “picks-and-shovels”, provide, in our view, the best
risk/reward profile and potential for liquidity versus companies that either “touch the plant” or invest in
real estate. Ancillary companies do not “touch the plant” (i.e., do not cultivate, process, manufacture,
distribute, test or sell products containing cannabis or extracts as defined by the federal Controlled
Substances Act). Ancillary companies provide the products and services to licensed operators that do
“touch the plant”. These companies help licensed operators lower costs, meet regulations and increase
sales. Ancillary companies are not required to obtain cannabis-related state/local licenses and, because
they do not touch the plant, they can scale across states and even countries. We believe ancillary
companies will also have more options for liquidity, including being acquired more quickly and at higher
multiples by larger private or public companies and listing on reputable public stock exchanges.

ACME intends to invest aggressively as the political environment points to some form of cannabis
legalization being 12-36 months away. The 2018 Farm Bill already legalized hemp cultivation, and we saw
an explosion of new hemp-related businesses appear in 2019. The congress is currently in the late stages of
voting on some form of banking access for the industry, though nearly all ancillary companies have access
to banking. ACME only invests in ancillary technology companies that have full banking access and
typically receive less than 5% of their revenues in cash.

ACME
Private Placement Memorandum -- Page 3
Investment Opportunity

Most companies in the ancillary cannabis space are able to grow and scale with little competition
from large existing companies. Given the split legal status of cannabis, existing public and large private
companies are unwilling or unable to compete for business. Non-cannabis firms that are geared to
compete in highly regulated markets, such as pharmaceutical, anti-counterfeiting, high-value track-
andtrace, and even media, are unable to participate in the legal cannabis space for fear of losing their
approved status in their other businesses. For example, a pharmaceutical firm may lose its DEA Schedule
1 license if it participates in the cannabis industry in any way. Security services, compliance and tracking
companies, and software companies with government contracts face similar issues.

Thus ancillary companies have a unique opportunity to form, grow and compete with minimal
competition from large competitors. If and when cannabis is federally legal, we believe it is highly likely
that large corporations supplying products and services to agriculture, alcohol, tobacco, pharmaceuticals,
and media/social networks will acquire or partner with cannabis-related ancillary portfolio companies.

We have analyzed the spectrum of potential investments in the legal cannabis space, both in the
U.S. and internationally, from public equities to private investments, and looked at companies touching
and not touching the plant. We believe the few high-quality public equities, mostly in Canada, are already
fairly valued given their significant appreciation over the past few years. In the private space, we believe
the ancillary companies offer the best opportunity for value appreciation at a lower risk level than most
undifferentiated plant touching entities.

We believe the competition for investing in portfolio companies still remains low – though events
like the legalization of hemp, more medical and adult-use legal states coming on-line, and popular federal
bills that look to piecemeal legalization efforts are compressing the timeline to lift federal prohibition.
Most institutional investors, pensions and funds-of-funds are unable or unwilling to invest in ancillary
companies that focus on the legal cannabis space. This includes most traditional venture capital funds,
which often have institutional investors. We believe that, regardless of the many news headlines about
investing in cannabis, the scales still tip toward investors versus start-up companies. We analyzed over
1,500 venture deals over the past 18 months and revenue multiples in the ancillary remain largely
subdued compared to non-cannabis VC deals.
Investment Areas

ACME intends to invest in many areas of the ancillary cannabis industry as it evolves. Ancillary
companies, the “picks-and-shovels”, make products and services that help those companies that touch the
plant to lower costs, comply with regulations and increase sales. Recent efforts of start-up companies to
scale and professionalize the industry has started to increase the quality of companies, versus the more
frontier-like modus operandi seen previously. Cannabis had previously been illegal at both the state and
federal levels and the basic practices of cultivation, distribution and dispensing were built around
operating in that environment. As states have begun to approve medical and adult-use, the industry must
adapt to complex regulations, detailed recordkeeping, consistent operations, and reliably satisfying
outside investors. Ancillary companies are specifically built to accomplish these goals.

Ancillary companies are diverse in their business models and cover a range of sub-sectors.
Companies could range from those developing cannabis breeding technology, to greenhouse automation,
to compliance software, or even an advertising-driven media play.

For example, we estimate that 100 million square feet of greenhouses are needed to satisfy the
bulk of US cannabis demand. Current capital expenditures for greenhouse construction and outfitting is
averaging $150/sqft and rising. This implies $15 billion of sales to ancillary companies supplying the
structures, equipment and automation to complete a modern greenhouse.

ACME
Private Placement Memorandum -- Page 4
 We believe some of the most attractive segments are the cannabis breeders, nurseries, and
developers of advanced genomic testing and tools. Cannabis has never been subjected to modern
development tools that other agricultural crops have over the past 30-40 years. These techniques show
promise in boosting yields, reducing vulnerabilities to molds and pathogens, and improving cannabinoid
levels. These will likely be aggressively acquired by large agricultural companies looking to jump-start
their market entrance if and when cannabis is federally legal.

The need to introduce and “train” new, and in many cases, existing cannabis users to the
emerging products and brands falls on media start-ups that cannot use many of the existing social media,
advertising, and other media platforms. Thus we are seeing companies develop innovative solutions to
these problems and capture eyeballs and wallet share for the 40+ million and growing number of cannabis
users in the U.S. today.

Finally cannabis is fairly unique as a product due to the complexity of the cannabis flower and its
varying effect on a multitude of medical conditions as well as recreational uses. The industry does not
have a comprehensive or science-based understanding of the hundreds of cannabis strains, or the effects of
the hundreds of cannabinoids, terpenes, and other compounds found in the cannabis flower. This is
significantly different from many consumer goods, where consistency is significantly more uniform.
Alcohol products, for example, exhibit variability in smell and taste, but the physiological effects are
typically uniform among the types of alcohol and consumers. We believe the variability in cannabis
products will create a significant opportunity for cannabis marketing and for brands to evolve and
differentiate.

Investment Process

Deal Flow. ACME’s deal flow is extensive and stems from many sources. ACME spends a significant
amount of time on the road at agriculture, technology, and media conferences, both for cannabis and
non-cannabis industries. Companies proactively send us deals through our website or through mutual
contacts in our professional networks. Finally, we look to proactively create deals by finding companies
that are not in the cannabis space but in our view, should enter the space. Our pipeline of deals numbers
over 1,500 opportunities and we are seeing 30-60 new deals a week, with little sign of slowing.

Investment Criteria. ACME intends to cause the Partnership to invest primarily in convertible debt,
preferred equity, and in a few very limited cases, short-term fixed debt and common equity, of ancillary
cannabis-related companies. ACME may also, in a limited amount, invest in public ancillary Canadian
names, as the process for venture deals in Canada is for many small start-ups to “go public” and raise
capital in this process, versus in the US, where start-ups generally raise capital while staying private.
Portfolio Companies must show the potential for a 20x return on investment and have a plausible path to
liquidity before the end the Partnership’s term.

ACME focuses on companies with hybrid management teams (those with members from both
inside and outside the cannabis industry). ACME believes skills are needed from both talent pools to
succeed in this fast-changing business environment. We aim to invest in Portfolio Companies that should
flourish in the industry structure that we see evolving over the next 3-5 years. We look to find companies
that can thrive over many years regardless if prohibition on cannabis is lifted in the U.S. or remains in
place before the end the Partnership’s term.

ACME intends to invest $500,000 - $5 million per Portfolio Company over several rounds, and
make 1-2 new investments per month until the Partnership’s portfolio has approximately 15 Portfolio
Companies. After this period, the Partnership will continue to make follow-on investments into Portfolio
Companies that are meeting their milestones. The Partnership will participate as part of syndicates and
may in some instances lead investment rounds. The Partnership will focus its investments at the seed to
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later stages. ACME seeks management teams whose incentives are aligned with investors and thus
expects teams to have invested much of their personal assets into their companies. Management teams
may also need to have shown they were able to attract and convince “friends and family” and angel
investors to invest at the early stages as well.

Due Diligence. ACME believes that an extensive due diligence process is imperative to maximizing the
Partnership’s investment outcome due to the highly inefficient nature of information flow in the legal
cannabis industry. First, ACME will require or conduct a background check of key management at all
potential Portfolio Companies. A clean business and personal track record is critical to ACME’s
investment process. The cannabis industry operates in some respects like a frontier market, where rules
can change daily, best practices are created and replaced quickly, and informal rules of normal business
functions are still being determined. ACME is only interested in funding companies that can operate in
the legal cannabis space and operate with the highest regards for transparency, fiduciary responsibility
and a concerted effort to exceed the minimum level of compliance required by regulations, when
applicable. ACME will only invest in companies that have bank accounts and strict financial controls.

ACME will leverage its own extensive investing and operating experience, as well as input from
its advisors, to extensively research each potential investment. ACME heavily weighs a company’s
previous success at meeting forecasts it has provided to earlier stage investors. ACME has a far-reaching
knowledge of the cannabis space, and investigating direct or potential competitors is almost as important
as researching a potential target. ACME is not influenced by a potential investment’s fund raising
timeline. ACME has and will continue to perform a thorough due diligence process and only invest when
satisfied that the rewards outweigh the risks. ACME has invested as quickly as 6 weeks and as slowly as
14 months.

Post Investment Process. ACME seeks to maintain a delicate balance in managing the Partnership’s
investments in Portfolio Companies. ACME will seek to give Portfolio Companies the benefit of its time,
knowledge, and network when needed but also give management the entrepreneurial freedom to do the
heavy lifting of building a great company. We will look to take board seats when we believe our
experience can help. Even without a board seat, we expect high levels of information flow and updates
from Portfolio Companies to help us understand if additional investments are warranted and if we should
attempt to bring on co-investors for ideas that require more capital than appropriate for the Partnership to
deploy itself.

Exits and Liquidity. The Partnership’s investments in Portfolio Companies may be more illiquid than
venture capital investments in the non-cannabis world, but ACME believes there are significant avenues
for liquidity, even before any relaxation or elimination of the federal prohibition. The Partnership will not
need liquidity for a few years for many of its expected investments, which will be at earlier stages of
development, as ACME plans to help these companies grow into large and potentially public companies.
While ACME would rather see the federal prohibition eliminated sooner than later, especially for the sake
of people with severe medical needs that cannabis could help, this reality also allows ACME to attempt to
build companies without much competition from large competitors.

Trade Sales. M&A in the sector has already begun, with cannabis companies buying
other cannabis targets, and non-cannabis companies starting to do deals. One of the
most interesting ancillary transactions was Microsoft’s partnership with Kind Financial.
Scotts Miracle-Gro, a $4 billion public company that provides home gardening supplies
has purchased at least 3 ancillary cannabis companies for over $330 million. A more
recent source of liquidity has started to emerge as Canada is now federally legal for
medical and adult-use. As such, many of the Canadian names are public and able to
raise $50-100 million overnight in bought deals, giving them significant cash and equity
to acquire U.S. companies. The top 10 Canadian cannabis-related public companies are
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 trading at market capitalizations from $1 to $30 billion, and we believe they will be a
significant source of liquidity in the next 1-3 years. In fact, we have seen companies
similar to our own investments, acquired by public Canadian companies in
multihundred million dollar deals. We also see many agriculture, technology, and
software companies building strong relationships with ancillary companies as they
prepare their strategy to buy into the space in a much larger way.

IPOs. Hundreds of mostly low quality companies have gone public on the pink sheets
and OTC exchanges. Many of these are no more than shell companies trying to capitalize
on the strong desire for any public equity way to invest in the cannabis space. We view a
public offering on the OTC or lower stock exchange as a last resort. However, ancillary
companies have significant access to a number of Canadian exchanges and a limited
ability to list on at least one major U.S. exchange. Innovative Industrial Properties
(Ticker: IIPR) listed its IPO on the NYSE on Dec 1, 2016. IIPR is a REIT that acquires
properties and leases them to businesses that touch the plant, such as dispensaries,
distribution points, and cultivation operations. We expect the major stock exchanges
such as the NYSE and NASDAQ to slowly accept more ancillary cannabis companies as
they become larger as of interest to public stock investors.

Distributions and Forced Recapitalizations. If the M&A and IPO markets are
unavailable or unattractive as the Partnership approaches the end of its life, ACME
would begin to 1) liquidate positions in the private secondary markets, 2) demand
distributions from its Portfolio Companies (to the extent permitted under the terms of its
investments) and/or 3) seek to force Portfolio Companies to recapitalize with debt, new
investors or other mechanisms to get liquidity for the Partnership.

Risk Management

ACME looks to manage risks whenever available. The first level of risk management is investing in
seasoned management teams, start-ups with a clear and protectable advantage, and ones that can
plausibly return 20x to the Partnership. ACME also seeks Portfolio Companies that have the ability to
pivot should their initial products or services not gain the expected traction. Additionally, Portfolio
Companies that can sell some or all of their offerings outside of the cannabis industry should increase
returns if these adjacent markets are successful and help retain value if the entire cannabis industry suffers
a setback. ACME will also encourage Portfolio Companies to use tactics and strategies to prepare for a
sudden adverse political or legal environment. ACME’s principals have operated in many boom and bust
investment cycles. We will urge Portfolio Companies to proactively prepare for industry and market
turns that may make profitability more difficult.

Other Matters

The investment objectives and methods summarized above represent the Investment Adviser’s
current intentions, are general in nature and are not intended to be exhaustive. Among other things, there
are no investment restrictions applicable to the Partnership, including no limits on the types of Securities,
or other instruments in which the Partnership may take positions, the types of positions it may take, the
concentration of its investments in companies, industries or market sectors or subsectors, or the amount of
leverage that it may use. The Investment Adviser has broad discretion to use any Securities trading or
investment techniques, whether or not contemplated by the expected investment strategies and criteria
described above, that it considers appropriate and in the Partnership’s best interests. Therefore, the
Investment Adviser may change the Partnership’s investment strategy or policy in its exclusive discretion.
In addition, there are inherent limitations in describing any investment strategy due to its complexity,
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confidentiality and indefinite nature. The Partnership may not achieve its investment objectives. Further,
many of the investment techniques and activities described above are high-risk activities that could result
in substantial losses. Consequently, only experienced and sophisticated persons who are able to risk
losing all of their investment should invest in the Partnership. An investment in the Partnership should be
considered a long term investment. The Partnership is not intended to meet investors’ short-term
financial needs or to provide a complete or balanced investment program.

MANAGEMENT

The General Partner of, and Investment Adviser to, the Partnership are ACMEPartners LLC, a
Delaware limited liability company, and ACMEPartners LP, a Delaware limited partnership, respectively.
ASDF J. Smith is the Founder and Managing Director of the Investment Adviser and the General Partner,
controls both firms and is responsible for making the Partnership’s investments. Mr. Smith’s biography is
above in “Executive Summary -- People.” The Investment Adviser is based in Lafayette, California.

The General Partner has delegated full and exclusive management authority over all investments,
asset dispositions, distributions and other affairs of the Partnership to the Investment Adviser. Therefore,
references to the General Partner’s actions in this Private Placement Memorandum generally mean the
Investment Adviser. The Investment Adviser has a relationship with Colorado based Shift Cannibis Co.
(“Shift”), which may assist the Investment Adviser with deal flow on an ad-hoc basis.

The Investment Adviser is not required to register as an investment adviser with the SEC or any
other regulatory authority, in reliance on exemptions for private investment fund managers promulgated
by the SEC and California Department of Business Oversight.

Other Activities. The Investment Adviser, its Affiliates and their partners, managers, members,
officers and employees, engage in other activities not related to the Partnership’s activities. For example,
the General Partner and Investment adviser currently serve as the general partner and investment adviser
to ACMEFund I LP (“ACME Fund I”), which launched in 2017 and raised $5,325,000 of committed capital.
ACME Fund I is actively making investments and will continue to do so through early 2022. ACME Fund I
has a similar strategy to the Partnership, which creates certain conflicts of interest. See “Conflicts of
Interest.”
In the future, the Investment Adviser and its Affiliates may also manage other ACME Funds that
have a variety of fee and carried interest distribution provisions that differ from the Partnership’s fee and
carried interest distribution provisions.

The Investment Adviser also may cause the Partnership to invest in Portfolio Companies in
which the Investment Adviser, its Affiliates and their respective partners, managers, members, officers
and employees have an economic interest. For example, the Investment Adviser’s principals directly and
indirectly hold equity interests in various companies in the cannabis industry, and expect to make
additional investments in the future.

Due to these other activities, the Investment Adviser may not be able to take action that might
benefit the Partnership because of confidential information the Investment Adviser acquires or obligations
it incurs in connection with these other activities or because one of its Affiliates or its partners, managers,
members, officers or employees serves as an officer or director of, or a consultant to, a company in which
the Partnership has invested or otherwise might invest. See “Conflicts of Interest.”

Indemnification and Limitation of Liability. Under the Agreement and the Investment Adviser
Agreement, the Partnership will indemnify, defend and hold harmless the General Partner, the
Investment Adviser, their Affiliates and their respective partners, managers, members, officers,

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employees, controlling persons and agents (each, an “indemnified person”) in certain circumstances. See
“Summary of Principal Terms -- Exculpation and Indemnification.”

Limited Partners may have a more limited right of action than they would ordinarily have as a
result of these limitations in the Agreement. To the extent that such exculpatory provisions purport to
include indemnification for liabilities arising under the 1933 Act, in the opinion of the SEC, this
indemnification is contrary to public policy and therefore unenforceable.

The foregoing only briefly summarizes existing statutes, rules and decisions. Limited Partners
who believe that the General Partner or the Investment Adviser has breached its fiduciary duty should
consult their own counsel.

Notice About California Investment Adviser Registration Exemption. The Investment Adviser
and the General Partner intend to rely on the exemption from the investment adviser registration
requirements under the California Corporate Securities Law of 1968 provided by section 260.204.9 under
the California Code of Regulations (the “Exemption”). In accordance with the Exemption’s requirements,
the Investment Adviser and the General Partner hereby disclose that the services that they will provide to
the Partnership are described in the Agreement, including sections 6 and 12.1 of the Agreement, and in
this Private Placement Memorandum, including the “Investment Strategy”, “Management” and the
“Summary of Principal Terms” sections. Additionally, the Investment Adviser’s and the General Partner’s
duties to the Partnership are disclosed in the Agreement, including sections 6, 12.1, 12.2 and 12.4 of the
Agreement, and in this Private Placement Memorandum, including the “Management” and “Summary of
Principal Terms” sections.
SUMMARY OF PRINCIPAL TERMS

The following discussion briefly summarizes certain provisions of the Agreement. As with all
other references to or descriptions of the Agreement in this Private Placement Memorandum, the
following discussion is only a summary and is qualified in its entirety by reference to the Agreement, the
form of which is included as Exhibit A in this Private Placement Memorandum. Capitalized terms not
otherwise defined herein are defined in the Agreement.
The Partnership ACMEFund II LP a Delaware limited partnership.
The General
Partner and the The General Partner of, and Investment Adviser to, the Partnership are
Investment Adviser ACMEPartners LLC, a Delaware limited liability company, and ACMEPartners
LP, a Delaware limited partnership, respectively. ASDF J. Smith is the Founder
and Managing Director of the Investment Adviser and the General Partner,
controls both firms, and is responsible for making the Partnership’s investments.

The General Partner has delegated full and exclusive management authority
over all investments, asset dispositions, distributions and other affairs of the
Partnership to the Investment Adviser. Therefore, references to the General
Partner’s actions in this Private Placement Memorandum generally mean the
Investment Adviser.

The Limited Partners (as defined below) have no authority to transact business
for, or participate in the management activities and decisions of, the Partnership.

Limited Partners The Partnership is seeking Capital Commitments from qualified investors (each
such investor is hereinafter referred to as a "Limited Partner," collectively, as the
"Limited Partners" and, together with the General Partner, the "Partners").
Interests are offered only to persons that are "accredited investors" within the
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 meaning of Regulation D under the 1933 Act and “qualified clients” within the
meaning of the Advisers Act.
Minimum The minimum initial Capital Commitment for a Limited Partner is $500,000,
Commitment by although Capital Commitments of lesser amounts may be accepted at the
Limited Partners discretion of the General Partner.
Initial Closing
The initial closing of the Partnership (the “Initial Closing”) took place on April 15,
2019.
Additional Closings Additional Capital Commitments from new or existing investors may be added
at one or more additional closings held not later than December 31, 2020 (the
“Final Closing Date”), except that the General Partner may extend the Final
Closing Date, in its sole discretion, to June 30, 2021. Limited Partners admitted
to the Partnership after the Initial Closing Date generally must pay to the
Partnership on admission, as a Capital Contribution, the aggregate Capital
Contributions that would have been due to the Partnership from that Additional
Limited Partner if it had been admitted at the Initial Closing (which amount
includes the aggregate Management Fees that would have been due if the
Additional Limited Partner had been admitted at the Initial Closing). Such
Capital Contribution (less the Management Fees, which will be paid to the
General Partner) may be distributed to the Partners pro rata based on
Ownership Percentages immediately prior to the Additional Limited Partners
admission to the Partnership; provided that any amounts distributed will not
reduce the Capital Commitment of any Partner and may be recalled at a later
date.

If an existing Partner increases its Capital Commitment after the Initial Closing,
that Partner will be treated, with respect to the amount of such increase, in
accordance with the previous paragraph as if newly admitted to the Partnership.
Capital The General Partner will determine the Capital Contribution with respect to each
Contributions; Partner’s Capital Commitment that will be due and payable on a Partner’s
Capital Calls admission to the Partnership. Capital Contributions with respect to the Partners’
remaining Capital Commitments will be due, on not less than 10 days’ prior
notice, at such times and in such amounts as the General Partner specifies to
permit the Partnership to invest in Portfolio Companies, to pay the Partnership’s
expenses, including, without limitation, Management
Fees and any indemnification obligations, or to establish adequate
Reserves (all in accordance with the Agreement). Capital Contributions are
deposited directly in the Partnership’s account at its custodian.

If the General Partner determines that a proposed investment in respect of which

Partners have made Capital Contributions will not be consummated, or if the
General Partner determines that a proposed investment in respect of which
Partners have made Capital Contributions will not require the full amount of
Capital Contributions made therefor, the General Partner may refund such
amounts to the Partners (less any amounts the General Partner has determined
to apply to another investment or to pay the Partnership’s expenses or to
establish appropriate Reserves), any amount so refunded will be added back to
the Partners’ respective remaining Undrawn Capital Commitments and the
Partners’ Unreturned Capital will be reduced by an amount equal to the amount
returned.
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Termination of Each Limited Partner may, in its sole discretion, terminate that Limited Partner’s
Unfunded Capital Undrawn Capital Commitment in its entirety, if a Key Principal Event or a
Commitment Cause Event shall have occurred, except that a Limited Partner may not cancel
the portion of the Limited Partner’s Capital Commitment attributable to
Portfolio Investments to which the Partnership previously has made a capital
commitment before the occurrence of such Key Principal Event or Cause Event.
The General Partner shall notify the Limited Partners of the occurrence of a Key
Principal Event or a Cause Event no later than ten days after it becomes aware of
the occurrence thereof. A Limited Partner shall have 60 days from the date of
the notice of the occurrence of the Key Principal Event or the Cause Event to
provide written notice to the General Partner of that Limited Partner’s election to
terminate such Limited Partner’s Undrawn Capital Commitment.
A Key Principal Event is the occurrence of the death, disability or other failure of
the Key Principal (a) to devote the majority of such person’s professional efforts
or a substantial portion of such person’s business time, to the General Partner
and the Investment Adviser and their Affiliates, and (b) to devote as much time
as is reasonably required with respect to the Partnership to insure that the
Partnership will satisfy its investment objectives to the extent possible.

A Cause Event is, with respect to the General Partner, the Investment Adviser or
a Key Principal: (a) an indictment, conviction, plea of guilty or nolo contendere
for fraud or misappropriation of funds, or a felony involving a violation of
applicable non-U.S., U.S. federal or state securities or tax laws, or a felony
involving moral turpitude; (b) a determination by a court of competent
jurisdiction or an arbitrator that the General Partner or any Key Principal
willfully and materially breached the Agreement or that the Investment Adviser
willfully and materially breached the Investment Adviser Agreement; (c) a
determination by a regulatory body, or by a self-regulatory body, that the
General Partner, the Investment Adviser or any Key Principal has violated any
securities laws or any material rules or regulations thereunder, or any material
rules of any self-regulatory body; (d) the receipt of formal written notice from a
governmental agency of its intention to commence an investigation of the
General Partner, the Investment Adviser or their respective Affiliates, including,
without limitation, a Wells Notice; (e) the General Partner, the Investment
Adviser or a Key Principal becomes a “bad actor”, as described in Rule 506 of
Regulation D; or (f) the General Partner or the Investment Adviser (i) files a
voluntary petition in bankruptcy, (ii) is involuntarily dissolved and commences
its winding up, (iii) consents to or acquiesces to the appointment of a trustee,
receiver or liquidator, or (iv) has entered against it an order for relief in a U.S.
federal bankruptcy proceeding, which order is not stayed, vacated or dismissed
within 60 days.
Term Unless dissolved earlier in accordance with the Agreement, the term of the
Partnership will continue until April 15, 2026; provided that the General Partner
may, without the consent of any other Partner, extend such dissolution and
termination date for up to 2 additional 1-year periods, and thereafter the General
Partner may, with the consent of a Majority Combined Interest, extend such term
for additional periods.
Commitment The Partnership's Commitment Period commenced on the Initial Closing Date
Period and will end on the third anniversary of the Final Closing Date. During the
Commitment Period, the Partnership may make investments and call capital for
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 any proper purpose of the Partnership in the General Partner’s discretion.
Post Commitment After the Commitment Period, the General Partner will not, without consent of a
Period Majority Combined Interest, call any capital to invest in Portfolio Companies,
other than investments in Portfolio Companies in which the Partnership has
previously invested (a “Follow-On Investment”) or investments in Portfolio
Companies with respect to which the Partnership entered into a binding
agreement during the Commitment Period to invest. Capital calls with respect
to a Limited Partner for Follow-On Investments after the expiration of the
Commitment Period are limited to 30% of that Limited Partner’s Capital
Commitment.
A Partner (or former Partner) must contribute to the Partnership that Partner’s
(or former Partner’s) proportionate share of any Partnership liability or loss;
provided, however, that the aggregated amount of such required contributions
from any Partner (or former Partner) cannot exceed the lesser of (a) the
aggregate amount of distributions (other than distributions recalled) received
from the Partnership by such Partner and (b) one-third of the Partner’s Capital
Commitment. In addition, no former Partner will be required to return
distributions pursuant to this provision after the second anniversary of the
termination of the Partnership, unless the General Partner notified the former
Partner prior to the second anniversary of the termination of the Partnership of a
potential obligation of the Partnership that may require the former Partner to
return distributions pursuant to this provision.
Event of Default If a Limited Partner fails to make a Capital Contribution when due, the General
Partner will promptly notify that Limited Partner that it is a Defaulting Partner.
If within 10 days of the date of such notice the Defaulting Partner has not made
the required Capital Contribution, the General Partner may elect any one or
more of the following, in its sole discretion:

• The General Partner may offer to any person the option of advancing all
or any portion of the Defaulting Partner’s required Capital Contribution
which it failed to make. The amount advanced will be deemed a
recourse loan from such person to the Defaulting Partner and a Capital
Contribution by the Defaulting Partner, and will be subject to such
additional terms and conditions provided in the Agreement;

• The General Partner may reduce (as of the date of the default) any
portion of such Defaulting Partner’s Capital Commitment and
Ownership Percentage (that has not been assumed by another Partner)
to those corresponding to the amount of the Capital Contributions (that
have not been purchased by another Partner) made by such Defaulting
Partner, and the aggregate Capital Commitments of the Partnership will
be commensurately reduced;

• The General Partner may reduce the Defaulting Partner’s Capital

Account balance and Ownership Percentage (as of the date of default) by
an amount equal to up to 50% of such balance and percentage,
respectively, and reallocate such amount and such Ownership
Percentage to the Non-Defaulting Partners and the Investors pro rata in
proportion to their respective ACME II Capital Commitments;

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 • The General Partner may reduce the Defaulting Partner’s right to be
allocated future Profits (but not Losses) by an amount equal to up to 50%
of such Profits, and reallocate such Profits to the Capital Accounts of
Non-Defaulting Partners and the capital accounts of the non-defaulting
Investors pro rata in proportion to their respective ACME II Capital
Commitments;

• The General Partner may, for and on behalf of such Defaulting Partner,
sell to a third-party (including a Limited Partner) such Defaulting
Partner’s interest in the Partnership for a price equal to 50% of such
Defaulting Partner’s Capital Account balance;

• The Defaulting Partner’s representative, if any, on the LPAC shall be

automatically removed from the LPAC;

• Whenever the vote, consent or decision of Partners is required or

permitted pursuant to this Agreement, any Defaulting Partner will not
be entitled to participate in such vote or consent, or to make such
decision, and such vote, consent or decision will be tabulated or made as
if such Defaulting Partner were not a Partner or an Investor; and

• The General Partner may institute legal proceedings to recover the

defaulted amount and all costs and expenses incurred by the ACME
Funds as a result of the Defaulting Partner’s failure to contribute or pay
(plus interest on all of the foregoing at the Default Rate), and such other
amounts as may be provided under applicable law.
Partnership Credit The Partnership may borrow under a credit facility to finance investments or to
Facility pay expenses in advance of calling for Capital Contributions or at such other
times as it deems appropriate. The Partnership may secure a credit facility by an
assignment of the Capital Commitments, and each Partner must, at the request
of the General Partner, (a) confirm that such Limited Partner’s obligation to
make Capital Contributions is unconditional and that it will honor calls for
Capital Contributions by the lender, (b) provide such financial information with
respect to such Partner as reasonably required by the lender, and (c) execute
such other documents, instruments, certificates and agreements as required by
the lender, provided that a lender’s recourse against the Limited Partners with
respect to such Partnership borrowings will be limited to such Limited Partner’s
Undrawn Capital Commitments. In particular, a lender may request a certificate
from each Limited Partner confirming (a) the remaining amount of such Limited
Partner’s Undrawn Capital Commitment, (b) that the Limited Partner has not
and will not pledge, collaterally assign, encumber or otherwise grant a security
interest in, its interest in the Partnership and (c) that such Limited Partner’s
obligation to make Capital Contributions in respect of its Undrawn Capital
Commitment is without defense, counterclaim or offset of any kind. The
Partnership’s use of the proceeds of any borrowing must comply with the terms
of the Agreement as if such proceeds constituted Capital Contributions by the
Partners.

If funds are advanced against the Capital Commitment of a particular Partner

because a Partner is late in funding or defaults in making a required Capital
Contribution, in addition to the default provisions of the Agreement, that
Partner will be responsible for any interest expense in connection with such
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 advance. Any such expenses will be withheld from distributions otherwise to be
made to that Partner, and, to the extent such expenses exceed such distributions,
that Partner must pay the amount of such excess to the Partnership in the
manner and at the time or times required by the General Partner. Any such
excess will not be credited to that Partner’s Capital Account. Any amount
withheld from a Partner and paid to a lender will be paid to the lender on behalf
of that Partner and will be treated as if distributed to that Partner. The General
Partner may waive any interest expenses incurred in connection with an
advance associated with any Partner’s late funding of or default on a required
Capital Contribution.
Limits on Key Principal Event. If a Key Principal Event occurs during the Commitment
Authority; Conflicts Period, the General Partner will not cause the Partnership to make a new
of Interest investment in a Portfolio Company during the Key Principal Event Notice
Period (the “New Investment Suspension Period”). Notwithstanding the
foregoing, during a New Investment Suspension Period the Partnership may
make Follow-on Investments or investments in Portfolio Companies with
respect to which, prior to the beginning of the New Investment Suspension
Period, the Partnership entered into a binding agreement to invest.

Successor Funds. Until the earlier of (i) the date on which at least 65% of the
aggregate Capital Commitments of the Non-Defaulting Partners have been
invested in or committed to be invested in Portfolio Companies or reserved for
payment of future Management Fees or Partnership expenses and (ii) the end of
the Commitment Period (such date, whichever is earlier, is the “Substantial
Investment Date”), none of the General Partner, the Investment Adviser and any
Key Principal will, except with the LPAC’s consent, make any investments on
behalf of a new investment vehicle for which the General Partner or one of its
Affiliates serves as general partner or in a similar capacity and that employs
substantially the same venture capital-focused investment strategy as that of the
Partnership (a “Successor Fund”). Any ACME II Fund will not be deemed a
Successor Fund.

Limits on Investments. Without the LPAC’s consent, the General Partner will not
cause the Partnership to take any of the following actions:

• Invest more than 15% of the aggregate Capital Commitments in the

Securities of any single Portfolio Company;

• Acquire an interest in any Portfolio Company (either directly or

indirectly) from or sell an interest in any Portfolio Company to (a) the
General Partner or the Investment Adviser or any of their Affiliates,
other than a Parallel Fund or an Alternative Investment Vehicle related
to the Partnership, (b) any ACME Fund, other than a Parallel Fund or
Alternative Investment Vehicle related to the Partnership, (c) any
CoInvestment Vehicle, or (d) any entity in which the General Partner or
the Investment Adviser or any of their Affiliates (other than a ACME
Fund) have a beneficial interest in the aggregate of more than 5% of the
outstanding Securities of such entity; or

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Private Placement Memorandum -- Page 14
 • Cause a Portfolio Company to purchase any property or Securities from,
or sell any Portfolio Company property or Securities to, another
Portfolio Company.

The foregoing limits will be determined at the time of investment. During the
period beginning on the Initial Closing Date and ending on the Final Closing
Date, the foregoing limits will be calculated based on the greater of (1) assumed
Capital Commitments of $50,000,000 and (2) the actual Capital Commitments.

Limits on Other Activities. Except to the extent otherwise permitted under the
Agreement, until at least the Substantial Investment Date, the General Partner
will devote substantially all of its business time to the conduct of the affairs of
the ACME II Funds, ACME Fund I and any other entities that are not prohibited
by the Agreement. Thereafter, the General Partner will devote so much of its
time to Partnership affairs as shall be necessary to manage the Partnership’s
affairs effectively.

Notwithstanding the foregoing, (a) time spent by any partner, member or

manager of the General Partner to the conduct of the affairs of such person’s
personal investment portfolio (including directorships) or volunteering his
services to a foundation, non-profit organization or similar charitable entity will
not be deemed “business time”, and (b) vacations, sabbaticals, medical leaves
and similar periods of absence, each of reasonable duration, will not be deemed
to cause the General Partner to be in violation of the foregoing obligations.
Limited Partner The General Partner may at any time constitute a Limited Partner advisory
Advisory committee (the “LPAC”) having the powers and duties described below. A
Committee Committee Member must perform his or her duties in good faith, in a manner
that he or she believes to be in the best interests of the Partnership and the
Partners generally. The LPAC will consider and act on any matter specified in
the Agreement for its consideration or action and any matter submitted to it by
the General Partner. Without limiting the foregoing, the General Partner may
consult with and seek the LPAC’s approval with respect to (a) any potential
conflicts of interest between the General Partner or the Investment Adviser, on
the one hand, and a ACME II Fund, on the other hand (including but not limited
to principal transactions or other transactions that the General Partner deems
necessary or appropriate under the Investment Advisers Act of 1940, as
amended) or (b) investments that are not within a ACME II Fund’s stated
investment strategy or that would violate a ACME II Fund’s investment
restrictions. Each Limited Partner authorizes the LPAC to act on its behalf and
any vote, consent or other action of the LPAC shall be deemed a vote, consent or
other action by all of the Limited Partners. Any vote, consent or other action of
the LPAC will, in the absence of fraud or bad faith, be final, binding and
conclusive on all Limited Partners for all purposes.

The General Partner selects the Committee Members as well as the number of
Committee Members. Each Committee Member must be a Limited Partner or an
Investor (or representative thereof) and no Committee Member may be an
Affiliate of the General Partner.

The General Partner may remove (with or without cause) the entire LPAC or any
individual Committee Member.

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Private Placement Memorandum -- Page 15
 The Partnership will indemnify, to the fullest extent permitted by law, each
LPAC Indemnified Person from and against any cost, claim, liability, damage,
loss, settlement, or expense arising from any act or omission performed or
omitted by such member arising out of his or her service on the LPAC, except
for any such losses, claims, damages, expenses or liabilities resulting from such
person's gross negligence, willful misconduct or fraud.
Alternative The General Partner may require one or more of the Partners (or the Partnership
Investment itself) to participate in all or any portion of such investment through an
Vehicles Alternative Investment Vehicle (commonly called a “blocker”), which may be
outside of the Partnership and which may include one or more entities that may
be corporations, limited partnerships or other entities, including non-U.S.
entities, organized by or on behalf of the General Partner or its Affiliates (and
which may invest on a parallel basis with or in lieu of the Partnership or through
which the Partnership may directly or indirectly invest), or restructure any such
investment or Alternative Investment Vehicle, by requiring any Partner to make
such investment directly or indirectly through separate corporations, limited
partnerships (or other vehicles) that will invest on a parallel basis with or in lieu
of the Partnership or through which the Partnership will directly or indirectly
invest. The General Partner is willing to cooperate with Limited Partners that
have concerns about unrelated business taxable income to address such
concerns.
Co-Investment The Investment Adviser may offer one or more Partners (or any other persons)
Vehicles the right to participate in investments in which the Partnership participates if (a)
the Investment Adviser believes in good faith that their participation would be
beneficial to the Partnership or the Portfolio Company, including without
limitation, in consummating the Partnership’s investment, successfully
operating the Portfolio Company or its assets, disposing of the investment or
otherwise adding value to the Partnership’s investment because of certain skills
or attributes of the particular investor or (b) the General Partner determines that
the Partnership has been allocated the full amount of such investment in the
Portfolio Company in light of the Partnership’s risk-return profile, available
capital and other considerations the General Partner determines to be relevant.
Any such investment, whether structured as a fund or as a direct investment by
that person, is called a “Co-Investment Vehicle.”
Recall The General Partner may, whether during or after the Commitment Period,
recall any amounts that the Partnership distributes to the Partners if the
Partnership received such amounts with respect to an investment in a Portfolio
Company and such amount is recalled in accordance with the governing
documents related to that Portfolio Company or investment in that Portfolio
Company.
Tax Distributions
Prior to any distribution of proceeds from any investment in a Portfolio
Company, the Partnership may, at the General Partner’s election, distribute any
available assets to the General Partner in amounts intended to enable the
General Partner and, to the extent applicable, its beneficial owners, to discharge
their tax liabilities arising from the Profit allocations that relate to the General
Partner’s Carried Interest Distributions (each, a “Tax Liability Distribution”).
The General Partner will determine the amount of any such Tax Liability
Distribution with respect to any Fiscal Year in its sole discretion, provided that
such distributions will not exceed the product of (a) the maximum combined
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Private Placement Memorandum -- Page 16
 U.S. federal, state and local tax rates applicable to individuals or corporations
(whichever is applicable) on ordinary income and net short-term capital gain or
on net long-term capital gain, as applicable, and taking into account the
deductibility of state and local income taxes for U.S. federal income tax purposes
and the character of the income in question and the holding period of any asset
disposed of, multiplied by (b) the amounts of Profits allocated or to be allocated
to the General Partner for such Fiscal Year in respect of the Carried Interest
Distribution. Any Tax Liability Distribution is treated as an advance against,
and reduces the amount of, subsequent distributions that the General Partner
otherwise would receive.
Distributions The Partnership will promptly distribute all cash available from the proceeds
from dispositions of, distributions received from, or withdrawal proceeds from,
investments in Portfolio Companies in Portfolio Companies (after retaining all
Reserves and paying any Partnership expenses). Such proceeds generally are
made in proportion to the Partners’ Ownership Percentages; provided that
amounts that otherwise would be distributed to a Limited Partner are made as
follows:
(a) First, to that Partner an amount equal to that Partner’s
Unreturned Capital; and

(b) Thereafter, 80% to that Partner and 20% to the General Partner
(such amount distributed to the General Partner pursuant to this
provision is the “Carried Interest Distribution”).

The “Ownership Percentage” of a Partner at any date means the percentage

computed by dividing that Partner’s Capital Contributions by the aggregate of
all Partners’ Capital Contributions.

The General Partner in its discretion may waive all or a portion of the Carried
Interest Distribution with respect to a particular Partner (in which case such
waived portion will be distributed to that Partner) or may cause all or a portion
of a Carried Interest Distribution to be distributed to another Partner.
Allocations of Profits and Losses generally are allocated to the Partners for each Fiscal Quarter
Profits and Losses in such amounts to cause Capital Account balances to be as closely as possible in
such proportions that distributions can be made in the order described in
“Distributions” if the Partnership were to sell all Partnership assets for an
amount equal to their fair market value, all liabilities were satisfied, and the
proceeds were distributed. The General Partner may waive all or any portion of
the Profit allocations to which the General Partner would otherwise be entitled
as described in this paragraph that relate to any Carried Interest Distribution
with respect to any Limited Partner in any fiscal period if the General Partner
waives its right to any such Carried Interest Distribution.
Reserves The General Partner or the Liquidating Person may establish such reserves as it
deems necessary or appropriate to pay any prospective expense, liability,
contingency or obligation that the General Partner or the Liquidating Person
believes may arise with respect to any of the Partnership’s investments or
activities. Any such reserve may be established whether or not it is required
under generally accepted accounting principles, and shall be allocated among
the Partners’ Capital Accounts when the General Partner or the Liquidating
Person deems appropriate in proportion to the Partners’ respective Capital
ACME
Private Placement Memorandum -- Page 17
 Contributions. Any such reserve shall be set aside, but may be invested in cash
equivalents or similar Securities if the General Partner or the Liquidating Person
deems appropriate and if so invested all Profits and Losses from that investment
activity shall be allocated to those reserves and if the Partnership pays an
expense or liability for which a reserve was established, the General Partner or
the Liquidating Person may specially allocate that expense or liability to Partners
for which such reserves were established (which, if allocated, shall reduce such
reserves), and to other Partners that do not have such reserves in any manner
that the General Partner or the Liquidating Person deems most appropriate to
equitably reflect the proportions the Partners should bear the burden of that
expense or liability.
Management Fee As compensation to the Investment Adviser for its services in administering the
Partnership’s business and affairs, on the first day of each calendar quarter the
Partnership pays the Investment Adviser a management fee (the “Management
Fee”). From the Initial Closing Date until the end of the calendar quarter in
which the Commitment Period ends, the Management Fee equals 0.50%
(approximately 2% per year) of the aggregate Capital Commitments of all
Limited Partners. Thereafter, the Management Fee equals the greater of $25,000
or 0.375% (approximately 1.5% per year) of Remaining Capital attributable to the
Limited Partners on the first day of that calendar quarter.
The Management Fee will be pro-rated on a daily basis (payable immediately) if
the Initial Closing Date occurs on a date other than the first day of a calendar
quarter and at any time that there is an increase in the aggregate Capital
Commitments of the Limited Partners. The first payment of the Management
Fee shall be made on the Initial Closing Date or at the earliest subsequent date
on which the Partnership has received sufficient Capital Contributions to fund
such payment.

The General Partner may agree to charge a reduced or no Management Fee with
respect to any Limited Partner (including but not limited to any Affiliated
Limited Partner) for any period, in which case the expense of the Management
Fee shall be allocated among the Limited Partners in proportion to their
respective shares of the Capital Commitments or Remaining Capital that are
subject to such Management Fees.

If the General Partner, the Investment Adviser or their Affiliates receive Fees Subject to Offset,
subsequent Management Fees will be reduced by an aggregate amount equal to
such Fees Subject to Offset. “Fees Subject to Offset” are transaction,
commitment, breakup, advisory, syndication, guarantee, directors, officers,
management and other fees paid to the General Partner or the Investment
Adviser or Affiliates (other than a ACME Fund) and directors’ stock options and
warrants of the General Partner or the Investment Adviser by Portfolio
Companies that would not, if earned directly by the Partnership, cause the
Partnership to cease to qualify as an “investment partnership” within the
meaning of Code section 731(c)(3)(C). In each instance, the amount of Fees
Subject to Offset deemed received by a person will be net of any expenses
relating thereto (including expenses incurred by such person in the process of
earning such fees).

To the extent that the aggregate remaining Capital Commitments of the Limited
Partners available to be called by the Partnership are insufficient for the
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Private Placement Memorandum -- Page 18
 Partnership to pay Management Fees that would otherwise be payable
hereunder, and the Partnership otherwise has sufficient assets available (in the
General Partner’s good faith determination) for such payment, the General
Partner may reduce each applicable Limited Partner’s Capital Account balance
by the amount of the Management Fee and credit that amount to the General
Partner’s Capital Account; provided that a Limited Partner may elect to (a) pay
the Management Fee due directly to the General Partner within 30 days of the
beginning of that calendar quarter or (b) if the General Partner permits, make an
additional Capital Contribution that (i) will be set aside in a special Capital
Account and used only to pay the Management Fees accrued with respect to that
Limited Partner’s Capital Account as they become due, (ii) will not be allocated
Profits and Losses, and (iii) cannot be withdrawn until the Limited Partner no
longer is a limited partner in the Partnership.

Placement Agent The General Partner may also require certain Limited Partners to pay an upfront fee
to the Investment Adviser of up to 4% of such Limited Partners’ Capital
Commitments in connection with placement agent fees borne by the Partnership
or the Investment Adviser in connection with such Partner’s admission. Such
amounts will be specially allocated to the applicable Partners, will be taken out
of Capital Contributions otherwise made by such Partners. Requiring certain
Limited Partners to pay this upfront fee will reduce the amount of capital
available for investment, but nonetheless all distributions will be made based on
Ownership Percentages (which are based on Capital Contributions). As a result,
these special expenses negatively affect Limited Partners who are not subject to
such arrangements. While such fees will not offset any Management Fees of the
Investment Adviser, the applicable Partner will receive the full return of its
Capital Contributions prior to any Carried Interest Distributions being paid to
the General Partner. Any prospective investor may request additional
information from the General Partner regarding these arrangements. The
General Partner may adjust the Agreement as it deems appropriate to ensure
that the economic burden of such fees are borne by the applicable Partners.
General Partner If, as of the date the distributions in connection with the Partnership’s
Clawback dissolution are to be made and after giving effect to such distributions, with
respect to any Limited Partner (other than a Defaulting Limited Partner), either
(a) such Limited Partner has not received aggregated distributions equal to that
Limited Partner’s Capital Contributions (the “Distribution Shortfall”), or (b) the
General Partner has received Carried Interest Distributions attributable to such
Limited Partner’s interest in the Partnership that exceed 20% of the excess, if
any, of (x) all distributions made to such Limited Partner and to the General
Partner in respect of such Limited Partner’s interest in the Partnership, over (y)
the aggregate amount of Capital Contributions made by such Limited Partner
(the amount of any such excess, the “Excess GP Distributions”), then the General
Partner shall contribute to the Partnership, for distribution to such Limited
Partner, the greater of that Distribution Shortfall and the Excess GP
Distributions; provided that the General Partner is not required to return
pursuant to this provision with respect to any Limited Partner an amount
greater than the aggregate amount of Carried Interest Distribution with respect
to that Limited Partner received by the General Partner, less the aggregate
Income Tax Liability on those Carried Interest Distributions.

“Income Tax Liability” means the General Partner’s determination of the federal
and state tax liability with respect to income and gain allocated to the General
ACME
Private Placement Memorandum -- Page 19
 Partner in respect of Carried Interest Distributions at a federal and State of
California rate applicable to a person in the highest marginal tax bracket and
taking into account the character of such income and gain.
Expenses The Partnership pays or reimburses the General Partner for the Partnership’s
Organizational Expenses. Organizational Expenses are all fees, including legal,
accounting, consulting and financial advisory fees and out-of-pocket costs and
expenses of and incidental to organizing the Partnership and offering and selling
Interests (including any placement agent fees, stamp duty or transfer taxes,
travel costs, printing costs and the cost of governmental and agency filings).
The Partnership also pays or reimburses the General Partner for all costs and
expenses incurred by or on behalf of the Partnership or for its benefit, including,
but not limited to, (a) all costs and expenses associated with negotiating and
entering into contracts and arrangements in the ordinary course of the
Partnership’s business, (b) all costs and expenses related to due diligence for
prospective investments, whether or not consummated, and current investments
(such as travel and travel related expenses in connection with visits to potential
Portfolio Companies, credit checks and background checks), (c) all interest on
Partnership borrowings, (d) all expenses relating to the investment of the
Partnership’s capital (such as, for example, custodial, brokerage and finder’s fees
and commissions), (e) all costs and expenses of any meetings of the Partners, (f)
all costs and expenses of meetings of the LPAC, (g) all costs and expenses
incurred for the purposes of protecting and enhancing the value of the
Partnership’s assets (including the costs of instituting or defending lawsuits), (h)
all administration, bookkeeping, recordkeeping, legal, accounting, auditing, tax
preparation and all professional, expert and consulting fees and expenses arising
in connection with the Partnership’s activities (including fees and expenses of
counsel for the Partnership, the General Partner, the Investment Adviser or one
or more officers or managers of the General Partner or the Investment Adviser
for legal services for the benefit of the Partnership, service contracts related to
on-line research, portfolio management and quotation services and equipment
(including computer hardware and software related thereto) and all fees, costs
and expenses of accounting, bookkeeping and recordkeeping services of the
Partnership’s administrator or any similar service provider retained by the
General Partner or the Investment Adviser to assist it in performing these
services for the Partnership), (i) all fees, costs and expenses of communicating
with Limited Partners (including, without limitation, communications costs, the
costs of printing and distributing offering materials, subscription materials,
reports and notices, legal and accounting fees and expenses and governmental
and self-regulatory agency filing fees, costs and expenses), (j) all costs and
expenses of investing the Partnership’s assets indirectly, such as through a
partnership or other entity, such as a master fund, including the Partnership’s
proportionate share of the costs and expenses of organizing and operating the
master fund, if any, (k) all premiums and other costs and expenses of insurance
policies as the General Partner or the Investment Adviser considers appropriate,
insuring the Partnership, the General Partner, the Investment Adviser and their
Affiliates against liabilities that may arise in connection with the business or
management of the Partnership or any Portfolio Company, (l) any contingencies
for which the General Partner determines Reserves are required, (m) any
extraordinary expenses (such as litigation expenses) and (n) all legal, tax
preparation, accounting and appraisal fees and expenses (including the fees and
expenses of counsel for the General Partner or the Investment Adviser for legal
ACME
Private Placement Memorandum -- Page 20
 services for the benefit of the Partnership) arising in connection with the
Partnership’s business. The Partnership also bears all placement fees incurred in
connection with the offer, sale or syndication of interests in the Partnership.

Except for the expenses specified above, which shall be borne by the Partnership,
the General Partner shall bear all of its own operating, general, administrative,
and overhead costs and expenses incurred in managing the Partnership,
including: (i) salaries and wages of the Partnership’s employees, if any, and of
the General Partner’s and its Affiliates’ employees; (ii) rent for space that the
General Partner or its Affiliates use; and (iii) expenditures for equipment that the
General Partner or its Affiliates use and shall not charge the Partnership for any
thereof.

For the purposes of determining Partnership expenses payable or reimbursable

to the General Partner, the total expenses of the Partnership and the expenses of
Parallel Funds (other than, in each case, the management fees) are aggregated
and apportioned among the Partnership and the Parallel Funds pro rata in
accordance with the Partners’ and the Investors’ ACME II Capital
Commitments; provided that notwithstanding the foregoing the General Partner
may allocate expenses on a non-pro rata basis between the Partnership and one
or more Parallel Funds to the extent the General Partner determines such
allocation is desirable or fair and equitable to the Partnership and the Parallel
Funds.
Valuation of The General Partner values Securities and other assets and liabilities of the
Securities Partnership at fair market value. The General Partner uses the following criteria
for determining the fair market value of Securities:
(a) If traded on one or more securities exchanges or any of the
markets operated by NASDAQ, the value is deemed to be the
Securities’ closing price on the principal of such exchanges on the
valuation date;

(b) If there is no active public market, the value is the fair

market value thereof, as reasonably determined by the General
Partner in good faith, taking into consideration the purchase price of
the Securities, developments concerning the Portfolio Company or
other investment subsequent to the acquisition of the Securities, any
financial data and projections of the Portfolio Company or other
investment provided to the General Partner, and such other factor or
factors as the General Partner may deem relevant; provided that if
the Partnership is distributing such Security in-kind, the LPAC shall
have approved such valuation; and

(c) For Securities that are interests in funds of funds, hedge

funds, private equity funds, joint ventures, co-investments or other
similar pooled investment vehicles that are sponsored and managed
by persons that are not Affiliates of the General Partner, at values
reported by the sponsor or manager, as applicable.

If the General Partner in good faith determines that, because of special

circumstances, the valuation methods described above do not fairly determine
the value of a Security, the General Partner makes such adjustments or uses such
alternative valuation method as it reasonably deems appropriate in good faith.
ACME
Private Placement Memorandum -- Page 21
Withdrawal and If at any time the General Partner determines that there is a reasonable
Termination likelihood that the continuing participation in the Partnership by any Limited
Partner will have a Material Adverse Effect, such Limited Partner is required, at
the request of the General Partner, to use its best efforts to assign its entire
interest in the Partnership (or such portion thereof as is sufficient, in the good
faith discretion of the General Partner, to prevent or remedy such Material
Adverse Effect) to any person approved by the General Partner at a price
reasonably acceptable to such Limited Partner. If such Limited Partner has not
assigned its entire interest in the Partnership (or such portion thereof as is
sufficient, in the good faith discretion of the General Partner, to prevent or
remedy such Material Adverse Effect) within 60 days of the General Partner’s
having notified such Limited Partner of the determination described in the
preceding sentence, then the General Partner may, upon at least 10 days’ prior
written notice to such Limited Partner, to do, in its sole discretion, any or all of
the following to prevent or remedy the Material Adverse Effect:
(a) Prohibit such Limited Partner from making any and all
Capital Contributions with respect to future investments in Portfolio
Companies and reduce its Capital Commitment accordingly;

(b) Offer to any person, including each other Limited Partner

(other than any Defaulting Partner), the opportunity to purchase all
or a portion of such Limited Partner’s interest in the Partnership at a
cash price determined by reference to the fair market value of the
Partnership’s assets;

(c) If no Limited Partner purchases such Limited Partner’s

interest, the General Partner may purchase such interest at a price no
lower than that offered to the Limited Partners;

(d) Liquidate all or any portion of such Limited Partner’s

interest in the Partnership or make a special distribution in respect of
such interest to such Limited Partner in an amount equal to the
amount such Limited Partner would receive (in the good faith
discretion of the General Partner) if the Partnership were to be
dissolved and liquidated at such time (with the assets of the
Partnership being sold in such hypothetical liquidation at a cash
price equal to fair market value); and

(e) Dissolve and wind up the Partnership, if none of the above

actions is sufficient (in the good faith discretion of the General
Partner) to prevent or remedy the Material Adverse Effect.
Transfer of Interests Except with respect to any assignment to an Affiliate of the General Partner, a
General Partner may not assign its interest without the prior consent of a
Majority Combined Interest.

A Limited Partner may assign an interest in the Partnership, subject to

compliance at that Limited Partner’s expense with federal and state securities
laws, the Agreement, the Limited Partner’s Subscription Agreement, and certain
prohibitions against assignments to entities subject to ERISA. Such compliance
includes (unless waived by the General Partner) providing the Partnership with
a written opinion of counsel, in form satisfactory to the General Partner, that the
ACME
Private Placement Memorandum -- Page 22
 proposed transfer (a) complies with applicable provisions of the 1933 Act and
any applicable state securities laws, (b) will not result in the Partnership having
to register as an investment company under the ICA, (c) will not render the
Carried Interest Distributions unlawful or violate any applicable law or
regulation, (d) will not result in the Partnership’s termination for federal income
tax purposes, and (e) will not result in Partnership assets being deemed “plan
assets” under ERISA. Additionally, no assignment shall be effective without the
consent of the General Partner, which will not be unreasonably withheld.
Reports and Meetings
The General Partner, on behalf of the Partnership, sends to each Limited Partner
an annual report containing the Partnership’s audited financial statements. The
Partnership has engaged Spicer Jeffries LLP to audit such financial statements.
In addition, the General Partner, on behalf of the Partnership, sends to Limited
Partners unaudited quarterly summary reports containing estimated capital
account balances. The General Partner may change the content of such reports.
The General Partner also may send to certain Limited Partners more frequent
reports (e.g., monthly or weekly). The General Partner also furnishes to the
Limited Partners appropriate tax information each year.

The Agreement requires each Limited Partner to maintain the confidentiality of

those financial statements, reports and other information about the Partnership,
except for certain permitted disclosures. These obligations are not affected by,
and survive, the Partnership’s dissolution or termination and any Partner’s
death, disability, incapacity, withdrawal, insolvency or dissolution.

The Investment Adviser, the General Partner or the Administrator may provide
to any Limited Partner (or the Limited Partner’s designated agents) statements,
reports and other communications relating to the Partnership or the Limited
Partner’s investment in the Partnership exclusively in electronic form, such as
email, without separate mailing of paper copies, provided that the Limited
Partner consents to receive such statements, reports and other communications
in such format.

Exculpation and Under the Agreement and the Investment Adviser Agreement, the Partnership
Indemnification will indemnify the General Partner, the Investment Adviser and their Affiliates
and their respective members, shareholders, directors, officers, employees,
agents and controlling persons, and the LPAC Indemnified Persons (each, an
“indemnified person”) from and against any cost, claim, liability, damage, loss,
settlement or expense (including, without limitation, all court costs, legal and
expert witness fees and expenses and all costs of investigation, taxes and
penalties) incurred or suffered by the indemnified person by virtue of such
indemnified person acting as or on behalf of the General Partner, the Investment
Adviser or the Partnership in connection with the Partnership’s activities.

The Agreement and the Investment Adviser Agreement also provide that
indemnified persons will not be liable to the Partnership or any Partner for any
cost, claim, liability, damage, loss, settlement or expense incurred or suffered by
the Partnership or any of its partners that arises out of or is in any way
connected with the Partnership’s activities including without limitation, any (a)
error in judgment with respect to the Partnership or (b) tax liability asserted
against any Partner by any federal, state or local authority, as a result of any
position taken by the Partnership or any partner. Nevertheless, if such cost,

ACME
Private Placement Memorandum -- Page 23
 claim, liability, damage, loss, settlement or expense arises out of any action or
inaction of the indemnified person, these provisions will be available only if
such course of conduct did not constitute (a) a breach by the indemnified person
of any fiduciary duty (other than an LPAC Indemnified Person) the indemnified
person may have to the Partnership (for these purposes, any error in judgment
described in the foregoing clause (a) is not deemed to be a breach of fiduciary
duty), or (b) in the case of all Indemnified Persons, gross negligence, willful
misconduct or fraud. In addition, the indemnification is available only as and to
the extent that it is not prohibited by applicable law governing rights of
indemnification. Recoveries under these provisions may be had only out of the
assets of the Partnership, and not from Limited Partners.

The agreements also provide that, subject to the approval of the General Partner
or the Partnership will advance funds for legal expenses and other costs incurred
by an indemnified person in connection with any such cost, claim, liability,
damage, loss or expense if the indemnified person undertakes to repay the
advanced funds to the Partnership if it is finally determined by a court of
competent jurisdiction that the indemnitee is not entitled to indemnification
under the Agreement.

Removal of the The General Partner may be removed as such if a Cause Event shall have
General Partner occurred by a vote or consent of Sixty-Six Percent Combined Interest.
Following the removal of the General Partner, the Removed General Partner
shall not be entitled to any further Management Fees and its share of Carried
Interest Distributions shall be reduced as described below. Solely for the
purposes of calculating the Carried Interest Distributions to be made to the
Removed General Partner and any replacement General Partner, the
investments made by the Partnership before the removal of the Removed
General Partner and any follow-on investments related to those investments
(collectively, the “Pre-Removal Investments”) shall be treated as a separate
portfolio of investments. The Removed General Partner shall receive Carried
Interest Distributions equal to the lesser of (i) 75% of the Carried Interest
Distributions from the Pre-Removal Investments, and (ii) 100% of the aggregate
Carried Interest Distributions. The replacement General Partner shall receive
the difference between the aggregate Carried Interest Distributions and the
Carried Interest Distributions received by the Removed General Partner. The
replacement General Partner will determine in good faith the amount of Capital
Contributions allocated to the Pre-Removal Investments and any other matters
required hereunder to calculate the Carried Interest Distributions.

ACME Fund I The General Partner and Investment Adviser currently serve as the general partner and
investment adviser to ACME Fund I, which launched in 2017 and raised
$5,325,000 of committed capital. ACME Fund I is actively making investments
and will continue to do so through early 2022. ACME Fund I has a similar
strategy to the Partnership, and the Investment Adviser will attempt to allocate
investment opportunities between the Partnership and ACME Fund I on a fair
and equitable basis. The Investment Adviser may determine that certain
investments are only appropriate for ACME Fund I or the Partnership and is
under no obligation to invest the Partnership’s assets in the same investments
held by ACME Fund I. ACME Fund I’s term is shorter than the Partnership’s
term, and, as a result, the Investment Adviser will have an incentive to seek

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Private Placement Memorandum -- Page 24
 liquidity for investors in ACME Fund I more quickly than it would for the
Limited Partners. See “Conflicts of Interest.”

CO-INVESTMENT PROGRAM

The Investment Adviser may offer certain Partners or other persons the right to participate in a
co-investment program. The principal objective of the co-investment program would be to facilitate
participation in Co-Investment Vehicles or in other investments that the Investment Adviser identifies
that are not appropriate for the Partnership.

RISK FACTORS

Discussed below are some risks that potential investors should consider carefully before
investing in the Partnership. The Partnership is a highly speculative investment and is not intended as a
complete investment program. It is designed only for sophisticated persons who are able to risk losing
their investment in the Partnership and who have limited need for liquidity. Potential investors should
review this Private Placement Memorandum carefully and in its entirety and consult with their
professional advisors before deciding whether to invest in the Partnership. The risks described below are
not exhaustive.

General Risks Related to Management by the Investment Adviser

Dependence on Management. The Partnership’s success depends on the skill and acumen of the
General Partner, the Investment Adviser and its investment personnel. They may devote a significant
amount of time to other activities, including managing other ACME Funds and investing in opportunities
without presenting such opportunities to the Partnership or the Partners, even if such opportunities may
be appropriate for the Partnership. See “Conflicts of Interest.” If any of them should cease to participate
in the Partnership’s activities, the Investment Adviser’s ability to select attractive investments and manage
the Partnership’s portfolio could be impaired severely. Further, the Partnership has a limited operating
history on which prospective investors may evaluate its likely performance. The Partnership cannot
assure investors that: (a) it will realize its investment objectives; (b) its investment strategy will prove
successful; or (c) investors will not lose all or a portion of their investment in the Partnership. See
“Investment Strategy” and “Management.”

The Investment Adviser has exclusive and absolute discretion and authority to manage and
control the Partnership’s investments, except as limited by the Agreement or applicable law. The
Investment Adviser has the unrestricted right to select the Securities and other intangible investment
instruments in which the Partnership invests and to determine the amount of funds to be used for each
purpose. The Investment Adviser may exercise this discretion and authority conditionally or
unconditionally, arbitrarily or inconsistently in varying or similar circumstances, without accountability to
the Partnership or any Limited Partner. For example, the Investment Adviser or the Administrator may
provide certain Limited Partners more frequent or more detailed reports of the Partnership’s portfolio
holdings or performance, special fee and allocation arrangements that it does not provide to other Limited
Partners.

The Investment Adviser can never learn all relevant information regarding a particular Security.
Further, the Investment Adviser may misinterpret or incorrectly analyze the information that it has about
a particular Portfolio Company. These and other factors may cause the Investment Adviser to (a) invest in
Portfolio Companies at times that will lead to losses in the Partnership’s portfolio and may cause a
Limited Partner to lose a significant portion of its investment in the Partnership or (b) refrain from

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investing in particular Portfolio Companies at times that would have resulted in gains in the Partnership’s
portfolio if the Investment Adviser would have caused the Partnership to invest.

Investment Selection. The Limited Partners have no opportunity to select or evaluate any of the
Partnership’s investments or strategies. The Investment Adviser selects all Partnership investments and
strategies. The likelihood that Limited Partners will realize income or gain depends on the skill and
expertise of the Investment Adviser and its investment personnel. See “Investment Strategy” and
“Management.”

Investment Risks. Although the Partnership may at times invest in publicly traded Securities,
the Partnership invests a substantial portion of its available capital directly and indirectly in Securities of
privately-held companies. Identifying and operating profitable enterprises and properties are difficult
tasks. Many organizations and properties managed by competent individuals have been unsuccessful.
The Investment Adviser cannot assure investors that the Partnership will succeed in investing its capital
in profitable businesses or properties. In addition, such Securities are issued by unseasoned companies
and are highly speculative. The Partnership’s investment portfolio may not generate any income or
appreciate in value.

Lack of Diversification. The Partnership intends to invest substantially all of its assets in
Securities issued by a small number of Portfolio Companies that are primarily in the cannabis industry or
in agriculture technology. Accordingly, the Partnership’s portfolio will not be diversified beyond those
investments, idle cash, money market instruments or other short-term investments. In addition, the
Partnership is not required to maintain a minimum level of capital. If the Partnership incurs losses, it may
not have sufficient funds to adequately diversify the investments it holds. Therefore, the Partnership’s
portfolio may be subject to more risk than would be the case if the Partnership’s assets were greater and
held a more diverse set of investments.

Shift Relationship. The Investment Adviser expects that Shift will provide assistance in
identifying and evaluating potential investment opportunities, as well as advice regarding operational and
other matters for existing Portfolio Companies. If the Investment Adviser’s relationship with Shift
terminates, the Partnership may be adversely affected.

Due Diligence. Before investing in a Portfolio Company, the Investment Adviser generally
conducts due diligence on that Portfolio Company as the Investment Adviser deems relevant. In
conducting its due diligence and making an assessment regarding a potential investment, the Investment
Adviser relies on the resources available to it, including information from third party sources and
information provided by the Portfolio Company and its personnel. The Investment Adviser is not in a
position to confirm the completeness, genuineness or accuracy of such information and data, and in some
cases, complete and accurate information is not readily available. Also, the due diligence that the
Investment Adviser carries out with respect to any potential investment may not reveal or highlight all
relevant facts that may be necessary or helpful in evaluating such investment opportunity. Moreover,
such an investigation will not necessarily result in the investment being successful.

Risks Specifically Related to the Cannabis Industry

Uncertainty of Size of Target Market. Because the Partnership’s Portfolio Companies will
operate, or do business with companies operating, in a new industry, the size of the Partnership’s target
market is difficult to quantify. Few estimates of the market size in the cannabis industry exist from
reliable third parties, so investors will have to rely on their own or the Partnership’s estimates in making
a decision about whether to invest in the Partnership. There can be no assurance that the Partnership’s
estimates regarding the market size for its investments are accurate or that such market size is sufficiently

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large for the Partnership’s investments to grow as projected, which may negatively impact the
Partnership’s financial results.

Regulatory Uncertainty. The Partnership’s investment decisions and the business activities and
operations of its Portfolio Companies, as well as the companies that its Portfolio Companies do business
with, rely on newly established regulations in multiple jurisdictions. These regulations are rapidly
evolving and subject to change with minimal notice. Regulatory uncertainty surrounding the cannabis
industry may impair the ability of some of the Partnership’s Portfolio Companies to operate, go public or
to find a suitable acquirer, which could adversely affect the Partnership’s returns.

Illegality under Federal Law and Laws of Other Jurisdictions. Many of the Partnership’s
Portfolio Companies operate, or do business with companies operating, in the newly emerging cannabis
industry. The Partnership’s Portfolio Companies will be engaged in transactions with businesses in states
that have legalized cannabis production and distribution, even though such activities are illegal under
federal law. Although cannabis production and distribution by licensed or registered entities is
authorized under such states’ statutes, the federal government classifies cannabis as a Schedule 1
controlled substance under the federal Controlled Substances Act (the “CSA”) and the sale, possession or
cultivation of cannabis, and the promotion of the distribution of cannabis, remain criminal acts under
federal law under any and all circumstances.

A Limited Partner’s Capital Commitment to the Partnership, and involvement in such activities,
whether direct or indirect, may result in such Limited Partner being in violation of federal law. The
penalties for violating the CSA are very serious and, depending on the quantity of cannabis involved,
may include criminal penalties of up to 20 years in prison and/or a fine of up to $2,000,000. The penalties
increase if the sale or possession with intent occurs within 1,000 feet of a school or playground. In
addition, without pursuing a criminal prosecution, the federal government can seize and seek the federal
forfeiture of the real or personal property used to facilitate the sale of cannabis as well as the money or
other proceeds received in connection with such sale.

Inconsistencies between federal law and the laws of states that have legalized or decriminalized
the production, processing, distribution, sale and use of cannabis for adult-use or medical purposes
represent a substantial risk over which the Partnership and the Partnership’s investments have no
control. Because the federal government views cannabis as an illegal drug, it is illegal to produce,
process, distribute, sell and consume cannabis. For this reason, the federal government could shut down
the businesses that the Partnership’s Portfolio Companies engage with, or, depending on the
circumstances, the operations of the Partnership’s Portfolio Companies themselves, at any time. There is
a potential risk that the Partnership and its Limited Partners may be subject to a criminal investigation
or prosecution for aiding and abetting in a violation of the CSA or for conspiring to violate the CSA.

Under the Obama Administration, the Department of Justice released a memo on August 29, 2013
(the “Cole Memorandum”), which provided non-binding guidance to federal prosecutors concerning
cannabis enforcement under the CSA in light of the recent state legislation to legalize the production,
processing, and sale of cannabis. The Cole Memorandum was rescinded on January 4, 2018 by now
former U.S. Attorney General Jeff Sessions, who had been critical of cannabis legalization and of the
Obama administration’s approach to enforcing federal law in states that have legalized cannabis.
Although the Cole Memorandum has been rescinded, the Trump Administration has not provided
further guidance to instruct federal prosecutors concerning cannabis enforcement under the CSA.

Substantial uncertainty exists regarding how the Trump Administration will approach cannabis
enforcement under the CSA and whether federal prosecutors will continue to follow the approach
described in the Cole Memorandum despite its rescission. In comments delivered during a February 23,
2017 press briefing, White House Press Secretary Sean Spicer stated that the Trump Administration sees a
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“big difference” between medical and adult-use cannabis, and indicated that although enforcement of the
CSA is “a question for the Department of Justice,” he believed there would be “greater enforcement of
[federal law]” particularly as it relates to adult-use cannabis.

Ultimately, in the absence of an official policy statement from the Trump Administration, the
position of the federal government on state-level legalization of adult-use and medical cannabis remains
unclear. If the Trump Administration were to instruct federal prosecutors to prosecute businesses and
individuals engaged in the production, processing and sale of cannabis, this could result in the inability
of the Partnership’s investments to conduct their business, as well as criminal and/or civil actions against
the Partnership, the Partnership’s Portfolio Companies and the Limited Partners.

These are substantial risks and there is no guaranty that the Partnership or its Portfolio
Companies will be successful in operating without interference or prohibition by the federal
government.

Increased Enforcement of Federal Law. Changes to the federal government’s administration and
the manner in which the federal government regulates cannabis, including how it intends to enforce laws
prohibiting medical cannabis and adult-use cannabis could materially and negatively affect the
Partnership’s investments. If the federal government elects to take a more aggressive approach towards
the enforcement of federal laws against businesses in the adult-use cannabis market, by some estimates,
the overall potential of the cannabis market may be reduced by as much as 75%. Eliminating the
adultuse cannabis market would be an existential threat to many cannabis businesses and those doing
business with such cannabis businesses, including the Partnership’s investments. Future legalization
and/or regulation at the federal, state and local level could stunt the growth of the cannabis industry and
thereby negatively affect the Partnership by shrinking the market for the services of the Partnership’s
investments.

Lack of Necessary Permits or Authorizations. The regulations in the cannabis industry are still
evolving, and some states, counties and/or other local jurisdictions may develop regulations that require
companies involved in the cannabis industry to obtain licenses, permits, authorizations or accreditations
even if such companies do not produce, process, distribute or sell cannabis directly. Accordingly, some
of the Partnership’s investments may not be able to obtain or maintain the necessary licenses, permits,
authorizations, or accreditations for certain operations related to the cannabis industry, or they may only
be able to do so at great cost. In addition, the Partnership’s investments may not be able to comply fully
with the wide variety of laws and regulations applicable to the cannabis industry. Failure to comply with
such laws and regulations or to obtain the necessary licenses, permits, authorizations, or accreditations
could result in restrictions on a company’s ability to operate in the cannabis industry, which could have a
material adverse effect on the Partnership or any of the Partnership’s investments.

Inability to Protect Intellectual Property. Due to the uncertain nature of the political and legal
prospects of the cannabis industry, the Partnership’s investments may have difficulty in obtaining state
and/or federal registration or other protection of their trademarks and copyrights. Particularly in light of
the illegality of cannabis under federal law, there is no assurance that any applications for trademarks
and copyrights relating to the business conducted by the Partnership’s investments may ever be granted,
especially in connection with any intellectual property relating to cannabis. Further, if such applications
are granted, the level of protection afforded and the duration of such protection is not guaranteed due to
the illegal nature of cannabis on a federal level. If such applications are granted, they may be challenged
or invalidated, and the affected company may not be able to succeed in protecting its rights in such
intellectual property.

Difficulty of Obtaining Banking Services. Since the use of cannabis is illegal under federal law,
many banks are concerned that they cannot accept for deposit funds from or otherwise provide services
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to businesses involved with the cannabis industry. The U.S. Treasury Department has issued guidelines
to federally regulated banks (which constitute almost all banks) addressing how they can provide
banking services to cannabis businesses, which impose burdensome requirements on any banks seeking
to do so. Consequently, businesses involved in the cannabis industry often have difficulty finding a bank
willing to accept their business. The inability or limitation in the ability of the Partnership and any of the
Partnership’s investments to open or maintain bank accounts or obtain other banking services may make
it difficult for the Partnership and such investments of the Partnership to operate and conduct business as
planned.

Difficulty of Obtaining Insurance. Insurance that is otherwise readily available, such as workers
compensation, general liability, and directors and officers insurance, may be more difficult or more
expensive for the Partnership’s investments to find, and more expensive, because the Partnership’s
investments are engaged in the cannabis industry.

Rapid Changes and Intensifying Competition. The cannabis industry is undergoing rapid
growth and substantial change, which has resulted in increasing consolidation and formation of strategic
relationships. The Partnership expects this consolidation and strategic partnering to continue.
Acquisitions or other consolidating transactions could harm the Partnership in a number of ways,
including:

• Some, or all, of the Partnership’s investments could lose strategic

relationships if their strategic partners are acquired by or enter into relationships with
competitors (which could cause the Partnership’s investments to lose access to products,
supplies, technology and other resources); and

• The current competitors of the Partnership’s investments could become

stronger, or new competitors could form, from consolidations.

Any of these events could put the Partnership’s investments at a competitive disadvantage,
which could cause such investments to lose customers, revenue or market share. Consolidation could
also force the Partnership’s investments to expend greater resources to meet new or additional
competitive threats, which could also harm their operating results. The occurrence of any such events
could materially and adversely affect the Partnership.

Inexperience of Participants within the Cannabis Industry; Potential Unenforceability of

Contracts. Many of the people and entities with whom the Partnership and the Partnership’s
investments engage with may not have significant experience with engaging in business transactions in
the ordinary course. Entities and persons in the cannabis industry may be unaccustomed to following
standard business practices, such as keeping financial records according to GAAP, entering into written
contracts or paying particular attention to the obligations to which they have agreed to in written
contracts. Moreover, many contracts involving cannabis companies may not be enforceable in federal or
state courts, which could negatively impact the ability of the Partnership’s investments to have certainty
regarding key contracts and business relationships. It may become challenging for the Partnership and
the Partnership’s investments to enter into more complex commercial transactions, which could limit the
growth of the Partnership’s investments or otherwise create a material adverse effect on the Partnership
and its investments.

General Risks of Venture Capital and Other Private Investments

Extreme Illiquidity of Investments. No significant market for angel or other early stage venture
investments, or for most of the other types of Securities in which the Partnership intends to invest, exists
or can be expected to develop, and most Securities cannot be assigned without the consent of the
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applicable Portfolio Company and compliance with applicable securities laws. Even if certain Securities
(such as Securities of private companies) become publicly traded, the Partnership may be restricted from
liquidating those Securities for a significant period of time. Accordingly, the Partnership’s investments
are extremely illiquid, even in an emergency.

Venture Capital Risks. Venture capital investments involve an extraordinarily high degree of
business and financial risk and can result in substantial or complete losses. Many Portfolio Companies
will operate at a loss, will experience substantial variations in operating results from period to period and
may need substantial additional capital to support expansion or to achieve or maintain competitive
positions. Portfolio Companies may face intense competition, including competition from companies
with much greater financial resources, much more extensive development, production, marketing and
service capabilities, and a much larger number of qualified managerial and technical personnel. A high
percentage of venture capital investments, and an even higher percentage of angel investments, result in
total losses.

Extreme Volatility. The Partnership may invest in Portfolio Companies that experience
substantial variation in operating results from period to period. If any Securities in which the
Partnership invests become publicly traded, the public trading markets for those Securities may be
extremely volatile from day to day or from period to period.

Additional Capital Needs. After the Partnership makes initial investments in Portfolio
Companies, those companies may require additional funding, or the Partnership may have the
opportunity to increase its investment in successful Portfolio Companies (if any are successful). For
example, any Portfolio Company is subject to the risk that a proposed service or product cannot be
developed successfully with the resources available to that company. The development efforts of any
Portfolio Company may fail, or may not be completed within the budget or time originally estimated.
Additional funds may be necessary to complete such development, and such funds may not be available.
The Partnership may not make follow-on investments. Any decision by the Partnership not to make
follow-on investments, or the Partnership’s inability to make them, may have substantial adverse effects
on Portfolio Companies in need of such investment or may result in missed opportunities for the
Partnership to increase its participation in successful ventures, or may cause a decrease in the value of the
Partnership’s portfolio.

Time Required for Maturity of Investments. The Investment Adviser anticipates that significant
time will be required before the Partnership’s committed capital will be fully invested. In addition,
private businesses can take several years from the date of initial investment to reach a state of maturity
that disposition of outstanding Securities can be considered, and frequently require even longer periods
before disposition can occur. It is unlikely that any significant distributions of profits generated from the
operations of these non-public companies or disposition or liquidation of the Partnership’s investments
in them will be made until well after the investments are made, if at all. The Partnership may not realize
a return on any investment within a reasonable time, or at all.

Limited or No Control over Portfolio Companies. The Investment Adviser will not have control
over the management of Portfolio Companies. The success of each investment will depend on the ability
of the management of the Portfolio Company. The Partnership is likely to participate with other
investors in making many of its investments and, in doing so, the Partnership likely will not be the lead
investor. Although the Investment Adviser may participate in considering decisions affecting these
investments, the lead investors are expected to control decisions affecting Portfolio Companies. Even if
the Investment Adviser disagrees with any decisions affecting the Partnership’s investments, the
Partnership is not likely to be able to sell or otherwise liquidate its investment as a result of any such
disagreement on terms favorable to the Partnership, or at all.

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 Risks of Co-Investments. While the Investment Adviser may arrange for Co-Investment Vehicles
or third parties to co-invest with the Partnership in particular Portfolio Companies, the Investment
Adviser may not necessarily control any such Co-Investment Vehicle’s or third party’s investment
decisions. Any such third party co-venturer may have economic or business interests or goals that are
inconsistent with those of the Partnership, or may be in a position to take (or block) action in a manner
contrary to the Partnership’s investment objectives. In addition, such co-investments may or may not be
on substantially the same terms and conditions as the Partnership, and such coinvestments may or may
not be disposed of in lockstep with dispositions by the Partnership. To the extent that any dispositions
are not made in lockstep, they may be disadvantageous to the Partnership or any Limited Partner
participating directly therein.

General Investment Risks

Competition for Investments. The Partnership will be competing for investment opportunities
against other groups, including institutional investors, investment managers, industrial groups and
merchant banks owned by larger and well-capitalized investors. The competition for investment
opportunities may adversely affect the terms of the investments. Also, such competition may prevent the
Partnership from finding a sufficient number of attractive opportunities to meet its investment objectives.

General Risk of Changes in Economic Conditions. Changes in economic conditions, including,

for example, interest rates, credit availability, inflation rates, industry conditions, government regulation,
competition, technological developments, political and diplomatic events and trends, tax and other laws
and innumerable other factors, can affect the Partnership’s investments and prospects materially and
adversely. None of these conditions is within the Investment Adviser’s control, and it may not anticipate
these developments. These factors may increase the volatility of the valuations of Portfolio Companies
and the liquidity of those investments. Unexpected volatility or illiquidity could impair the Partnership’s
profitability or result in losses.

Risks of Poor Economic Conditions. Poor economic conditions may affect the Partnership’s
investments and prospects materially and adversely. None of these conditions is within the Investment
Adviser's control and even if it anticipates these developments, it will not adjust the Partnership’s
investment objective.

General Risks of Non-U.S. Investments. The Partnership may invest in Portfolio Companies that
are organized or operate in non-U.S. countries. Those types of investments involve unusual risk not
typically associated with investing in U.S. companies, including but not limited to, currency volatility, less
public information available regarding issuers, limited liquidity of Securities, greater price volatility and
political risks associated with the countries in which such Securities are traded and the countries where
the issuers are located. Exchange control regulations or changes in the exchange rate between other
currencies and the U.S. dollar may affect the Partnership unfavorably. Individual non-U.S. economies
may differ unfavorably from the U.S. economy in gross national product growth, inflation rate, savings
rate and capital reinvestment, resource self-sufficiency and balance of payments positions, and in other
respects. The value and marketability of the Partnership’s investments in some countries may be
materially and adversely affected by expropriation or confiscatory taxation, limitations on removing funds
or other assets, political or social instability, or diplomatic developments. The investments also may be
subject to withholding taxes imposed by the applicable country’s taxing authority.
Risks of Leverage. The Partnership may use leverage by borrowing capital from third parties to
invest in Securities. Such leverage increases the risk of loss and volatility. In addition, the use of leverage
requires the Partnership to pledge assets as collateral. The Partnership may be required to pledge
additional collateral or liquidate its holdings under the terms of those borrowing arrangements, which
could require the Partnership to liquidate its investments at substantial losses that it otherwise would not
realize.
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 Confidential Information. The Investment Adviser (through its representatives or otherwise)
may receive information (such as information from one of its Portfolio Companies) that restricts its ability
to cause the Partnership to make an investment for substantial periods of time when the Partnership
otherwise could realize a profit or avoid a loss. This may adversely affect the Partnership’s flexibility in
buying or selling Securities.

Service on Boards of Directors, Etc. The Investment Adviser’s personnel may (but will not be
obligated to) serve as officers or directors of Portfolio Companies. In their capacity as officers or
directors, such individuals may become subject to fiduciary or other duties that adversely affect the
Partnership. For example, the Partnership may be unable to sell or otherwise dispose of Securities if the
Investment Adviser’s personnel are in possession of inside information relating to the issuer thereof.

In general, if there is a conflict between the fiduciary duties of the Investment Adviser or its
personnel to a Portfolio Company and such person's fiduciary duties to the Partnership or the Limited
Partners, such person's fiduciary duties to the Portfolio Company will prevail.

Risks Related to the Partnership’s Counterparties, Service Providers and Terms

Risk of Default by Counterparties, Brokers and Exchanges. The Partnership will be exposed to
the credit risk of the counterparties with which, or the banks, brokers, dealers and exchanges through
which, it deals. The Partnership may be subject to risk of loss of its assets on deposit with a bank or broker
in the event of that bank’s or broker’s bankruptcy. In the case of any such bankruptcy or customer loss,
the Partnership might recover, even in respect of property specifically traceable to the Partnership, only a
pro rata share of all property available for distribution to all of such broker’s or dealer’s customers.

The Partnership may effect transactions in “over-the-counter” or “interdealer” markets.

Participants in these markets typically are not subject to credit evaluation and regulatory oversight as are
members of “exchange-based” markets. To the extent the Partnership invests in swaps, derivatives or
synthetic instruments, or other over-the-counter transactions in these markets, the Partnership may take a
credit risk with regard to parties with which it trades and also may bear the risk of settlement default.
These risks may differ materially from those involved in exchange-traded transactions, which generally
are characterized by clearing organization guarantees, daily marking-to-market and settlement, and
segregation and minimum capital requirements applicable to intermediaries. Transactions entered into
directly between two counterparties generally do not benefit from these protections, which in turn may
subject the Partnership to the risk that a counterparty will not settle in accordance with agreed terms and
conditions because of a dispute over the terms of the contract or because of a credit or liquidity problem.
Such “counterparty risk” is increased for contracts with longer maturities when events may intervene to
prevent settlement. The ability of the Partnership to transact business with any one or any number of
counterparties, the lack of any independent evaluation of the counterparties or their financial capabilities,
and the absence of a regulated market to facilitate settlement, may increase the potential for losses to the
Partnership.

Service Provider Default Risk. The Partnership has contractual agreements with various service
providers, including the Partnership’s custodians, the Administrator and the Subscription Agent, to
perform various functions or effect certain transactions for or on its behalf. These entities may default on
their obligations, which could adversely affect the Partnership and the Limited Partners.
Limitation of Liability and Indemnification of Various Persons. Under the Agreement and the
Investment Adviser Agreement, the Partnership will indemnify the General Partner, the Investment
Adviser and their Affiliates and their respective members, shareholders, directors, officers, employees,
agents and controlling persons, and the LPAC Indemnified Persons (each, an “indemnified person”) from
and against any cost, claim, liability, damage, loss, settlement or expense (including, without limitation, all
court costs, legal and expert witness fees and expenses and all costs of investigation, taxes and penalties)
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incurred or suffered by the indemnified person by virtue of such indemnified person acting as or on
behalf of the General Partner, the Investment Adviser or the Partnership in connection with the
Partnership’s activities. The Agreement and the Investment Adviser Agreement also provide that
indemnified persons will not be liable to the Partnership or any Partner for any cost, claim, liability,
damage, loss, settlement or expense incurred or suffered by the Partnership or any of its partners that
arises out of or is in any way connected with the Partnership’s activities. See “Summary of Principal
Terms - Exculpation and Indemnification.”

The Partnership’s agreements with its custodians, administrators, auditors and other service
providers may contain provisions that limit the liability of and indemnify those parties and their affiliates
in certain circumstances.

No Liquidity of Interests. No market for Interests exists or is expected to develop. It may be

difficult or impossible to transfer any Interests, even in an emergency. No distributions are likely to
occur with respect to the Interests for a significant period of time after the Initial Closing Date. See
“Summary of Principal Terms -- Distributions.”

Significant Direct and Indirect Expenses. The Partnership may incur significant transaction costs
and expenses in connection with its investments. These and other expenses of organizing and operating
the ACME II Funds (including Management Fees, Carried Interest Distributions and the fees payable to
the Administrator) are paid out of the Partnership’s capital, reducing the Partnership’s investments and
potential for profitability. This risk is higher if the Partnership has limited assets. Because the Partnership
may also pay the expenses of any Alternative Investment Vehicles, the Partnership indirectly bears a
portion of the expenses of those entities. See “Summary of Principal Terms -- Expenses.”

Reserve for Contingencies. The General Partner may establish reserves as it deems necessary or
appropriate to pay any prospective liability or obligation that it believes may arise with respect to any of
the Partnership’s investments or activities. Any such reserve may be established, whether or not it is
required under generally accepted accounting principles, and may be allocated among the Partners’
Capital Accounts as the General Partner deems appropriate. A Limited Partner may not be distributed
any portion of its Capital Account balance related to any such reserve until the General Partner deems that
the reserve no longer is necessary.

Effect of the Carried Interest Distribution. The General Partner receives a performance-based
Carried Interest Distribution with respect to each Limited Partner. The Carried Interest Distribution may
create an incentive for the Investment Adviser to make investments that are riskier or more speculative
than it would make if the General Partner did not receive a distribution based on the Partnership’s
performance. See “Summary of Principal Terms -- Distributions.”

Limited Distributions. The General Partner does not intend to make distributions to the Limited
Partners until, at the earliest, the end of the calendar quarter in which the third anniversary of the Offering
Termination Date occurs. As a result, Limited Partners may be credited with Partnership net income, and
will incur the consequent income tax liability (to the extent that they are subject to income tax), even
though Limited Partners receive limited or no Partnership distributions. Accordingly, an investment in
the Partnership may not be suitable for investors seeking current returns for financial or tax planning
purposes.
Dilution. Limited Partners that make or increase their Capital Commitments after the Initial
Closing Date will participate in the Partnership’s existing investments, diluting the interest of existing
Limited Partners therein. Although such Limited Partners will contribute their pro rata share of previously
made Capital Contributions, there can be no assurance that this payment will reflect the fair value of the
Partnership’s existing investments at the time such additional Limited Partners subscribe for Interests.

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 Special Caution for Investors in Second or Later Closings. The Partnership will engage in a
variety of investment and investment-related activities. In connection with such activities, the
Partnership, the General Partner and the Investment Adviser likely will obtain confidential information
regarding actual or potential investments, and they generally will not disclose such information to
prospective investors in connection with an investment in the Partnership. As a more general matter, any
person considering an investment in the Partnership (including an existing Limited Partner that is
considering an increase to its Capital Commitment) subsequent to the Initial Closing should assume that
the Investment Adviser, the General Partner and the Partnership will be in possession of information
(such as information relating to actual or prospective investments, to actual or prospective Limited
Partners, or to other matters arising subsequent to such Initial Closing) which information (a) would be
material to such person's evaluation of an investment in the Partnership and (b) will not be disclosed to
such person by any of the Investment Adviser, the General Partner or the Partnership in connection with
such evaluation. The Investment Adviser, the General Partner and the Partnership explicitly disclaim any
obligation to update this Private Placement Memorandum to include (or otherwise inform prospective
investors of) any such information.

Under some circumstances, a person considering an investment in the Partnership may be

provided with copies of the Partnership's financial statements for periods following the Initial Closing.
Any such person is cautioned that it will be inherently difficult to determine the value of the Partnership’s
investments and that, accordingly, it would be inappropriate to interpret any information set forth in such
statements as a representation or warranty regarding the true fair market value of any such investments.

Failure to Meet Capital Commitments. If a Limited Partner fails to pay any portion of its Capital
Commitment to the Partnership when due, and the contributions made by Non-Defaulting Partners and
borrowings by the Partnership are inadequate to cover the defaulted amount, the Partnership may be
unable to pay its obligations when due, and its ability to execute its investment strategy or to otherwise
continue operations may be impaired. As a result, the Partnership may be subjected to significant
penalties that could materially adversely affect the returns to the Limited Partners (including
NonDefaulting Partners). A default by a substantial number of Limited Partners would limit
opportunities for investment diversification and would likely negatively affect the Partnership’s economic
results.

Other Consequences of Default. If a Limited Partner defaults, it may be subject to various

remedies as provided in the Agreement, including, without limitation, reductions in its Capital Account
balance, forfeiture of future Profits or other portions of its Interests and preclusion from further
investment in the Partnership. The General Partner may require that the remainder of the Defaulting
Partner’s Capital Commitment be cancelled. In addition, the General Partner may pursue any available
legal or equitable remedies, with the expenses of collection of the unpaid amount (including attorneys’
fees) to be paid by the Defaulting Partner. See “Summary of Principal Terms -- Event of Default.”

Differing Terms for Particular Limited Partners and Other ACME Funds. The terms that
govern any particular ACME Fund may be more advantageous than those generally applicable to the
Partnership, and the terms that apply to a particular Limited Partner in the Partnership or investor in a
ACME Fund may be more advantageous than those generally applicable to other Limited Partners in the
Partnership. For example, in the future, some Limited Partners or investors in other ACME Funds may
receive the following terms and conditions that do not apply to other Limited Partners in the Partnership:
a reduction, rebate or waiver of Management Fees or Carried Interest Distributions (or other terms);
rights to receive reports on a more frequent basis or that include information not provided to other
Limited Partners (including, without limitation, more detailed information regarding portfolio positions);
special rights to make future investments in the Partnership, Parallel Funds or Co-Investment Vehicles;
and such other rights as may be negotiated by those persons or other ACME Funds.

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 Litigation Risks. The Partnership will be subject to a variety of litigation risks, particularly in
consequence of the substantial likelihood that one or more Portfolio Companies will face financial or other
difficulties during the term of the Partnership’s investment. For example, the Investment Adviser’s
personnel may participate in and assist Portfolio Companies in differing capacities (including, without
limitation, by serving as officers, directors, or advisors). The Partnership may also participate in
financings of Portfolio Companies at implicit valuations lower than the valuations implicit in preceding
rounds of financing, exercise the Partnership’s voting or consent rights with respect to a Portfolio
Company in a manner contrary to the interests of other investors, or be exposed to flow-through liability
for a Portfolio Company’s debts and obligations (for example, under laws governing liability for
environmental damage). If a dispute arises from any of the foregoing activities (or other activities relating
to the operation of the Partnership or the Investment Adviser), the Partnership, the Investment Adviser or
the Investment Adviser’s personnel may be named as defendants. Under most circumstances, the
Partnership will indemnify the Investment Adviser and its personnel for any costs they incur in
connection with such disputes. Beyond direct costs, such disputes may adversely affect the Partnership in
a variety of ways, including by distracting the Investment Adviser and harming relationships between the
Partnership and its Portfolio Companies or other investors in such Portfolio Companies.

Limited Partners may be required to return prior distributions from the Partnership to enable the
Partnership to indemnify the General Partner, the Investment Adviser, their personnel or other
indemnified persons. See “Summary of Principal Terms – Post Commitment Period.”

Anti-Money Laundering. If the General Partner, the Investment Adviser, the Administrator, the
Subscription Agent or any governmental agency believes that the Partnership has accepted subscriptions
for Interests by, or is otherwise holding assets of, any person or entity that is acting, directly or indirectly,
in violation of any U.S., international or other anti-money laundering laws, rules, regulations, treaties or
other restrictions, or on behalf of any suspected terrorist or terrorist organization, the General Partner, the
Investment Adviser, the Administrator, the Subscription Agent or such governmental agency may freeze
the assets of that investor or suspend its withdrawal rights. None of the Partnership, the General Partner,
the Investment Adviser, the Administrator or the Subscription Agent will be liable for losses in connection
with delays or otherwise related to the anti-money laundering verification process. The Partnership also
may be required to remit or transfer those assets to a governmental agency.

General Partner’s Right to Dissolve the Partnership. The General Partner may dissolve the
Partnership at any time. Accordingly, there is a risk that if the Partnership’s assets become depleted,
Losses become significant and, as a result, the Management Fee and Carried Interest Distribution are
reduced, the General Partner may elect to dissolve the Partnership at a time when dissolution may be
disadvantageous to the Limited Partners.

Liquidation. If the Partnership becomes insolvent, the Limited Partners may be required to
return with interest any property distributed that represented a return of capital, repay any distributions
wrongfully made to them and forfeit any undistributed profits.

Legal, Regulatory, Tax and ERISA-Related Risks

Regulatory Risks Related to Cannabis Industry. Many of the Portfolio Companies in which the
Partnership expects to invest are involved in the cannabis industry and therefore will be subject to
significant legal and regulatory risk. See “Risk Factors -- Risks Specifically Related to the Cannabis
Industry.” If a federal or state regulator takes the position that any such Portfolio Company’s activities
(and perhaps any investors in it, such as the Partnership) do not comply with applicable law, any such
regulatory action could adversely affect the Partnership and the Limited Partners.

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 Regulatory Risks Related to Investment Advisers and Private Investment Funds. The U.S., the
E.U. and other countries and regulatory authorities have enacted major legislation that increases the
regulation and reporting of investment advisers and private investment funds. In addition, the
regulatory and tax environment for derivative Securities and related instruments is also evolving and
may be subject to modification by government or judicial action. These regulatory developments and
continuing uncertainty regarding their implementation may adversely affect the Investment Adviser, the
General Partner and the Partnership.

State and Federal Securities Laws. This offering has not been registered under the 1933 Act, in
reliance on the exemptions in section 4(a)(2) of the 1933 Act and Regulation D promulgated thereunder.
Similar reliance has been placed on apparently available exemptions from securities registration or
qualification requirements under applicable state securities laws. The Partnership cannot assure investors
that the offering currently qualifies or will continue to qualify under any of such exemptions due to,
among other things, the adequacy of disclosure and the manner of distribution, the existence of similar
offerings in the past or in the future, or the retroactive change of any securities law or regulation. If, and
to the extent that, claims or suits for rescission are brought and successfully concluded for failure to
register this offering or other offerings or for acts or omissions constituting offenses under the 1933 Act,
the 1934 Act, or applicable state securities laws, the Partnership could be affected materially and
adversely, jeopardizing its ability to operate successfully. Furthermore, the human and capital resources
of the Partnership, the General Partner and the Investment Adviser could be affected adversely by
defending actions under these laws, even if the Partnership is ultimately successful in its defense.

The General Partner believes that, by virtue of ICA section 3(c)(1), the Partnership should not be
deemed to be an “investment company” and, accordingly, should not be required to register as such
under the ICA. That provision depends in part, however, on the Partnership’s voting securities (if
Interests were to be deemed “voting securities” for purposes of ICA section 3(c)(1)), and possibly the
voting securities of affiliated entities and accounts, being held by not more than 100 beneficial owners.
The rules and interpretations of the SEC and the courts relating to the definition of “voting securities” and
the counting of “beneficial owners” are highly complex and uncertain in numerous respects. As a result,
the Partnership cannot assure investors that it will not be deemed an “investment company” for purposes
of the ICA and required to register as such thereunder, in which event the Partnership and the General
Partner could be subject to legal actions by regulatory authorities and others and could be forced to
terminate. The costs of defending any such action could constitute a material part of the Partnership’s
assets. Termination could have materially adverse effects on the Partnership and the value of the
Interests. See “Suitability Standards.”

Pursuant to the exemption from registration provided by Rule 4.13(a)(3) under the CEA, neither
the General Partner nor the Investment Adviser is required to register, and neither is registered, with the
Commodity Futures Trading Commission as a commodity pool operator because among other things, the
Interests are exempt from registration under the 1933 Act and are offered and sold without marketing to
the public in the U.S., and at all times either (a) the aggregate initial margin and premiums required to
establish the Partnership’s commodity interest positions will not exceed 5% of the liquidation value of its
portfolio or (b) the aggregate net notional value of the Partnership’s commodity interest positions will not
exceed the liquidation value of its portfolio. Each of the General Partner and the Investment Adviser has
filed a notice of exemption with the National Futures Association to be eligible for this exemption. Unlike
a registered commodity pool operator, the General Partner and the Investment Adviser are not required to
deliver to Limited Partners the disclosure document and certified annual report required by the CEA and
the rules and regulations thereunder.

None of the Partnership, the General Partner or the Investment Adviser is or intends to be
registered as a broker or dealer under the 1934 Act or any other securities law. The Investment Adviser
believes that none of those persons is required to be so registered, but if the SEC or any state securities law
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administrator were to assert that such registration is required, the Partnership would bear the resulting
increased expenses and their activities could be restricted. If it were determined that the General Partner
or the Investment Adviser is required to be registered as a broker or dealer, it might be precluded from
performing its duties as such, which could lead to dissolution of the Partnership, and liquidation of their
investments at a time when such liquidation may be disadvantageous to the Partnership, or could lead to
other materially adverse effects on the Partnership’s activities.

Moreover, the General Partner and the Investment Adviser are not registered as investment
advisers under the Advisers Act or under the laws of any state or any other country. As a consequence,
neither the Partnership nor the Partners will receive any benefits that derive from SEC or state regulatory
oversight. If it were determined that the General Partner or the Investment Adviser were subject to
further registration as an investment adviser or other compliance action, or registered as a broker or
dealer, it might be precluded from performing its duties as such, which could lead to dissolution of the
Partnership and liquidation of its investments at a time when such liquidation may be disadvantageous to
the Partnership, or could lead to other materially adverse effects on the Partnership’s activities.

Securities and investment businesses generally are regulated comprehensively and intensively
under state and federal laws and regulations. Any investigation, litigation or other proceeding that state
or federal regulatory agencies or private parties undertake that involves the General Partner, the
Investment Adviser or the Partnership could require them to spend a significant amount of money and
time to address those matters, which could have materially adverse consequences for the Partnership. In
addition, because this offering has not been registered under the 1933 Act, the Partnership is not registered
under the ICA, and the Investment Adviser and the General Partner are not registered as investment
advisers, commodity pool operators or brokers with any regulatory authority, the Limited Partners do not
have certain regulatory protection available to investors in offerings or entities that are registered under
such laws or that are managed by finance lenders or brokers that are registered under such laws.

Public Disclosure Obligations. The Partnership may be required to disclose confidential

information relating to its portfolio investments and its financial results to third parties that may request
such information if and to the extent required by federal, state or local law or regulation applicable to the
Partnership or any of its Limited Partners, including those Limited Partners that are public agencies or
governmental bodies. Such disclosure obligations may adversely affect certain Limited Partners,
particularly Limited Partners who are not otherwise subject to public disclosure of information relating to
the private holdings of funds in which they invest.

Tax Considerations. The tax aspects of an investment in the Partnership are complicated. Each
investor should have them reviewed by professional advisers familiar with such investor’s personal tax
situation and with the tax laws and regulations applicable to the investor and investment limited
partnerships. The Partnership is not intended and should not be expected to provide any tax shelter, but
is organized as a partnership to provide for a single level of tax.

The availability of a single level of tax depends on the classification of the Partnership as a
partnership rather than as an “association” taxable as a corporation for federal income tax purposes.
Regulations provide that a limited partnership with 2 or more partners may elect to be taxed as a
corporation or a partnership. The Partnership does not intend to elect to be taxed as a corporation, and
thus should be treated for federal income tax purposes as a partnership.

In addition, the Partners, and not the Partnership, are taxed on any realized income or gain of the
Partnership (to the extent that the Limited Partners are subject to income tax). The General Partner may
delay distributions pending resolution of various actual or contingent obligations. This tax liability exists
even in the absence of cash distributions. Accordingly, a Limited Partner may have taxable income and
tax liability arising from that Limited Partner’s investment in the Partnership in a Fiscal Year when no
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cash is distributed to that Limited Partner by the Partnership, or even in a Fiscal Year when that Limited
Partner’s Capital Account balance is reduced (for example, when that Limited Partner’s share of net
unrealized losses exceeds that Limited Partner’s share of net realized income and gain in that Fiscal Year).

Most of the income, gains and losses of the Partnership are not passive income, gains and losses.
Thus, Limited Partners may not offset their distributive shares of income and gain, if any, from the
Partnership against passive losses derived from other investments (except to the limited extent of a
Limited Partner’s distributive share of nonportfolio passive income or gain, if any, generated by the
Partnership); provided, however, that if the Partnership makes investments in entities that are treated for
income tax purposes as partnerships rather than as corporations, income gain and loss allocated to the
Partnership from such investments would likely constitute passive income gain or loss. See “Federal
Income Tax Aspects -- Passive Activities.”

Under Code section 67(c), temporary regulations prevent taxpayers from deducting indirectly,
through a pass-through entity such as a partnership, expenses that would not be deductible if paid or
incurred directly by such taxpayers. Under Code section 67(g), expenditures related to investment income
or property generally are not deductible. The Management Fee and other expenses of the Partnership
should constitute such investment income expenditures and thus should not be deductible by a Limited
Partner. The IRS may assert that the allocation of Profits associated with the Carried Interest Distributions
should be treated as an expense of the Partnership, rather than as an allocation of Profits. If the IRS
successfully asserts that position, the Profit allocations related to the Carried Interest Distributions also
should constitute such an investment income expenditure and not be deductible.

Tax-exempt Partners may be subject to unrelated business taxable income as a result of their
investment in the Partnership. See “Federal Income Tax Aspects – Unrelated Business Taxable Income”
and “– Charitable Remainder Trusts.”

The tax consequences described herein may not apply to the Partnership or the Limited Partners.
Such matters are subject to change by legislation, administrative action and judicial decisions. Legislation
has been proposed from time to time in Congress which, if enacted, could modify the tax treatment of the
Partnership or the Limited Partners. In addition, the Partnership may engage in some investments that
have uncertain federal income tax consequences. If the IRS challenges any tax position that the
Partnership takes and such challenge is sustained, Limited Partners may be liable for interest and
penalties. See “Federal Income Tax Aspects -- Audit of Tax Returns.”

A Partner may be liable for taxes under state or local income tax laws of certain jurisdictions in
which the Partnership operates as well as the jurisdiction of such Partner’s residence or domicile, which
laws vary from one locale to another and which, like federal income tax laws, are complex and subject to
change. Special tax considerations also may apply to Tax-Exempt Entities. See “ERISA and Other Plan
Considerations” and “Federal Income Tax Aspects -- Unrelated Business Taxable Income,” “-- Prohibited
Transaction Excise Taxes,” “-- Charitable Remainder Trusts” and “-- Tax Shelter Reporting.” Prospective
investors should consult with their own tax advisers concerning the effect of federal, state and local taxes
on an investment in the Partnership.

Consequences of Prohibited Transactions. If a transaction in which the Partnership engages

were to constitute (or were alleged to have constituted) a prohibited transaction under ERISA section 406
or Code section 4975(c) and not qualify for exemptive relief under a statutory, regulatory or administrative
exemption, (a) the particular transaction may have to be rescinded or otherwise corrected, with potential
substantial losses to the Partnership, (b) responsible fiduciaries may be subjected to claims for monetary
relief under ERISA section 409, (c) affected parties may assert indemnity or other claims against the
Partnership, (d) fiduciaries and other parties in interest may be subject to claims for equitable relief, and

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(e) any party in interest (other than a fiduciary acting solely in that capacity) may be required to pay excise
taxes under Code section 4975. See “ERISA and Other Plan Considerations” below.
ERISA Fiduciary Liability. Fiduciaries of ERISA Plans that invest in the Partnership are subject
to the fiduciary responsibility and liability provisions of ERISA, which are described generally at “ERISA
and Other Plan Considerations” below.

The Investment Adviser may not be a “qualified professional asset manager” (“QPAM”). At any
time that the Investment Adviser is not a QPAM and the Partnership’s assets are “plan assets” under
ERISA section 3(42) and the regulations referred to therein, as explained in “ERISA and Other Plan
Considerations,” (a) transactions involving the Partnership will not be eligible for the DOL prohibited
transaction class exemption that otherwise would be available if those funds were managed by a QPAM
(although another class exemption may apply) and (b) fiduciaries of Plans that invest in the Partnership
will not receive the protection from potential liability that otherwise would apply by virtue of that class
exemption.

THE FOREGOING RISK FACTORS DO NOT COMPLETELY EXPLAIN THE RISKS INVOLVED
IN THIS OFFERING. POTENTIAL INVESTORS MUST READ THE ENTIRE PRIVATE PLACEMENT
MEMORANDUM, INCLUDING ALL APPENDICES AND EXHIBITS, AND CONSULT THEIR OWN
ADVISERS BEFORE INVESTING IN THE PARTNERSHIP.

CONFLICTS OF INTEREST

The Investment Adviser and its Affiliates sponsor, manage or participate in other investment
activities unrelated to the Partnership’s activities (some of which may compete with the Partnership’s
investment activities), and they intend in the future to be engaged in these and other investment
activities. These other activities include, among other things, providing investment advisory services to
the other ACME Funds and investing for their own accounts. The Investment Adviser’s judgment may
be affected by the conflicts of interest summarized below, among others, caused by these other activities.

Investments in the Same Portfolio Company by Multiple ACME Funds. Conflicts may arise if
the Partnership and other ACME Funds (including ACME Fund I) make investments together, or if
another ACME Fund invests or has previously invested in a Portfolio Company in which the Partnership
invests. Investment opportunities may be appropriate for ACME Funds at the same, different or
overlapping levels of a Portfolio Company’s capital structure. Conflicts may arise in determining the
terms of investments, particularly if different ACME Funds may invest in different types of Securities in a
single Portfolio Company. For example, the Investment Adviser may need to decide or participate in the
Portfolio Company’s decision-making process as to whether payment obligations and covenants should be
enforced, modified or waived, or whether debt should be refinanced. In addition, the Investment Adviser
may be incentivized to encourage Portfolio Companies to seek an exit event, such as an initial public
offering, merger or sale of its stock or assets, to provide liquidity for a ACME Fund that has a shorter term
than the Partnership, such as ACME Fund I, even if such course of action is not in the best interest of the
Partnership. Conflicts may also arise when deciding what action should be taken in a troubled situation,
including whether or not to enforce claims, whether or not to advocate or initiate a restructuring or
liquidation inside or outside of bankruptcy, and the terms of any work-out or restructuring. Investments
by more than one ACME Fund in a company may also raise the risk of using assets of some ACME Funds
to support positions taken by other ACME Funds. There can be no assurance that a ACME Fund’s return
in a particular transaction would be equal to and not less than another ACME Fund participating in the
same transaction or that it would have been as favorable as it would have been had such conflict not
existed.

Follow-On Investments. Follow-on investments in Portfolio Companies may present particular

conflicts of interest, including the terms of the new financing as well as the allocation of the investment
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opportunities in the case of follow-on acquisitions by one ACME Fund in a Portfolio Company in which
another ACME Fund has previously invested. In addition, a ACME Fund may participate in releveraging
and recapitalization transactions involving Portfolio Companies in which another ACME Fund has
already invested or will invest. Conflicts of interest may arise, including determinations of whether
existing investors are being cashed out at a price that is higher or lower than market value and whether
new investors are paying too high or too low a price for the company or purchasing securities with terms
that are more or less favorable than the prevailing market terms.

Management of Other ACME Funds. The Investment Adviser selects investments for the
Partnership and other ACME Funds based solely on investment considerations for such persons. The
Partnership intends to invest in private companies using a “venture capital” strategy. In the future, the
Investment Adviser may manage other ACME Funds with different investment strategies. The
Investment Adviser, on behalf of the Partnership or the other ACME Funds and in other capacities with
other entities or for its own account, has discretion in determining which investments are made by the
Partnership or the other ACME Funds, sold to others or made by it or its Affiliates, with or without the
participation of any other person. Because the General Partner, the Investment Adviser and their
Affiliates have and will have fiduciary duties to the Partnership and the other ACME Funds, the interests
of the Partnership and the other ACME Funds in selecting, negotiating and administering investments
may conflict in some circumstances. The General Partner and the Investment Adviser may give advice
and take action with respect to any other ACME Fund that differs from the advice that either gives or the
timing or nature of action that either takes with respect to the Partnership. In the course of providing
advisory services, the Investment Adviser may buy or sell a Security for one type of client but not for
another. Further, the Investment Adviser may buy or sell a Security for one type of client while
simultaneously selling or buying the same Security for another type of client. The Investment Adviser or
its Affiliates may be able to obtain more favorable compensation, cost reimbursement or risk sharing
arrangements in connection with some investments if the Partnership does not participate. These factors
could influence the Investment Adviser not to make investments on behalf of the Partnership even though
participation might benefit the Partnership.

Allocation of Investment Opportunities. The Investment Adviser may be required to determine

how to allocate investment opportunities among the Partnership and other ACME Funds. For example, in
allocating an investment opportunity among ACME Funds with differing fee, expense and compensation
structures, the Investment Adviser may have an incentive to allocate investment opportunities to the
ACME Funds from which the Investment Adviser or its related persons may derive, directly or indirectly,
a higher fee, compensation or other benefit. In addition, the Investment Adviser’s personnel and their
affiliates invest in some ACME Funds and therefore participate indirectly in those ACME Funds’
investments. The level of their economic participation in each ACME Fund will vary, which creates
conflicts of interest in determining how much, if any, of certain investment opportunities to offer to any
particular ACME Fund. The Investment Adviser will seek to treat all of the ACME Funds fairly and
equitably in allocating investment opportunities and transactions more generally.

Allocation of Expenses. The Investment Adviser will have conflicts of interest regarding the
appropriate allocation among the ACME Funds of expenses and fees related to evaluating and making
investments which are not consummated, such as out-of-pocket fees associated with due diligence,
attorney fees and the fees of other professionals, particularly if the economic participation of the
Investment Adviser or its personnel and their Affiliates is higher for some ACME Funds than others.

Use of the Partnership’s Investments to Support Other Investments Held by the Investment
Adviser or its Affiliates. The Investment Adviser and its partners, managers, members, officers,
employees and affiliates currently hold Securities in a variety of privately-held companies. The
Investment Adviser may cause the Partnership to invest in Securities issued by those companies, at
valuations that differ from the valuations at which such persons purchased their interests in those
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companies. The Investment Adviser will have an incentive to support such other investments by causing
the Partnership may make such an investment at a time or in a manner that ultimately protects the value
of the investments held by such other persons. Any such investment may adversely affect the Partnership.
Investments for the Investment Adviser’s and its Affiliates’ Accounts. The Investment Adviser,
the General Partner and their respective partners, managers, members, officers, employees and affiliates
also engage in Securities transactions for their own accounts. Except as limited by the Agreement, the
Investment Adviser is not obligated to acquire for the Partnership any Security that any of such persons
may acquire for its or their own accounts.

Time Devoted to the Partnership and Other ACME Funds. The Investment Adviser will have
conflicts over the amount of time devoted for the benefit of the Partnership and the other ACME Funds.
To the extent that the Investment Adviser receives better overall compensation and other benefits with
respect to managing the other ACME Funds or other activities compared to with respect to the
Partnership, it has an incentive to allocate more time to those other activities.

Lack of Separate Representation. Legal counsel for the General Partner and the Investment
Adviser does not and will not serve as counsel for the Partnership, or represent the interests of the Limited
Partners or the Partnership in connection with the organization or activities of the Partnership or any
offering of Interests, and such counsel disclaims any fiduciary or attorney-client relationship with the
Limited Partners, the Partnership (even if such counsel represents 1 or more Partners in matters unrelated
to the Partnership). None of the Partnership, the potential investors in the Partnership as a group or the
Limited Partners as a group has been represented by separate counsel. The attorneys and certain other
experts who perform services on behalf of the General Partner or the Investment Adviser for the
Partnership do not represent or perform services for the Limited Partners. Prospective Limited Partners
should obtain the advice of their own counsel regarding legal matters. See “Legal Matters.”

SUITABILITY STANDARDS

Interests are suitable investments only for investors for which an investment in the Partnership
does not constitute a complete investment program and who fully understand, are willing to assume, and
who have the financial resources necessary to withstand, the risks involved in the Partnership’s
investment program and to bear the potential loss of their entire investment in Interests.

Prospective investors should determine whether an investment in Interests is suitable for them,
should examine this Private Placement Memorandum, which includes the Appendices and Exhibits
hereto, and should request such additional information about the offering, the Partnership, the General
Partner and the Investment Adviser and their activities as they consider necessary to make an informed
investment decision.

In addition to the net worth and income standards described below, each investor must have
funds adequate to meet personal needs and contingencies, must not need prompt liquidity from the
investment, and must purchase Interests for investment only and not with a view to their sale or
distribution.

Each investor, either alone or together with a purchaser representative, also must have sufficient
knowledge and experience in financial and business matters generally and in Securities investment in
particular to be capable of evaluating the merits and risks of investing in the Partnership. Because of the
inability to withdraw funds from the Partnership and the risks of investment (some of which are
discussed under “Risk Factors”), a purchase of Interests would not be suitable for an investor who does
not meet the suitability standards discussed in this Private Placement Memorandum.

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 Investors who are subject to income tax should be aware that investment in the Partnership is
likely to create taxable income or tax liabilities in excess of cash distributions available to pay such
liabilities. Accordingly, Interests may not be a suitable investment for prospective investors who will
be subject to and do not desire such consequences.
Plans and Tax-Exempt Entities. Interests may be a suitable investment for Plans, subject to their
circumstances and investment objectives, and subject to the provisions of their plan documents. In
addition, depending on their circumstances and investment objectives and assuming the provisions of
their governing instruments and the nature of their tax exemptions permit such an investment, TaxExempt
Entities may find Interests to be a suitable investment. Fiduciaries of Plans, in consultation with their tax
and legal advisers, should consider carefully (a) whether an investment in Interests is consistent with their
fiduciary responsibilities, particularly the responsibilities outlined in Part 4 of Title I of ERISA, (b) the
effect of the possible treatment of assets of the Partnership as “plan assets” under ERISA section 3(42) and
the regulations referred to therein and (c) other risks discussed briefly under “ERISA and Other Plan
Considerations.” Plans are urged to consult with their legal, financial and tax advisers before investing in
Interests.

Accredited Investor Requirement. The Partnership will sell Interests only to accredited investors.
Generally, to be treated as an accredited investor, a purchaser must meet 1 of the following tests:

(a) Individuals. If the purchaser is an individual, the purchaser must

represent that he or she either (1) has an individual net worth, or joint net worth with his
or her spouse, at the time of his or her purchase that exceeds $1,000,000, excluding from
the net worth calculation both the fair market value of his or her primary residence and
the amount of any debt secured by such residence up to its fair market value, but
including in his or her liabilities the amount of any increase in the last 60 days in the debt
secured by such residence (accordingly, both the portion of any debt secured by such
primary residence that exceeds its fair market value and the amount of any increase in
such debt in the last 60 days must be deducted, without double counting, in calculating
his or her net worth), or (2) had an individual income in excess of $200,000 in each of the
two most recent years or had joint income with his or her spouse in excess of $300,000 in
each of those years and has a reasonable expectation of reaching the same income level in
the current year.

(b) Trusts. A revocable trust (including an IRA) generally will be treated as

an accredited investor if each grantor is an accredited investor and the grantors may
amend or revoke the trust at any time. An irrevocable trust generally will be treated as
an accredited investor if (1) it has total assets in excess of $5,000,000 and was not formed
for the specific purpose of acquiring Interests, and its investment in Interests is directed
by a person experienced in financial and business matters who is capable of evaluating
the merits and risks of such investment or (2) the trustee of the trust is a bank, and the
bank makes the decision to invest in Interests on behalf of the trust.

(c) Certain Plans. An employee benefit plan within the meaning of Title I of
ERISA will be treated as an accredited investor if (1) it is a Plan, all of whose participants
are accredited investors, or (2) it is a Plan and the investment decision is made by a plan
fiduciary that is either a bank, insurance company or registered investment adviser, or (3)
it has total assets in excess of $5,000,000 or (4) it is a self-directed Plan, with investment
decisions made solely by persons who are accredited investors.

(d) Other Entities. Any organization described in Code section 501(c), any
corporation, partnership or limited liability company and most other business entities not

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 formed for the specific purpose of acquiring Interests with total assets in excess of
$5,000,000 will be considered an accredited investor.

(e) Other Purchasers. Other accreditation standards are described in the

Questionnaire included as part of the Subscription Agreement.
The General Partner may reject the Subscription Agreement of any prospective investor for whom
it appears that Interests may not be a suitable investment or for any other reason regardless of whether a
prospective investor meets the suitability standards. A prospective investor should not, however, rely on
the General Partner to determine the suitability of an investment in Interests for such prospective investor.

Qualified Client. For other regulatory reasons, each such accredited investor must have a net
worth in excess of the minimum net worth required to be considered a “qualified client” under the
Advisers Act and the rules thereunder at the time of investment (currently $2,100,000). If an investor is (a)
a private investment company (that is, a company that would be defined as an investment company under
the ICA, but for the exception from that definition provided by ICA section 3(c)(1)), (b) an investment
company registered under the ICA or (c) a business development company as defined in Advisers Act
section 202(a)(22), then each equity owner of that investor must have a net worth in excess of the
minimum net worth described above.

Stricter State Standards. Residents of certain states may be subject to stricter suitability
standards than those stated above. The General Partner may reject the Subscription Agreements of
prospective investors not meeting such standards.

Reliance on Subscriber Information. The Subscription Agreement (which includes a

Questionnaire) that each prospective investor must complete contain certain representations and requests
for information regarding whether a prospective investor satisfies the Partnership’s investor suitability
standards. The Interests have not been registered under the 1933 Act and are offered in reliance on section
4(a)(2) thereof and Regulation D thereunder, and in reliance on applicable exemptions from state law
registration or qualification provisions. Accordingly, before selling Interests to any offeree, the General
Partner intends to make all inquiries reasonably necessary to satisfy itself that each offeree meets the
prerequisites of such exemptions. Prospective investors also must provide any additional evidence the
General Partner deems necessary to substantiate information or representations contained in their
Subscription Agreements. The standards set forth above are only minimum standards. The General
Partner may impose additional standards or waive minimum suitability standards not imposed by law.

The General Partner imposes comparable suitability standards in connection with any transfer of
Interests.

Use of Purchaser Representative. Under Regulation D, a prospective investor may be required,

under certain circumstances, to use a “purchaser representative” to assist in evaluating the merits of an
investment in the Partnership. Certain states impose analogous requirements under their securities laws
even as to some investors who are not subject to the Regulation D purchaser representative requirement.

Each prospective investor who proposes to engage a purchaser representative must, prior to or
concurrently with that investor’s subscription, complete and return to the General Partner a Purchaser
Representative Questionnaire, a form of which is available on request from the General Partner. The
General Partner will evaluate the qualifications of each proposed purchaser representative and will notify
the prospective investor whether that person is acceptable as a purchaser representative. Each purchaser
representative must disclose to each prospective Limited Partner whom he or she represents any past,
present or proposed relationship with the Partnership, the General Partner, the Investment Adviser or
any of their Affiliates.

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 Each investor who requires a purchaser representative must select and compensate that
investor’s own purchaser representative. Purchaser representatives may not be engaged or employed by,
or be paid fees or commissions by, the Partnership, the General Partner, the Investment Adviser or any of
their Affiliates.
Transfer Restrictions. Only a limited number of persons will invest in the Partnership.
Transferring Interests is severely restricted. No market for Interests exists or is expected to develop.
Interests cannot be sold unless either they subsequently are registered under the 1933 Act and registered
or qualified under any applicable state securities laws or exemptions from such registration and
qualification are available. The General Partner will not recognize or permit any disposition of Interests
that does not comply in all respects with the Subscription Agreement, the Agreement, the 1933 Act, the
ICA and any other applicable securities law. Accordingly, a purchaser of Interests must bear the
economic risk of the investment indefinitely.

ERISA AND OTHER PLAN CONSIDERATIONS

Overview. ERISA imposes certain requirements on ERISA Plans and on those persons who are
fiduciaries with respect to ERISA Plans. Generally, all employee benefit plans, other than governmental
plans, foreign plans and most IRAs, Keogh plans and plans of churches and similar organizations, are
subject to Title I of ERISA.

Investments by ERISA Plans are subject to ERISA’s general fiduciary requirements, including the
requirements of investment prudence and diversification and that an ERISA Plan’s investments be made
in accordance with the ERISA Plan’s governing documents. The prudence of a particular investment
should be determined by the responsible fiduciary of an ERISA Plan by taking into account the ERISA
Plan’s particular circumstances and all of the facts and circumstances of the investment including, but not
limited to, the matters discussed under “Risk Factors” above. For example, before making an investment
in the Partnership, ERISA Plan fiduciaries should consider, among other things, (a) whether an investment
in the Partnership may be too speculative or illiquid an investment for the ERISA Plan, (b) the assignment
and withdrawal restrictions applicable to the investment, (c) the potential tax consequences of unrelated
business taxable income that may be generated by the investment (see “Federal Income Tax Aspects –
Unrelated Business Taxable Income”), (d) the current return of the ERISA Plan’s total portfolio relative to
its anticipated cash needs and funding objectives, (e) the diversification of the ERISA Plan’s assets and (f)
the Management Fees and Carried Interest Distributions to which the General Partner and the Investment
Adviser are entitled.

ERISA Plans with fewer than 100 participants generally are exempt from the requirement that the
financial statements of an ERISA Plan be examined annually by an independent qualified public
accountant. However, the exemption applies only if at least 95% of the ERISA Plan’s assets constitute in
“qualifying plan assets,” as defined in DOL Regulations section 2520.104-46, or unless the increased
bonding requirements of that section are satisfied. Fiduciaries of such ERISA Plans should be aware that
an interest in the Partnership may not be a “qualifying plan asset” and thus, depending on the percentage
of the ERISA Plan’s assets that are “qualifying plan assets,” an investment in the Partnership may result in
a loss of the exemption or require increased bonding in order for the exemption to apply.

Prohibited Transactions and Exemptions. ERISA section 406 prohibits, and Code section 4975
imposes excise taxes in the event of, certain transactions involving the assets of Plans subject to these
sections and certain persons (referred to as “parties in interest” or “disqualified persons”; collectively,
“Parties in Interest”) having certain relationships to such Plans, unless a statutory, regulatory or
administrative exemption is applicable to the transaction. A Party in Interest who engages in a prohibited
transaction may be subject to excise taxes and other penalties and liabilities under ERISA and the Code.

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 Fiduciaries of ERISA Plans or Plans subject to Code section 4975 should be aware that fiduciary
responsibility and prohibited transaction issues may arise with respect to the Partnership’s operations
and transactions if at any time the underlying assets of the Partnership constitute “plan assets” of Plans
that acquire Interests under ERISA section 3(42) and the regulations referred to therein. ERISA section
3(42) and those regulations provide that when a Plan invests in an equity interest in an entity, the Plan’s
assets will include both the equity interest and the undivided interest in each of the underlying assets of
the entity, unless an exception is applicable.

The “less than 25%” exception applies on any date if, immediately after the most recent
acquisition or disposition of any equity interest in the entity, less than 25% of the value of each class of
equity interest in the entity is held by ERISA Plans, Plans subject to Code section 4975 and “funds of
funds,” to the extent such funds’ assets are treated as plan assets by virtue of ERISA section 3(42) and
applicable regulations. Interests held by the General Partner, the Investment Adviser and their affiliates
are not included in the calculation unless those Interests are held by Plans maintained by the General
Partner, the Investment Adviser or any of their affiliates. The “less than 25%” exception currently applies
to the Partnership, but due to withdrawals or additional investments, this exception may not apply at all
future times. None of the other exceptions is likely to apply to investments in the Partnership. At such
times as the assets of the Partnership constitute “plan assets,” the General Partner and the Investment
Adviser will be considered fiduciaries of ERISA Plans and Plans that are subject to Code section 4975
investing in the Partnership and Parties in Interest with respect to those Plans.

Another exception provides generally that if a Plan acquires an equity interest in an entity that is
an “operating company” including a “venture capital operating company,” the entity will not be deemed
to hold plan assets. If the “less than 25%” exception is not satisfied, then the Investment Adviser intends
to attempt to operate the Partnership as an “operating company” (although no assurance can be offered in
this regard). The Partnership will be considered a venture capital operating company if on its “initial
valuation date” (as defined in DOL Regulations) and during a specified testing period annually thereafter,
at least 50% of its assets, valued at cost (exclusive of short-term investments pending long term
commitment), are investments in operating companies (other than venture capital operating companies) as
to which the Partnership has contractual rights directly with the operating company to substantially
participate in, or substantially influence, the conduct of the management of the company (“management
rights”) and the Partnership actually exercises its management rights in at least one of such companies in
the ordinary course of its business.

While it is expected that the Partnership will invest in operating companies (other than venture
capital operating companies) and for the Partnership generally to receive certain rights with respect to
such companies (such as the right to appoint directors to the board of the operating companies. the right
to consult on the day-to-day operation of operating companies and to discuss financing and acquisition
opportunities with management of the operating companies and the right to receive financial information
from, and examine the books of, operating companies), it is not certain that, even if the Partnership were
to receive and exercise all the rights the Partnership expects to obtain, such rights would be sufficient to
satisfy the management rights requirement within the meaning of the DOL Regulations, because such
determination will be made on the basis of all the particular facts involved in each case. While it is
believed that the Partnership should be considered a venture capital operating company and intends to
structure its investments in compliance with the requirements necessary to obtain such status, the
Partnership cannot give any assurances as to whether it will be so considered.

Generally, the fiduciary provisions of Title I of ERISA require fiduciaries of an ERISA Plan to act
for the exclusive benefit of the ERISA Plan’s participants and their beneficiaries; to employ the care, skill,
prudence and diligence that a prudent person acting in a like capacity and familiar with such matters
would use in the conduct of an enterprise of a like character and with like aims; to diversify investments
so as to minimize the risks of large losses; to comply with documents governing the ERISA Plan; to
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maintain the indicia of ownership of plan assets within the jurisdiction of the U.S. federal courts, subject to
certain exceptions; and not to involve the ERISA Plan or its assets in a transaction that the fiduciary knows
or should know is a prohibited transaction. A fiduciary of an ERISA Plan who allows another fiduciary of
that ERISA Plan to commit a breach of any of these duties, or who participates in, conceals, or fails to take
reasonable steps to correct the breach, will be co-liable for the breach. In addition, fiduciaries of ERISA
Plans and Plans that are subject to Code section 4975 should determine for themselves whether the
payment of incentive compensation based on the increase in the value of the Plan’s interest in the
Partnership (such as the Carried Interest Distribution) would constitute or result in a non-exempt
prohibited transaction under ERISA or the Code.

To the extent necessary, when the Partnership’s assets are “plan assets” of any ERISA Plan or Plan
subject to Code section 4975, the General Partner and the Investment Adviser each intends to use its
reasonable best efforts to manage the Partnership’s operations and transactions in a manner that complies
with the ERISA fiduciary obligations applicable to the General Partner and the Investment Adviser and
qualifies for prohibited transaction exemptive relief if the operation or transaction otherwise would be a
prohibited transaction. For example, at such times, (a) the value of the Partnership’s investments for such
purposes as the General Partner may decide will be determined according to objective, pre-established
guidelines or by persons independent of the General Partner, the Investment Adviser and their Affiliates,
(b) if the Partnership’s assets are “plan assets” of any ERISA Plan, neither the General Partner nor the
Investment Adviser may maintain the indicia of ownership of any Partnership asset outside the
jurisdiction of the U.S. District Courts, unless an exception applies, and (c) neither the General Partner nor
the Investment Adviser may cause the Partnership to engage in a cross trade, agency cross transaction or
principal transaction or other operation or transaction that may be a “prohibited transaction,” unless the
transaction qualifies for prohibited transaction exemptive relief available under any of various statutory
exemptions or exemptions issued by the DOL. The exemptions on which the General Partner and the
Investment Adviser may rely include the following prohibited transaction exemptions (“PTEs”):

• PTE 75-1, to exempt certain Securities transactions executed on a principal basis, during
an underwriting, or with a market-maker and extensions of credit involved in Securities purchase
transactions;

• PTE 81-6 and PTE 82-63, to exempt certain Securities lending transactions and to be
compensated therefor;

• PTE 86-128, to exempt certain Securities transactions executed on an agency basis; and

• Any of the PTEs 2000-25 through 2000-29, or any similar PTE, to exempt Securities
purchase transactions when a broker covered by the PTE or an affiliate is a member of the underwriting or
selling syndicate.

Reporting Compensation Paid to the General Partner and the Investment Adviser. The DOL
regulations generally require that an ERISA Plan’s annual returns disclose the direct and indirect
compensation paid to the ERISA Plan’s service providers. Under this general requirement, an ERISA Plan
that invests in the Partnership would need to report its share of direct and indirect compensation paid to
the General Partner and the Investment Adviser.

Under an alternative reporting option allowed by the DOL regulations, however, an ERISA Plan is
not required to report the amount of compensation paid to a service provider if the annual return
identifies the service provider and the ERISA Plan has received written disclosures of (1) the existence of
the compensation, (2) the services for which the compensation is paid, (3) the amount (or estimated
amount) of the compensation, or the formula used to calculate the compensation amount and (4) the
identity of the parties paying and receiving the compensation. The General Partner intends that the
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disclosures in “Conflicts of Interest,” “Summary of Principal Terms -- Distributions, -- Management Fee
and -- Expenses” satisfy these requirements, so that an ERISA Plan investing in the Partnership may use
this alternative reporting option.

Investment Adviser Appointment and Related Agreements. For a Plan to invest in the
Partnership, the Plan’s fiduciary (or a person signing the Subscription Agreement at the direction of the
Plan’s fiduciary) must represent and warrant in the Plan’s Subscription Agreement that, among other
things, the Plan fiduciary: (a) if the Plan is an ERISA Plan, either is (1) a named fiduciary (within the
meaning of ERISA section 402(a)(2)) of the Plan or (2) an investment manager (as defined in ERISA
section 3(38)) of the ERISA Plan; and (b) has the power and authority under applicable law and the Plan’s
governing documents to appoint the Investment Adviser as an investment manager with respect to the
Plan’s interest in the Partnership. In addition, the fiduciary of an ERISA Plan or Plan that is subject to
Code section 4975 must represent in the Plan’s Subscription Agreement that effective at all times that the
assets of the Partnership are “plan assets” of an ERISA Plan or Plan subject to Code section 4975 (which
may be well after the date of the subscription), the Plan fiduciary satisfies any applicable sophistication
requirement, the failure of which would cause the General Partner’s receipt of the Carried Interest
Distribution as provided by the Agreement to be a prohibited transaction under ERISA section 406 or
Code section 4975(c)(1). If the Plan fiduciary has any reason to believe that any of the above
representations and warranties has ceased to be true, it must notify the General Partner immediately.

To invest in the Partnership, an ERISA Plan fiduciary also must appoint the Investment Adviser as
an investment manager (as defined in ERISA section 3(38)) of the Plan (and, if the Plan is an entity, the
underlying assets of which are “plan assets” (as defined in ERISA section 3(42) and the regulations
referred to therein), of each such ERISA Plan) at any time the Partnership’s assets are “plan assets” (as
defined in ERISA section 3(42) and the regulations referred to therein) of the ERISA Plan, with authority to
hold, invest and manage such assets, together with all income, proceeds and profits derived therefrom.

Review by Counsel and Consent. Each Plan fiduciary that is responsible for making the
investment decisions whether to subscribe for Interests should consult with its counsel and financial
advisors (a) as to the propriety of such an investment in light of the circumstances of the particular Plan
and current tax law, and (b) to determine whether, under the applicable fiduciary standards and under the
Plan’s governing documents, an investment in the Partnership is appropriate for the Plan, taking into
account the overall investment policy of the Plan and the composition of the Plan’s investment portfolio.
The responsible fiduciary or fiduciaries of any Plan proposing to invest in the Partnership should consult
with its counsel to assess whether such investment will (x) result in a non-exempt prohibited transaction,
and (y) satisfy other applicable provisions of ERISA and the Code.

Except as otherwise set forth, the foregoing statements regarding certain consequences under
ERISA and the Code of an investment in the Partnership are based on the provisions of ERISA and the
Code as currently in effect, and the existing administrative and judicial interpretations thereunder.
Administrative, judicial or legislative changes may occur that would make the foregoing statements
incorrect or incomplete. Acceptance of subscriptions for Interests on behalf of Plans is in no respect a
representation by the Partnership, the General Partner, the Investment Adviser or any other party that
such an investment meets all relevant legal requirements applicable to investments by any particular Plan.
By investing in the Partnership, the Plan fiduciary will be deemed to have given its informed consent to
the risks involved in doing so and to the business terms of the Partnership.

SUBSCRIPTION AGREEMENT TERMS AND PROCEDURES

Processing of Subscriptions. Subscribers generally are expected to provide completed

Subscription Agreements (including all necessary supporting documentation) to Assure Fund

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Management, LLC (the “Subscription Agent”) by email or mail (email is preferred) prior to the desired
subscription date.

Capital Contributions. The General Partner will determine the Capital Contribution with respect
to each Partner’s Capital Commitment that will be due and payable on a Partner’s admission to the
Partnership. Capital Contributions with respect to the Partners’ remaining Capital Commitments will be
due, on not less than 10 days prior notice, at such times and in such amounts as the General Partner
specifies. All Capital Contributions are deposited directly in the Partnership’s account at its custodian.
Capital Contributions will be used to invest in Securities, to pay the Partnership’s expenses, including,
without limitation, Management Fees and any indemnification obligations, or to establish adequate
Reserves (all in accordance with the Agreement).
The General Partner may, in its discretion, satisfy all or any part of a Limited Partner’s obligation
to make a Capital Contribution from assets that otherwise would be distributed by the Partnership to that
Limited Partner. The General Partner will notify the Limited Partner if it does so, including the amount
of assets so applied and the Limited Partner’s remaining unfunded Capital Commitment.

Anti-Money Laundering. To ensure compliance with statutory and other generally accepted
principles relating to anti-money laundering regulations and policies, including the Partnership’s, the
General Partner’s and the Investment Adviser’s obligations under the USA PATRIOT Act, the Partnership
requires verification of identity and source of funds from all prospective investors in the Partnership.
Pending the provision of evidence satisfactory to the Partnership, admission of an investor as a Limited
Partner may be delayed in the sole discretion of the General Partner. If the General Partner has not
received satisfactory evidence of an investor’s identity within a reasonable period of time following a
request for such evidence, the General Partner may refuse to admit the investor as a Limited Partner, in
which event any subscription proceeds received by the Partnership from such investor will be returned to
the account of such investor. If the General Partner suspects that a payment to the Partnership (by way of
subscription or otherwise) contains the proceeds from criminal conduct, it may be required under
applicable anti-money laundering laws and regulations to report its suspicions to one or more
enforcement or regulatory agencies, including various government agencies. In addition, in accordance
with the USA PATRIOT Act and certain interpretations thereunder, certain financial institutions, such as
SEC-registered securities brokers, may seek to rely on customer identification procedures undertaken by
the General Partner or the Investment Adviser to discharge certain of their own anti-money laundering
obligations. In these situations, the General Partner or the Investment Adviser may elect to undertake
such procedures or to permit such reliance, which may involve sharing of customer identification
information between the General Partner, the Investment Adviser and the relying financial institution.

Sharing of Confidential Information. In the Subscription Agreement, each subscriber agrees that
the Partnership, the General Partner, the Investment Adviser, the Administrator and the Subscription
Agent may maintain confidential information about a subscriber or Partner (including the information
provided in its Subscription Agreement, the value of a Partner’s Interests and other details of a Partner’s
investment in the Partnership and historical and pending transactions with respect to Interests) and, if
applicable, its directors, officers and beneficial owners, in the U.S. or any other jurisdiction, and may
release and disclose any such confidential information to each other or to any other service provider in
any jurisdiction. Those persons also may disclose information regarding subscribers and Partners to any
regulatory body (a) in connection with anti-money laundering and similar matters in the U.S., European
Economic Area and other jurisdictions, (b) if any of them believes it is required to do so by applicable law,
rule, regulation, subpoena or court order or (c) if any of them believes it is in the best interests of the
Partnership in light of applicable laws, rules and regulations. Any such disclosure will not be treated as a
breach of any restriction on the disclosure of information imposed on such person by law or otherwise.

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 FEDERAL INCOME TAX ASPECTS

General. The Partnership is not intended to be a so-called “tax-shelter.” No substantial tax

benefits are expected to be derived from an investment in the Partnership. Moreover, because the
Partnership may realize Profits during a tax year without a distribution to the Partners in that year,
ownership of Interests may create taxable income in excess of distributions. See also “Risk Factors -- Tax
Considerations.”

Summarized below are the material federal income tax principles applicable to the Partnership,
based on the Code, the Regulations and published rulings and court decisions currently in effect. Future
legislative or administrative changes or court decisions may significantly modify the law and render
inapplicable or incorrect the statements and opinions expressed herein. Any such changes may or may
not be retroactive with respect to transactions completed prior to the effective date of such changes. As a
result of recent changes in the Code and the Regulations, there is significant uncertainty regarding
various federal income tax aspects of limited partnerships. The applicable Regulations and
interpretations dealing with this area of taxation are under continuing review by the IRS, and changes in
such Regulations or interpretations could adversely affect the Partnership and the Limited Partners. This
summary does not discuss all of the tax consequences that may be relevant to a particular investor or to
certain investors subject to special treatment, such as Tax-Exempt Entities, non-U.S. investors, financial
institutions, insurance companies, dealers and other investors that do not own Interests as capital assets.

Tax effects on Limited Partners of federal income tax laws may not be the same as those of state
or local income tax laws. Prospective investors are therefore urged to consult their personal tax advisers
regarding the impact of state and local taxes on an investment in the Partnership.

Federal Income Tax Treatment as a Partnership. Regulations provide that a domestic business
entity with 2 or more members that is not a corporation or one of certain other specified entities under
state law may elect for federal income tax purposes to be taxed as either a partnership or as an association
taxable as a corporation. Under these Regulations, a limited partnership with 2 or more members
established under state law will be classified as a partnership unless it files with the IRS an election to be
taxed as an association. The Partnership does not intend to elect to be taxed as an association and thus
should be treated for federal income tax purposes as a partnership.

Code section 7704 treats publicly traded limited partnerships that engage in active business
activities as corporations for federal income tax purposes. Publicly traded partnerships include those
whose interests (a) are traded on an established securities market (including the over-the-counter market),
or (b) are readily tradable on a secondary market or the substantial equivalent thereof. Interests will not
be traded on an established securities market. The Agreement contains provisions restricting transfers
and withdrawals of Interests that should cause Interests to be treated as not being readily tradable on a
secondary market or the substantial equivalent thereof.

If, as expected, the Partnership is treated for federal income tax purposes as a partnership and not
as an association taxable as a corporation, it will file annual income tax information returns and will not be
subject as an entity to the payment of federal income tax. Instead, each Limited Partner receives an IRS
Form 1065, Schedule K-1, if applicable, or comparable state form detailing such Limited Partner’s share of
Partnership income, gain, loss, deduction or credit each year. Each Limited Partner is required to report,
on such Limited Partner’s personal income tax return, such Limited Partner’s share of Partnership taxable
income and losses without regard for any cash actually distributed to such Limited Partner, and in the
absence of substantial distributions (as is contemplated), such Limited Partner will have to use such
Limited Partner’s funds from other sources to meet the tax liability on any Profits allocated to such
Limited Partner. Similarly, each Limited Partner may report such Limited Partner’s share of Losses, if
any, for tax purposes, even if such Limited Partner receives a cash distribution.
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 If, for any reason, the Partnership were to be treated for tax purposes as an association taxable as a
corporation, income, gain, loss, deductions and credits of the Partnership would be reflected only on the
Partnership’s tax returns, and income and loss would not pass through to the Partners. The Partners
would be treated as corporate shareholders for tax purposes. The Partnership would be required to pay
income tax at corporate tax rates on any net income, thereby reducing the amount of cash, if any, available
for reinvestment or distribution to the Partners. All or a portion of the distributions made to the Partners
would be taxable to them as dividends to the extent of Partnership earnings and profits. If there were no
earnings and profits, any distribution to a Partner would be considered a return of capital to the extent of
such Partner’s basis and as capital gain to the extent that such distribution was to exceed such Partner’s
basis.

Partners’ Bases in Interests. Generally, the initial tax basis of any partner’s interest in a
partnership equals the amount of money paid plus the basis of any property contributed to the
partnership less liabilities assumed by the partnership plus such partner’s share of the partnership’s
liabilities. If, however, any partner is personally liable for any partnership liability, only those partners
that are personally liable may include their proportionate share of the liability in basis. Basis is reduced
(but not below zero) by the partner’s share of partnership distributions and losses. Basis is increased by a
partner’s share of partnership income and additional contributions to capital. A partner may deduct such
partner’s share of partnership losses only to the extent that such losses do not exceed such partner’s
adjusted basis. Losses in excess of basis may be carried over until basis is increased above zero.

Charitable Remainder Trusts. An investment in the Partnership may be inappropriate for a

charitable remainder trust. Pursuant to Code section 664(c), a charitable remainder trust that has any
unrelated business taxable income in a taxable year is subject to an excise tax equal to the amount of
unrelated business taxable income for that year. See “Unrelated Business Taxable Income” below. A
charitable remainder trust should consult with its own tax advisors before determining to invest in the
Partnership.

Unrelated Business Taxable Income. Tax-Exempt Entities may acquire Interests. A Tax-Exempt
Entity that is a Limited Partner would be required to report as taxable income its pro rata share of any
portion of the Partnership’s income that is “unrelated business taxable income” to the Tax-Exempt Entity.
Unrelated business taxable income is defined as the gross income from any trade or business unrelated to
the tax-exempt business of the entity. If and to the extent that the unrelated business taxable income, from
all sources, of a Partner that is a Tax-Exempt Entity, less its allocable share of deductions directly
connected with carrying on any such trade or business, exceeds $1,000 in any year, such Partner would
incur tax liability with respect to the excess as unrelated business taxable income at tax rates that would be
applicable if such organization were not otherwise exempt from taxation. Except as discussed below in
connection with “debt-financed property,” unrelated business taxable income does not include interest
and dividend income or gains on the sale, exchange or other disposition of assets held for investment.

Prospective investors that are Tax-Exempt Entities are cautioned against financing purchases of
Interests, because the acquisition financing of Interests may result in the realization of unrelated business
taxable income.

In general, the receipt of unrelated trade or business taxable income by a Tax-Exempt Entity has
no effect on that entity’s tax-exempt status or on the exemption of its other income. In certain
circumstances not applicable to Plans, the continued receipt of unrelated trade or business taxable income
may cause certain Tax-Exempt Entities to lose their tax exemptions or be subject to an excise tax equal to
the amount of such unrelated business taxable income.

Income from “debt-financed property” (such as Securities purchased on margin) constitutes

unrelated business taxable income to Tax-Exempt Entities in the percentage that such property is subject
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to “acquisition indebtedness” (the percentage that acquisition indebtedness respecting such property
bears to the Partnership’s basis for such property). Generally, “acquisition indebtedness” is indebtedness
incurred directly or indirectly in connection with the acquisition or improvement of property.
Indebtedness incurred after the acquisition or improvement of any debt-financed property also constitutes
“acquisition indebtedness” if such indebtedness would not have been incurred but for such acquisition or
improvement and the incurrence of such indebtedness was reasonably foreseeable at the time of such
acquisition or improvement. The Investment Adviser expects that the Partnership may purchase assets
through debt-financed means or under circumstances that may be treated as involving acquisition
indebtedness. In such event, the receipt of income or gain from such assets would create unrelated
business taxable income equal to a portion of such income or gain, depending on the amount of
indebtedness with respect to the asset. Present interpretations of the rules applicable to the calculation of
unrelated business taxable income derived from debt financed property may not contemplate the types of
complex investments used by the Partnership. The Partnership will endeavor to interpret the Regulations
reasonably, but the IRS may recompute a Tax-Exempt Entity’s unrelated business income from the
Partnership.
In addition, if the Partnership invests in Portfolio Companies that are treated for income tax
purposes as partnerships rather than as corporations, any taxable income allocated to the Partnership as a
partner or a member of such a Portfolio Company generally would be unrelated business taxable income
for a Tax-Exempt Partner.

The foregoing discussion is intended to apply principally to Tax-Exempt Entities that are Plans.
The unrelated business taxable income provisions may apply differently to certain other types of
TaxExempt Entities. Tax-Exempt Entities should consult their tax advisers before investing in Interests.
Fiduciaries of ERISA Plans and other Plans also should consider carefully the appropriateness of an
investment in the Partnership under the “prudent man” and other fiduciary requirements dealing with
the appropriateness of investments by any such Plan. See “ERISA and Other Plan Considerations.”

Prohibited Transaction Excise Taxes. If Partnership assets are deemed to be assets of a Plan that
is subject to Title I of ERISA (see “ERISA and Other Plan Considerations”), certain transactions into which
the Partnership may enter with persons who are “disqualified persons” with respect to the Plan may
constitute “prohibited transactions,” resulting in potential excise tax liability for the disqualified persons.
Such potential excise tax liability also may apply to some Plans that are not ERISA Plans subject to Title I
of ERISA, such as plans covering only the owners of the plan sponsors and IRAs. See “Risk Factors –
Consequences of Prohibited Transactions.”

Deduction of Expenses Related to Controlled Substances. If the Partnership is deemed to be

subject to Code section 280E because of the business activities of the Portfolio Companies in which it
invests, the resulting disallowance of tax deductions could significantly increase the U.S. federal income
tax imposed on Partners. Code section 280E provides that, with respect to any taxpayer, no deduction or
credit is allowed for expenses incurred during a taxable year “in carrying on any trade or business if such
trade or business (or the activities which comprise such trade or business) consists of trafficking in
controlled substances (within the meaning of Schedule I and II of the CSA) which is prohibited by federal
law or the law of any State in which such trade or business is conducted.” Because cannabis is a Schedule
I controlled substance under the CSA, Code section 280E by its terms applies to the purchase and sale of
cannabis products in states that have legalized cannabis. Although the Partnership will not be directly
engaged in the purchase, sale, growth, cultivation, harvesting, or processing of cannabis products, it may
invest in Portfolio Companies that engage in such activities. Those Portfolio Companies will likely be
subject to Section 280E, and if such a Portfolio Company is structured as a pass through entity for income
tax purposes, the deductions allocable to the Partnership from such Portfolio Company would likely not
be deductible by the Partners. If the IRS were to take the position that, through the Partnership's
investments in Portfolio Companies engaged in cannabis activities, the Partnership is primarily or
vicariously liable under federal law for “trafficking” a Schedule 1 substance (cannabis) under Code section
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280E or for any other violations of the CSA, the IRS may seek to apply the provisions of Code section 280E
to the Partnership and disallow certain tax deductions, including for due diligence and related activities or
interest expenses. Because the Partnership will not be directly engaged in the purchase and/or sale of a
controlled substance, the General Partner does not believe that the Partnership will be subject to the
disallowance provisions of Code section 280E. There apparently are no tax court cases or guidance from
the IRS in which a taxpayer not directly engaged in the purchase or sale of a controlled substance was
disallowed deductions under Code section 280E. However, there is no assurance that the IRS will not take
such a position either currently or in the future.

Contribution of Securities. Generally, a transfer of appreciated or depreciated property to a

partnership does not cause the transferor to recognize taxable gain or loss. This rule does not apply, and
consequently gain is recognized, if the transfer is to an “investment company” (as that term is defined in
the Regulations) and results in a diversification of the transferor’s interests. Under Code section 351(e),
the determination of whether an entity is an investment company is based on, among other things, cash,
stock and other corporate equity instruments, evidences of indebtedness, options, derivatives, swaps and
non-U.S. currency that the Partnership holds. Regulations provide that a transfer will not result in a
diversification if each transferor contributes a “diversified portfolio of assets.” A diversified portfolio of
assets for this purpose generally means that not more than 25% of the value of the assets is invested in the
stock or securities of 1 issuer and not more than 50% of the value is invested in the stock or securities of 5
or fewer issuers. The General Partner expects that the Partnership should qualify as an investment
company, and thus a transfer of Securities in kind by a Limited Partner to the Partnership might cause that
Limited Partner to recognize taxable gain.

Profit and Loss Allocations. Profits or Losses of the Partnership are allocated among the Partners
in accordance with the Agreement, which provides, among other things, that the General Partner receives
a Carried Interest Distribution as described in “Summary of Principal Terms -- Distributions.” Such
allocation is not equivalent to the Limited Partners’ and the General Partner’s proportionate share of
Capital Contributions. Because unrealized Profits and Losses may be allocated prior to the year in which
they are recognized and Partners may withdraw before the recognition event, the timing of Profits and
Losses for tax purposes may not correlate with the economic realization of Profits and Losses.

Code section 704(b) provides that a partner’s distributive share of income, gain, loss, deduction
or credit is determined by the partnership agreement if the allocation to the partner thereunder has
substantial economic effect. If an allocation to a partner does not have substantial economic effect, such
partner’s distributive share of profits or losses for tax purposes is determined in accordance with such
partner’s interest in the partnership, taking into account all facts and circumstances.

In general, the Regulations provide that an allocation has “economic effect” only if (a) capital
accounts are maintained in accordance with the detailed requirements of the Regulations, (b) liquidation
proceeds are, throughout the term of the partnership, to be distributed in accordance with the partners’
capital accounts, and (c) any partner with a deficit capital account following the distribution of
liquidation proceeds is required to restore such deficit to the partnership for payment to creditors or for
distribution to partners with positive capital accounts, or alternatively, the partnership agreement
provides for a “qualified income offset.” The General Partner believes that the Partnership will meet the
requirements of the economic effect test.

Even if the allocations meet the economic effect test, the Regulations provide that the economic
effect of an allocation must be “substantial.” The economic effect will be treated as substantial “if there is
a reasonable possibility that the allocation will affect substantially the dollar amount to be received by the
partners from the partnership, independent of tax consequences.” The General Partner believes that
allocations under the Agreement affect substantially the dollar amounts received by the Partners, within
the meaning of the Regulations.
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 Distributions. A Partner is taxed on the taxable income of the Partnership, whether or not any
income or capital is distributed to the Partner. A distribution of Partnership income normally should not
result in further taxable income to a Partner. If cash distributions in any year exceed a Partner’s share of
the Partnership’s taxable income for such year, the excess amount initially will be treated as a return of
capital to the extent of the Partner’s adjusted tax basis, and will not constitute taxable income. A Partner’s
adjusted tax basis for the Partner’s Interests will be reduced by the amount of such distributions in excess
of the Partner’s Partnership taxable income. Any amounts distributed in excess of the Partner’s adjusted
tax basis generally are treated as gain from the sale or exchange of a Partnership interest. The taxation of
such gain is subject to the same kinds of considerations as are discussed under “Disposition of Interests”
below. For partnerships that do not qualify as “investment partnerships,” as defined under Code section
731(c), a distribution of marketable securities is treated as a distribution of cash.

If the Partnership distributes an asset in kind to a Partner, generally that Partner will not
recognize gain until the Partner sells the asset. With respect to a distribution of an asset in kind other
than on withdrawal of a Partner’s entire Capital Account, the Partner’s adjusted tax basis in the asset
distributed is the lesser of the Partnership’s adjusted tax basis in the asset distributed and the Partner’s
adjusted tax basis in the Partner’s Interests. If an asset is distributed in kind on withdrawal of a Partner’s
entire Capital Account, the Partner’s adjusted tax basis in the asset distributed is the same as the Partner’s
adjusted tax basis in the Partner’s Interests. The Partner’s gain or loss on sale of such asset is the
difference between the amount realized on the sale and the Partner’s adjusted tax basis in the asset
determined as discussed above. The character of such gain (capital gain or ordinary income), in general,
depends on the character of the asset in the hands of the Partner. For the purpose of determining
whether a capital gain on a Partner’s sale of such an asset may be treated as long-term capital gain, the
Partner normally may add the Partnership’s holding period to the Partner’s holding period.

Disposition of Interests. In general, on a sale or other taxable disposition of Interests, a Limited

Partner realizes gain or loss equal to the difference between the amount realized on the disposition and
the adjusted tax basis for such Limited Partner’s Interests. If the Interests are a capital asset of a Limited
Partner, the gain or loss resulting from the sale or other taxable disposition generally is treated as
longterm capital gain or loss, if the Interests are held for more than 1 year. See “Capital Gains and Losses;
Medicare Taxes” below.

Dissolution and Liquidation of the Partnership. On dissolution of the Partnership, any

remaining assets of the Partnership may be sold, which may result in the realization of taxable gain to the
Partners. Distributions of cash or Partnership assets in complete liquidation of the Partnership generally
will be treated first as a return of capital and thereafter as a capital gain, to the extent of the amount of
cash distributed. Generally, on liquidation or termination of the Partnership, income will be recognized
by a Limited Partner only to the extent that cash distributed exceeds such Limited Partner’s adjusted basis
in such Limited Partner’s Interests at the time of distribution.

Capital Gains and Losses; Medicare Taxes. Generally, the current maximum rate of tax for
individuals on capital gains from assets held more than a year and on qualifying dividends is 20% and on
ordinary income and short term capital gains is 37%. Individuals are allowed to use capital losses to offset
in full capital gains. To the extent that capital losses of an individual exceed capital gains in a taxable year,
such excess capital losses are also allowed against a maximum of $3,000 of ordinary income. Any capital
losses not used in a taxable year may be carried forward. The maximum rate of tax for corporations on
ordinary income and long-term capital gains is 21%. Corporations are allowed to use capital losses to
offset in full capital gains but are not allowed to offset ordinary income. Corporations generally may carry
capital losses back 3 years and forward 5 years.

In addition, individuals, estates and trusts are subject to a Medicare tax of 3.8% on “net
investment income” (or undistributed “net investment income,” in the case of estates and trusts) for each
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such taxable year, with such tax applying to the lesser of such income or the excess of such person’s
adjusted gross income (with certain adjustments) over a specified amount. The amount is $250,000 for
married individuals filing jointly, $125,000 for married individuals filing separately, $200,000 for other
individuals and the dollar amount at which the highest income tax bracket for estates and trusts begins.
Net investment income includes net income from interest, dividends, annuities, royalties and rents and net
gain attributable to the disposition of investment property. It is anticipated that net income and gain
attributable to an investment in the Partnership will be included in an investor’s “net investment income”
subject to this Medicare tax.

Section 754 Election. The General Partner is authorized to determine whether or not to make an
election under Code section 754 to adjust the basis of Partnership assets on a transfer of Interests. The
failure to make such an election generally will result in a transferee of Interests recognizing more taxable
income on the disposition of the Partnership assets than if such election were to be made. Hence, a
transferee of Interests may not pay as much for such Interests as such transferee would if an election
under Code section 754 were to be made.

Passive Activities. Generally under the Code, passive losses are deductible only to the extent of
passive income, including passive income from unrelated activities. A passive activity is generally
defined as any activity involving the conduct of a trade or business in which the taxpayer does not
materially participate. Temporary Regulations provide that an activity of trading personal property,
including stocks, bonds and other Securities, for the account of owners of interests in the activity is not a
passive activity, whether or not such activity is a trade or business. Therefore, the Partnership is not
considered to be engaged in a passive activity and the distributive shares of all income, gain, or loss are
not considered passive income, gain or loss to the Partners; provided, that if the Partnership invests in
Portfolio Companies that are treated for income tax purposes as partnerships rather than as corporations,
income gain and loss allocated to the Partnership from such Portfolio Companies would likely constitute
passive income gain or loss. Accordingly, a Limited Partner’s ability to deduct losses of the Partnership, if
any, generally is not limited by the passive loss rule (other limitations may apply, however, as discussed
below). Additionally, a Limited Partner’s passive losses from other investment activity generally are not
deductible against such Limited Partner’s distributive share of Partnership income or gain.

Limitation on Deducting Interest. Any interest expense incurred to purchase Interests may be
limited as to immediate deductibility. Code section 163(d) limits the amount of “investment interest” that
noncorporate taxpayers may deduct for federal income tax purposes. A taxpayer subject to Code section
163(d) may deduct investment interest only to the extent of the taxpayer’s “net investment income.” Any
deduction for investment interest that is disallowed may be carried over to subsequent years to offset the
net investment income. The interest expense on indebtedness incurred to purchase or carry Interests will
be subject to the investment interest limitation. A Limited Partner’s share of interest expense incurred by
the Partnership in carrying on its activities also might be subject to the investment interest expense
limitation.

Investment in Non-U.S. Securities. Dividends and interest received by the Partnership with
respect to non-U.S. Securities may give rise to withholding and other taxes imposed by non-U.S. countries,
generally at rates from 10% to 40%. Tax conventions between certain countries and the U.S. may reduce or
eliminate such taxes. In addition, non-U.S. countries generally do not impose taxes on capital gains with
respect to investments by nonresident investors. The tax treatment under the laws of non-U.S. countries of
many of the investments that the Partnership holds is unclear. Such countries may assert that the
Partnership owes additional taxes with respect to such transactions. In addition, the Partnership may be
required to treat such uncertain tax positions as liabilities on its financial statements, which could cause a
Partner’s Capital Account to be reduced, thus reducing the amount that such Partner would receive on
withdrawal from the Partnership, even though the Partnership may never actually pay such liability.
Further, a Partner may be entitled, subject to certain limitations, to a credit or deduction on the Partner’s
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federal income tax return for the Partner’s proportionate share of the Partnership’s non-U.S. tax liability.
This paragraph is not a comprehensive discussion of non-U.S. tax consequences of investment in the
Partnership.

Tax Considerations for Non-U.S. Investors. Investors who are neither citizens nor residents of
the U.S. and non-U.S. entities that generally are exempt from U.S. taxation should consult with such
persons’ own tax advisers with respect to the specific tax consequences to such persons of an investment
in Interests under U.S. federal, state and local income tax laws, including, without limitation, the impact of
the withholding rules imposed under Code sections 1471 to 1474 (i.e., “FATCA”), and with respect to the
treatment of income and gain from such investment under the tax laws of any non-U.S. jurisdiction in
which such persons are subject to tax. If the Partnership invests in Portfolio Companies that are
structured as partnerships for U.S. tax purposes and that are engaged in a U.S. trade or business, a nonU.S.
investor could have income effectively connected to a U.S. trade or business allocated to it.

Returns and Tax Information. The Partnership annually furnishes to the Limited Partners
sufficient information from its information return for the Limited Partners to prepare their own federal
and state income tax returns. The Partnership’s information returns are prepared by independent certified
public accountants selected by the General Partner. See “Summary of Principal Terms -- Reports and
Meetings.”
Tax Shelter Reporting. Under Regulations designed to help the IRS discover tax shelter type
transactions, the Partnership, the General Partner or the Investment Adviser may be required to report
certain transactions to the IRS. Such transactions include certain transactions listed by the IRS as potential
tax shelter transactions and transactions substantially similar to such transactions, and transactions in
which the Partnership generates significant tax losses. If the Partnership, the General Partner or the
Investment Adviser is required to report such a transaction, a Partner also may have to report such
transaction by filing a form with its tax return, which could raise the risk that such Partner would be
audited by the IRS and that the IRS would challenge the tax treatment of such transaction, and of other
items, on such Partner’s return. Failure to report such transactions could result in significant penalties for
the Partnership and for Partners. Although the Partnership is not intended to be a tax shelter, it cannot
assure investors that it will not engage in any such reportable transactions. Potential investors must be
aware that an investment in the Partnership could cause that investor to have to file such a form with its
tax return. In addition, the Regulations provide that if the Partnership engages in any such potential tax
shelter transactions, it or the General Partner has to maintain certain documentation for the IRS, possibly
including lists of the Partners. Moreover, a Tax-Exempt Entity could be subject to excise taxes under Code
section 4965 if the Partnership engages in reportable transactions.

Audit of Tax Returns. The General Partner understands that the IRS is paying increased
attention to the proper application of the tax laws to partnerships. The Partnership may engage in some
investments with uncertain federal income tax consequences. The IRS may challenge the Partnership’s
tax position on its information returns regarding such investments. If the Partnership is required to
disclose an uncertain tax position on its financial statements, such disclosure may increase the likelihood
of an IRS audit.

An audit adjustment to the Partnership’s tax return could result in a tax liability (including
interest and penalties) imposed on the Partnership for the year during which the adjustment is
determined. The tax liability generally is determined by using the highest tax rates under the Code
applicable to U.S. taxpayers, although the Partnership may be able to use a lower rate to compute the tax
liability by taking into account that the Partnership has certain tax exempt Partners. Thus, current year
Partners may bear the tax liability (including interest and penalties) arising from audit adjustments at
significantly higher rates and in amounts that are unrelated to their prior year economic interests in the
Partnership items that were adjusted. The General Partner may require a Partner, or former Partner, to

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contribute capital to the Partnership to pay its share of any tax liability related to a prior year if such
Partner’s or former Partner’s Capital Account is insufficient to cover that share.

Alternatively, the Partnership may be able to elect with the IRS to pass through such adjustments
for any year to the Partners who participated in the Partnership for that prior year, in which case each
such Partner, and not the Partnership, would be responsible for the payment of any tax deficiency,
determined after including its share of the adjustments on its tax return for that year. If such an election
is made by the Partnership, interest on any deficiency will be at a rate that is two percentage points
higher than the otherwise applicable interest rate on tax underpayments.

The General Partner or its delegate will act as the partnership representative of the Partnership
and will have the authority to bind the Partnership under these modified audit procedures.

Possible Legislative Tax Changes. The foregoing summary of federal income tax law reflects
some provisions of significant recent legislation. Their meaning is uncertain, however, because many of
the provisions are ambiguous and Regulations and other official interpretations have not been issued with
respect to a number of such provisions. In addition, other provisions once clarified may affect the tax
treatment of Partners. Additional legislation may be proposed in Congress that might have a substantial
and adverse effect on Partners. Investors should consult with their own professional advisers as to all
current and possible future proposals with respect to federal, state and local tax legislation and the effect,
if any, that such legislation may have on an investment in Interests.
The federal income tax aspects of the Partnership summarized above are general in nature and are
not intended to be a complete explanation of the federal income tax results of investing in the Partnership.
Each prospective Limited Partner should consult with such prospective Limited Partner’s own tax adviser
for detailed information..

ADMINISTRATOR

The Investment Adviser, on behalf of the ACME II Funds, expects to enter into an administration
agreement with Investor Services, Inc. (the “Administrator”) to perform certain tasks for the Partnership,
including: (a) communicating with Limited Partners; (b) maintaining information regarding the Limited
Partners; (c) accounting, tax and bookkeeping services; (d) calculating the net asset value of the
Partnership, (e) calculating the balances of the Partners’ Capital Accounts; (f) calculating distributions; and
(g) such other duties as may be agreed between the parties from time to time.

The Administrator will not be obligated to monitor or otherwise ensure Partnership compliance
with any investment policies, restrictions or guidelines applicable to it or any other term or condition of
the Partnership’s offering documents. The Administrator is a service provider to the Partnership and is
not responsible for the accuracy of adequacy of this Private Placement Memorandum.

LEGAL MATTERS

ADSF LLP represents the General Partner and the Investment Adviser in providing legal services
concerning the Partnership, other than with respect to cannabis-related legal matters described herein.
ASDF LLP does not represent the Partnership, and neither has any responsibility to the Partnership or any
Partner with respect to the legal advice it provides. See “Conflicts of Interest -- Lack of Separate
Representation.” The General Partner’s and the Investment Adviser’s engagement of ASD LLP for advice
on Partnership matters is limited to those matters as to which the General Partner and the Investment
Adviser request specific advice. Therefore, there may exist facts or circumstances that bear on the
financial condition or operations of the Partnership or the Investment Adviser on which ASDFLLP has not
been consulted. More specifically, ASDFLLP will not monitor the compliance of the Investment Adviser
and its Affiliates with the investment program, valuation procedures and other matters described herein,
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nor does it monitor compliance with applicable laws. In assisting the General Partner and the Investment
Adviser to prepare this Private Placement Memorandum, ASDFLLP relied on information furnished to it
by the Partnership, the General Partner and the Investment Adviser, and did not investigate or verify the
accuracy and completeness of such information.

ACCESS TO INFORMATION

Prospective investors and their purchaser representatives are invited to contact the General
Partner to review any written materials or documents relating to the offering or the Partnership, including
any financial information available concerning the Partnership or the General Partner. The General
Partner will answer all inquiries from prospective investors relative to the offering and will provide
additional information (to the extent that it possesses such information or can acquire it without
unreasonable effort or expense) necessary to verify the accuracy of any representations or information set
forth in this Private Placement Memorandum.

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 APPENDIX I

GLOSSARY GLOSSARY

Many of the terms used in this Private Placement Memorandum are defined in section 5 of the
Agreement, and most of those definitions are not repeated here. Other terms used in this Private
Placement Memorandum have the meanings indicated below:

“Administration Agreement” – means the Administration Agreement entered into between the
Partnership and the Administrator.

“Administrator” – means Carta Investor Services, Inc., or any other person or entity appointed and acting
as the Partnership’s administrator.

“Advisers Act” – means the Investment Advisers Act of 1940, as amended.

“Agreement” – means the Second Amended and Restated Agreement of Limited Partnership of the
Partnership in the form included as Exhibit A to this Private Placement Memorandum, as it may
be amended from time to time.

“Carried Interest Distribution” – means the Carried Interest Distribution payable to the General Partner
under the Agreement, as described under “Summary of Principal Terms -- Distributions.”

“DOL” – means the U.S. Department of Labor.

“ERISA Plan” – means any employee benefit plan (as defined in ERISA section 3(3)) that is subject to
Title I of ERISA, such as a collective investment fund or separate account, the underlying assets
of which include “plan assets” of such a plan under ERISA section 3(42) and the regulations
referred to therein.

“ACME Funds” – means the ACME II Funds, ACMEFund I, LP, as well as any other separately managed
account, investment fund or Co-Investment Vehicle or similar arrangement now or hereafter
formed, sponsored, managed or advised by the General Partner or any Affiliate thereof.

“ACME II Funds” – means, collectively, the Partnership, each Parallel Fund, each Co-Investment Vehicle,
each Alternative Investment Vehicle, or any other investment vehicle, entity or account formed
by the General Partner (or an Affiliate thereof) to co-invest in or co-invest with the Partnership.

“Interests” – means limited partner interests in the Partnership, with each Interest representing an
interest in the Partnership equivalent to the Limited Partner’s Capital Account.

“Investment Adviser Agreement” - means the Investment Adviser Agreement entered into between the
Partnership and the Investment Adviser pursuant to which the Partnership’s assets are invested
in Securities.

“IRS” – means the U.S. Internal Revenue Service.

“Management Fee” – means the Management Fee payable to the Investment Adviser that is described
under “Summary of Principal Terms -- Management Fee.”

“1933 Act” – means the Securities Act of 1933, as amended.

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“1934 Act” – means the Securities Exchange Act of 1934, as amended.

“Partnership” – means ACMEFund II LP, a Delaware limited partnership, Interests of which are being
offered hereby.

“Plan” – means (a) any ERISA Plan, (b) any employee benefit plan (as defined in ERISA section 3(3)) that
is not subject to Title I of ERISA, (c) any plan that covers only owners of the plan sponsor, (d) any
individual retirement account as described in Code section 408(a), or (e) any other entity, that is a
“benefit plan investor,” within the meaning of, and for purposes of applying, ERISA section 3(42)
and the regulations referred to therein.

“Regulation D” – means Regulation D promulgated under the 1933 Act.

“SEC” – means the U.S. Securities and Exchange Commission.

“Subscription Agent – means Assure Fund Management, LLC

“Tax-Exempt Entity” – means any corporation, partnership, limited liability company, trust or other
entity that is exempt from federal income taxation, including, without limitation, any Plan,
endowment fund or foundation, or charitable, religious, scientific or educational organization.

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