Sargon Hedging and Leverage/Expenses. The Old Sargon Portfolio may “hedge” its positions with the approval of Employer, as Employer, in its sole and absolute discretion, considers appropriate, in accordance with the Existing Parameters. The New Sargon Portfolio may “hedge” its positions with the approval of Employer, as Employer, in its sole and absolute discretion, considers appropriate, utilizing: (i) futures or options contracts referencing the S&P 500 Index or the Rxxxxxx 2000 Index; and/or (ii) equity securities (and derivatives referencing such equity securities) issued by Qualified Issuers. Hedging transactions: (i) must correlate to long portfolio positions (i.e., no speculative short sales or other trading will be permitted); and (ii) will be limited to $80 million of invested capital on any individual position or index (including the S&P 500 Index and the Rxxxxxx 2000 Index). Without limiting the foregoing, the New Sargon Portfolio may not at any time: (i) establish any position (whether long or short) having a notional value (i.e., total “exposure”) that exceeds the amount of cash and cash equivalents “held” in the New Sargon Portfolio at such time; or (ii) be net short on a notional basis. If, as a result of price movements or otherwise, the New Sargon Portfolio becomes net short on a notional basis, the Employer shall have the right from time to time to require the Co-Managers to reduce hxxxxx in an amount which, in the judgment of the Employer, is necessary to rectify such situation. For purposes of illustration, if the New Sargon Portfolio has $3 billion of “capital” or “assets”: (i) $3 billion of long positions and no short positions would be permissible; (ii) $2 billion of long positions and $1 billion of short positions would be permissible; (iii) $1 billion of long positions and $2 billion of short positions would not be permissible; and (iv) $4 billion of long positions and $3 billion of short positions would not be permissible. The foregoing examples assume $3 billion of “capital” or “assets”. As the amount of “capital” or “assets” increases and decreases, the restriction will be adjusted accordingly (e.g., if there is $5 billion of “capital” or “assets”, the New Sargon Portfolio may not have more than $5 billion of notional exposure; and if there is $1 billion of capital, the New Sargon Portfolio may not have more than $1 billion of notional exposure). Hxxxxx that satisfy all of the requirements set forth in this Section 4(e) are referred to herein as “Permitted Hxxxxx.” ...
