DUE DILIGENCE QUESTIONNAIRE - Third Eye · DUE DILIGENCE QUESTIONNAIRE THIRD EYE CAPITAL ALTERNATIVE CREDIT TRUST The information provided herein is correct as of October 31,

The material contained herein is proprietary and confidential. This Due Diligence Questionnaire (“DDQ”) is supplied to you in connection with your proposed investment in Third Eye Capital Alternative Credit Trust (the “Fund”) and provides certain confidential information about its Manager. This DDQ does not constitute an offering of Units in the Fund and any Units in the Fund are being offered solely on the basis of the

Fund’s Confidential Offering Memorandum. All capitalized terms shall have the meaning ascribed to them in the Confidential Offering Memorandum.

© Third Eye Capital Management Inc. Page 1 of 47 Strictly Proprietary and Confidential

DUE DILIGENCE QUESTIONNAIRE

THIRD EYE CAPITAL ALTERNATIVE CREDIT TRUST

The information provided herein is correct as of October 31, 2015

Based on AIMA’s Illustrative Questionnaire for the Due Diligence of Hedge Fund Managers (September 2014)

The information given herein is correct as at: October 31st, 2015 and has been completed by Arif N. Bhalwani, Portfolio Manager

This questionnaire is based on AIMA’s Illustrative Questionnaire for the Due Diligence of Hedge Fund Managers (2014) - 2 -

Due Diligence Questionnaire for THIRD EYE CAPITAL ALTERNATIVE CREDIT TRUST

CONTENTS

Items Page No.

PART 1: BASIC INFORMATION ........................................................................................................ 3 1.1 CONTACT INFORMATION ................................................................................................ 3 1.2 IDENTITY OF RELEVANT FUND ......................................................................................... 3 1.3 NATURE OF THE ENTITY OR ENTITIES COMPLETING THE QUESTIONNAIRE ................................... 3 PART 2: DOCUMENT CHECKLIST .................................................................................................... 4 PART 3: THE INVESTMENT MANAGER .............................................................................................. 6 3.1 FOUNDATION .............................................................................................................. 6 3.2 HUMAN RESOURCES ...................................................................................................... 7 3.3 OUTSOURCED/DELEGATED FUNCTIONS (EX-PORTFOLIO MANAGEMENT AND RISK MANAGEMENT) ....... 9 3.4 INVESTOR/CLIENT CONCENTRATION ................................................................................. 10 3.5 COMPLIANCE PROGRAMME ............................................................................................ 10 3.6 RELATIONSHIPS WITH REGULATORY AUTHORITIES ............................................................... 11 3.7 CONFLICTS OF INTEREST .............................................................................................. 12 3.8 ANTI-MONEY LAUNDERING ............................................................................................ 12 3.9 INSURANCE ............................................................................................................... 13 3.10 BUSINESS CONTINUITY PROGRAMMES ............................................................................... 13 PART 4: THE FUND ................................................................................................................... 15 4.1 INVESTMENT STRATEGY ................................................................................................ 15 4.2 RISK MANAGEMENT ..................................................................................................... 18 4.3 COUNTERPARTY RISK ................................................................................................... 19 4.4 LIQUIDITY RISK ........................................................................................................... 20 4.5 OPERATIONAL RISK ..................................................................................................... 21 4.6 INVESTMENT RESEARCH ................................................................................................ 21 4.7 TRADING .................................................................................................................. 22 4.8 EXECUTING BROKERS ................................................................................................... 25 4.9 TREASURY ................................................................................................................ 25 4.10 FUND GOVERNANCE .................................................................................................... 26 4.11 FEES AND EXPENSES .................................................................................................... 29 4.12 SUBSCRIPTIONS .......................................................................................................... 32 4.13 REDEMPTIONS ............................................................................................................ 32 4.14 TRANSFERS AND OTHER SECONDARY MARKET TRANSACTIONS ................................................ 34 4.15 PERFORMANCE, REPORTING AND INVESTOR PROFILE ............................................................ 35 4.16 VALUATION ............................................................................................................... 36 4.17 BANK ACCOUNTS ........................................................................................................ 38 4.18 TAX MATTERS ............................................................................................................ 38 PART 5: FUND SERVICE PROVIDERS ............................................................................................... 39 5.1 AUDITOR .................................................................................................................. 39 5.2 FUND COUNSEL .......................................................................................................... 40 5.3 LOCAL COUNSEL IN THE JURISDICTION OF FUND’S ESTABLISHMENT ......................................... 40 5.4 ADMINISTRATOR ......................................................................................................... 41 5.5 DEPOSITARY/CUSTODIAN .............................................................................................. 42 5.6 PRIME BROKERS .......................................................................................................... 44

The information given herein is correct as at: October 31st, 2015 and has been completed by Arif Bhalwani, Portfolio Manager


PART 1: BASIC INFORMATION

THE FOLLOWING QUESTIONS SHOULD BE ANSWERED IN RELATION TO THE ENTITY FILLING IN THE QUESTIONNAIRE.

1.1 CONTACT INFORMATION

1.1.1 Organisation name (legal name and

any other business names used, if

applicable)

(hereafter referred to as the

“investment manager”)

Third Eye Capital Management Inc.

1.1.2

Principal business address:

Brookfield Place, TD Canada Trust Tower

161 Bay Street, Suite 3930

Toronto, Ontario M5J 2S1 Canada

1.1.3 Telephone: 416-601-2270

1.1.4 Website: www.thirdeyecapital.com

1.1.5 Primary contact:

name:

title:

telephone:

e-mail:

Arif N. Bhalwani

President, Chief Executive Officer, Portfolio Manager, and Managing

Director

416-601-9824

[email protected]

1.2 IDENTITY OF RELEVANT FUND

1.2.1 Legal name of the fund with

respect to which the entity has

been asked to complete this

questionnaire

(hereafter referred to as the

“fund”)

Third Eye Capital Alternative Credit Trust

1.2.2 Nature of the fund Stand alone fund

□ Fund of funds

□ Feeder fund (indicate name of relevant master fund:

□ Master fund (indicate names of any feeder funds):

□ Other (please describe):

1.3 NATURE OF THE ENTITY OR ENTITIES COMPLETING THE QUESTIONNAIRE

1.3.1 Indicate whether the entity filling

in this questionnaire is the principal

investment manager of the fund or

is acting as a delegate. Where the

questionnaire is being filled out on

a group basis including information

from multiple entities, indicate the

names of all group entities covered

by this questionnaire.

The investment manager

http://www.thirdeyecapital.com/

mailto:[email protected]



1.3.2 Tick the box(es) best describing the

services this entity or group

provides to the fund.

Portfolio management

Risk management

Marketing fund units or shares

□ Administration

□ Other (indicate services):

PART 2: DOCUMENT CHECKLIST

PLEASE TICK ANY ITEMS WHICH ARE GOING TO BE PROVIDED IN AN INVESTOR PACK ALONG WITH THIS DUE DILIGENCE QUESTIONNAIRE. IF THE ITEMS ARE NOT GOING TO BE PROVIDED, PLEASE STATE WHETHER THEY ARE GOING TO BE MADE AVAILABLE ON REQUEST.

2.1 INVESTMENT MANAGER DOCUMENTS PROVIDED Y/N AVAILABLE ON REQUEST

Y/N

2.1.1 Corporate ownership chart Y

2.1.2 Company/Affiliates organisational chart (showing all

companies involved in managing the fund)

Y

2.1.3 Form ADV Part 2A (or other brochure) N/A

2.1.4 Business continuity programmes (or summary thereof) Y

2.1.5 Employee organisational chart(s) Y

2.1.6 Biographies (including all previous positions and education)

for each of the following:

o CEO

o CIO

o COO/CFO

o CRO

o Head of Trading

o CCO/Head of compliance

o CLO/Head of Legal/General counsel

o CTO

Y

2.1.7 Certificate of formation/incorporation Y

2.1.8 At least two references from investors with a significant

amount of net assets under management (‘AUM’) managed

by the investment manager including the referees’:

• name;

• title;

• organisation;

• telephone;

• e-mail;

• relationship with the investment manager and its key

staff.

(Y – subject to investors’ consent)

2.1.9 Two independent references for each of the founders or

principals, including the referees’:

• name;

• title;

• organisation;

• telephone;

• e-mail;

relationship with the investment manager and its key

staff.

Y



2.1.10 Investment manager SOC 1 report (or equivalent), if any Y

2.2 FUND DOCUMENTS WHERE THE FUND IS A FEEDER FUND, PLEASE PROVIDE AN ANSWER TO EACH OF THE ITEMS IN THIS SECTION FOR BOTH THE FEEDER FUND AND THE MASTER FUND WHERE RELEVANT.

PROVIDED Y/N AVAILABLE ON REQUEST

Y/N

2.2.1 Marketing presentation Y

2.2.2 Private placement memorandum/offering memorandum,

including any amendments or supplements thereto

Y

2.2.3 Articles and/or bylaws of the fund (in the case of limited

partnerships, the limited partnership agreement) and any

other documents constituting the rules or instruments of

incorporation or formation of the fund, as well as any

amendments or supplements thereto

Y

2.2.4 Subscription agreement(s)/redemption request(s)/transfer

request(s)

Y

2.2.5 Audited financial statements for at least the last three

completed fiscal years of the fund or since inception of the

fund, whichever period is shorter

Y

2.2.6 Master/feeder fund structure chart N/A

2.2.7 Pricing and valuation policy Y

2.2.8 Last 12 months of investor newsletters, fact sheets and

other correspondence provided to all investors

Y

2.2.9 Risk management reports (samples) Y

2.2.10 Portfolio value data for the longest dated share class of the

fund since its inception, unless the longest dated class will

not be representative (in which case indicate which class is

shown and why):

Monthly net asset value (‘NAV’)

Monthly gross and net exposures

Monthly gross and net returns

Y

2.2.11 Administrator’s NAV transparency letter N/A

2.3 TRANSPARENCY CHECKLIST ITEM PLEASE INDICATE WHETHER THE FOLLOWING ARE GOING TO BE MET BY THE INVESTMENT MANAGER, IF ‘NO’ IS ANSWERED FOR ANY OF THE BELOW, PLEASE INDICATE WHY IN THE COMMENTS SECTION.

Y/N COMMENT

2.3.1 Allow an on-site visit with key front and back office

personnel?

Y

2.3.2 Allow a trade and valuation walkthrough? Y

2.3.3 Allow review of NAV package on-site? Y

2.3.4 Allow fund returns and NAV to be distributed by the

administrator?

Y



PART 3: THE INVESTMENT MANAGER

THE FOLLOWING QUESTIONS SHOULD BE ANSWERED IN RELATION TO ALL OF THE INVESTMENT MANAGER’S ACTIVITIES IN GENERAL ACROSS MULTIPLE STRUCTURES.

3.1 FOUNDATION

3.1.1

In what jurisdiction was the

investment manager

established?

Toronto, Ontario

3.1.2

Form of organisation:

(tick one)

Corporation

□ Limited liability partnership

□ Limited liability company

□ Limited company

□ Public limited company (plc)

□ Other (indicate type of entity):

3.1.3

Provide a brief history of

the investment manager.

Third Eye Capital Management Inc. (“TECM” or “Manager”) was formed by the

founders of Third Eye Capital Corporation (“TECC”) for the purposes of acting as a

Portfolio Manager, and Investment Fund Manager and Exempt Market Dealer. TECC

is an affiliate of TECM.

From October 2005 to July 2008, TECC exclusively sourced, analysed, and

monitored asset-based loans (“ABL”) for a major Canadian pension fund. TECM

delegates certain of its responsibilities to TECC, including the origination,

servicing, and monitoring of ABL investments selected by TECM for the Fund.

Since April 2008, TECM has been an advisor to Third Eye Capital Credit

Opportunities Fund (“TECCOF”), (formerly Third Eye Capital ABL Opportunities

Fund), a Luxembourg-based multi-compartment fund, comprised of three sub-

funds:

(1) ABL Opportunities Fund (closed);

(2) Insight Fund (open for subscriptions); and

(3) Foresight Fund (to be launched).

In April 2010, TECM entered into an agreement with Sprott Asset Management LP

(“SAMLP”) to be the exclusive sub-advisor of the Sprott Private Credit Fund, a

Canadian-based fund available only to accredited Canadian-resident investors. The

Sprott Private Credit Fund was restructured as of January 1, 2012 into the Sprott

Private Credit Trust for tax efficiency reasons. The Sprott Private Credit Trust was

closed to new subscriptions effective January 31, 2013 after exceeding its target

AUM; however, it may be reopened at the discretion of TECM and SAMLP.

In June 2013, TECM launched the Third Eye Capital Alternative Credit Trust (the

“Fund”), an open-ended unincorporated investment trust available only to

accredited Canadian-resident investors. TECM is the Manager of the Fund.

Arif N. Bhalwani and David G. Alexander are the founders of TECM and TECC, and

have more than five decades of combined experience in private market investing.

They have worked together for close to fifteen years in structuring combination

private debt and private equity transactions for selected portfolio companies. TECC

has a team of experienced investment professionals with diverse backgrounds and

differing skill sets, including deep turnaround, operational, growth and distressed

investing, credit, and risk management expertise, and which enables it to analyze

and assess opportunities with special insight.



3.1.4 Tick the box next to any of

these categories if they

describe the investment

manager.

Minority-owned enterprise

□ Women-owned enterprise

□ Socially responsible investor

□ Other (please describe):

□ Not applicable

3.1.5 Provide a brief description

of the investment

manager’s (or the group’s,

if applicable) other

offerings/products.

Description of all products and offerings set out at 3.1.3.

3.1.6 If the investment manager

has any locations/branches

other than the principle

business location identified

in question 1.1.2, please

describe the functions

performed in each office

location.

All of the Manager’s business, including portfolio management, research,

underwriting, administration, and operations, is conducted at its headquarters in

Toronto, Ontario, Canada.

3.1.7

Does the investment

manager have a

management committee or

other governing body? If it

does, provide the names of

the members of that

committee or body and

indicate whether each

person named is an

executive or non-executive

member.

No – risk and other critical decisions are made by the Board of Directors

3.2 HUMAN RESOURCES

3.2.1

How many individuals are

employed by the investment

manager in each category

indicated?

TECM and TECC

Investment staff: 8

Middle/back office operation staff:2

Legal & compliance: 2

Risk: 1

Investor relations/client services/sales staff: 1

Other non-clerical staff:2

Clerical staff: 1

3.2.2

Outline the investment

manager’s performance

review and remuneration

policy. Include a description

of how the policy varies for

different groups of

employees, any deferral

process and/or any

clawback mechanism.

All employees are subject to ongoing performance reviews that evaluate individual

skills and contributions and outline future expectations. Employees are provided

with base salaries that are competitive to market and are entitled to participate

in comprehensive medical, dental, life insurance, and tuition benefit plans.

Bonuses are awarded based on the attainment of budgeted firm goals and

individual merit determined in management’s discretion. Bonuses to investment

team are partially deferred pending investment outcomes. All employees are

motivated to invest a pre-determined portion of bonuses into one or more funds

advised or managed by TECM.



3.2.3

Do you perform background

checks on newly hired

employees of all levels to

verify their qualifications

and experience? Please

explain this process and

indicate any outside

agencies used for this

purpose.

Yes. Prior to appointment, all investment professionals undergo a rigorous

interview process with the principals, must write 1-2 intense case studies, are

checked through at least three references, and are screened by an outside

background investigations firm. All new hires must undergo a background credit,

litigation, and criminal check.

3.2.4

List names, titles, functions

and the joining/leaving date

of all senior management

(VP and above) and portfolio

management joiners and

leavers during the last two

years. With respect to

portfolio management

joiners/leavers, this may be

limited to personnel directly

supporting the mandate.

The following individuals have joined the firm within the last two years.

Dev Bhangui – VP Investments

Mark Horrox - Principal

Belle Kaura – VP Legal and Chief Compliance Officer

No members of senior management or portfolio management have left the firm

within the last two years.

3.2.5

Does the investment

manager have a contingency

plan in the event of “key

person” departure?

In event of death or incapacity of Arif N. Bhalwani, David G. Alexander and the firm’s three principal investment managers will assume responsibilities for the Fund’s portfolio. Mr. Bhalwani is the ultimate owner of TECM and TECC and has no intentions of leaving the firm.



3.3 OUTSOURCED/DELEGATED FUNCTIONS (EX-PORTFOLIO MANAGEMENT AND RISK MANAGEMENT)

3.3.1

Provide details of the

investment manager’s (if

any):

(a) Auditor

(b) Legal advisors

(c) Tax advisors

(d) Compliance

consultant

(e) Any other outsourced

functions deemed

material to the

viability of the

investment

manager’s business

including date appointed

and type of services

engaged.

(a) KPMG LLP – Auditor of the Fund

333 Bay Street, Suite 4600, Bay Adelaide Centre,

Toronto, Ontario, M5H 2S5

Tel : 416-777-8500

Fax : 416-777-8818

Email : [email protected]

www.kpmg.ca

Since 2008. However, TECC has had a professional relationship with KPMG LLP in

Canada since October 2005, and the founders of the Manager have had a

professional relationship with the same firm for over twenty years.

Auditor of TECM

BDO Canada LLP

60 Columbus Way, Suite 300

Markham, Ontario L3R 0C9

(b) Tax and Legal Advisor in Canada

McMillan LLP


Toronto, Ontario

M5J 2T3 Canada

Tel: 416-865-7284Fax: 416-865-7048

Appointed since 2008.

Tax and Legal Counsel in the U.S.

Akin Gump Strauss Hauer & Feld LLP

One Bryant Park

New York, NY10036USA

(e) RBC Investor & Treasury Services

155 Wellington Street West

Toronto, ON, Canada M5V 3L3

Tel: 416-955-2975

Fax: 416-277-7467

TECM outsources the administration, valuation, record keeping and custody

activities of the Fund to RBC Investor Services Trust in Toronto. It has had a

relationship with RBCIST since 2008.

3.3.2

Has the current or any

previous auditor ever issued

qualified financial

statements with respect to

the investment manager or

any group entity?

No


http://www.kpmg.ca/



3.4 INVESTOR/CLIENT CONCENTRATION

3.4.1 List the total AUM by legal

entity including all funds,

managed accounts and

other advisory relationships

(including accounts

managed as sub-advisor or

delegate), by each trading

strategy.

Third Eye Capital Credit Opportunities Fund – ABL Opportunities Fund: $41 Million

USD

Third Eye Capital Credit Opportunities Fund – Insight Fund: $41 Million USD

Sprott Private Credit Trust: $296 Million CAD

Third Eye Capital Alternative Credit Trust: $46 Million CAD

3.4.2 What is the length of the

investment manager’s

oldest continuously active

account or client

relationship?

Third Eye Capital Credit Opportunities Fund since April 2008

3.4.3 What percentage of the

investment manager’s total

AUM across all investment

vehicles is represented by

the 10 largest

investors/clients?

100% (SPCT alone represents ~65% of AUM)

3.5 COMPLIANCE PROGRAMME

3.5.1

Who is responsible for

monitoring and managing

compliance at the

investment manager? Please

include the name, title and

experience of any

senior/key compliance staff

other than anyone listed in

response to question 2.1.7.

Belle Kaura – VP Legal and Chief Compliance Officer. Belle was called to the

Ontario Bar and the Quebec Bar in 1997 and completed a Masters of Securities Law

in 2003. She has over 15 years of experience in senior legal and compliance roles at

premier global asset management firms and financial institutions. She also acted as

enforcement counsel and policy counsel at a securities regulator.

3.5.2 Provide a summary of the


compliance monitoring

program including a brief

description of the:

monitoring performed;

frequency of

monitoring;

reporting of findings;

escalation process if

breaches or concerns

are identified.

The Manager has a comprehensive compliance program in place which establishes

a system of controls and supervision to provide reasonable assurance that TECM

and each individual acting on its behalf complies with securities laws and

regulations and to manage the risks associated with TECM’s business in accordance

with prudent business practice. The Manager’s compliance program consists of a

framework designed to monitor controls on a regular and ongoing basis so as to

ensure compliance with the Manager’s policies and procedures. The program is

overseen by the CCO and findings are reported to the UDP and escalated to the

Board of Directors of TECM as appropriate.

3.5.3 Describe the investment

manager’s current

compliance training

program, including

frequency, methods and

scope.

The Manager has developed a comprehensive compliance training program which is

delivered in person by the CCO to all registrants of the Manager. Annual compliance

training is conducted. Compliance training is also conducted more frequently, and

on as needed basis, in the case of new regulatory developments or changes to the

compliance program.

3.5.4 Is the investment manager

CFA Institute/GIPS

compliant?

The Manager follows the CFA Institute principles and believes that its performance

reporting is GIPS compliant, but has not obtained any third-party verification to

this effect.



3.6 RELATIONSHIPS WITH REGULATORY AUTHORITIES

3.6.1 Which regulatory

authority(ies) is the

investment manager

regulated by/registered

with? For each regulatory

authority, specify:

name of regulator;

date of registration;

registration number;

scope of registered

activities.

TECM has been registered as a Portfolio Manager with the Ontario Securities

Commission since March 4, 2010, and is authorized to provide advice to clients

with respect to investing in, buying, or selling any type of security, with or

without discretionary authority. Arif N. Bhalwani is TECM’s authorized Advising

Representative and Ultimate Designated Person.

Since April 2013, TECM is also registered as an Exempt Market Dealer in each

Canadian province and territory, and as an Investment Fund Manager in Ontario,

Newfoundland and Labrador and Quebec.

3.6.2 For each regulatory

authority specify the date of

last regulatory inspection or

other firm-specific

supervisory

review. Please exclude any

thematic or industry-wide

reviews where the

investment manager was not

a specific target of the

review.

The most recent OSC Compliance Review was conducted August 2014.

3.6.3 Are there, or have there

been, or are there any

pending any criminal

proceedings or any

investment-related civil,

regulatory or administrative

proceedings or disciplinary

actions taken against (i) the

investment manager or any

of its current key staff in

the last 10 years or (ii) the

funds or investment

products or any of their

directors or any similar such

matters including

reparations, arbitrations

and negotiated settlements?

If so, please provide details.

No

3.6.4 Has any application for

registration, authorisation

or a license of any kind to a

regulatory body on behalf of


an individual staff member

ever been refused,

suspended or revoked? If so,

please provide details.

No



3.7 CONFLICTS OF INTEREST

3.7.1 Describe any current or

potential conflicts of

interest or any relationships

which may threaten the

investment manager’s duty

to its clients/investors or

potentially breach

applicable regulation.

Please outline how the

conflicts of interest are

managed and resolved.

A potential conflict of interest exists with respect to investment opportunities

that might be presented by TECM to the Fund and other funds advised by TECM. In

this case, investments are allocated based on the particular fund’s investment

strategy and objectives and the amount of investable cash such fund has at the

time of investment. Where possible, investments are allocated on a pro-rata basis

to all funds with substantially similar strategies.

3.7.2 Disclose any rebates or

other similar fees

paid/concessions made by

the service providers of any

of the investment vehicles

managed by the investment

manager which are not

made directly to the

relevant investment vehicle.

N/A

3.7.3 Are any of the investment

manager’s staff involved in

other businesses which may

potentially conflict with the

duties of the investment

manager? If so, list the

staff member’s name, the

name of their other business

interest(s), describe the

nature of the business and

quantify how much of their

professional time is

dedicated to each other

business interest.

Arif N. Bhalwani is a director of the managing general partner of TECCOF where he

votes on certain resolutions affecting TECCOF and approves investments to be

made by such fund. Mr. Bhalwani spends approximately 1 hour per month on

director-related matters for TECCOF. Mr. Bhalwani is also a director and managing

director of Pinnacle Capital, a private investment company that oversees his

family investments. Mr. Bhalwani spends approximately 1 hour per month on

matters related to Pinnacle Capital.

Dr. David G. Alexander participates on the Board of Directors of certain pension

plans, universities, and not-for-profits, and is a visiting professor at one or more

universities in Ontario, Canada. None of these activities interfere with Dr.

Alexander’s responsibilities to the Manager or TECC.

3.7.4

Does the investment

manager restrict or monitor

the personal account

dealing/personal trading of

its staff? If so, please

describe its policy (which

may be included in a code

of ethics, if any).

The Manager has adopted the CFA Asset Manager Code of Conduct, which sets out,

among other things, rules concerning personal account dealing. No officer,

director, or employee of the Manager, who in the ordinary course of his activities

participates in or obtains information regarding the purchase or sale of securities

or investments made by the Fund (or any other third-party account advised by the

Manager), may take any action which is adverse or appears to be adverse to the

interests of the Fund or any of its Unitholders. The Manager’s Policies and

Procedures Manual includes a Personal Trading Policy which sets out restrictions

on the use of material non-public information, and the requirement by employees

to report all personal trading activity.

3.8 ANTI-MONEY LAUNDERING

3.8.1 Who is responsible for Anti-

Money Laundering (AML)

compliance at the

investment manager,

whether that person is a

designated MLRO or

otherwise?

Belle Kaura, VP Legal and Chief Compliance Officer

Brian Hick, Chief Financial Officer

The CCO and CFO of the Manager monitor AML obligations on an ongoing basis in

accordance with the Manager’s AML Policies and Procedures.




manager’s AML policies and

procedures including details

of training provided to staff

and ongoing AML compliance

monitoring.

The Manager’s AML Policy and Procedures have been developed in accordance

with FINTRAC requirements. AML training is conducted on an annual basis.

3.8.3 If any AML responsibilities

are delegated to third

parties, please provide their

name(s), a description of

the services provided and an

outline as to how their

performance is monitored.

N/A

3.9 INSURANCE

3.9.1 Outline insurance held by

the investment manager and

its key employees for the

following areas:

Directors’ & Officers’

Liability:

a) for the funds;

b) for the management

companies;

Professional Indemnity

or Errors and Omissions;

Crime (employee

fidelity/third party

fraud);

Key Person Insurance.

Yes, D&O and professional indemnity/liability insurance for $5,000,000 (Liberty

International, expires June 23,2016) has been obtained for the Funds, Manager,

and TECC. TECM also has fidelity insurance in the form of a financial institution

bond for $2,000,000( Liberty International, expires June 23, 2016) in accordance

with the regulatory requirements set out by the Ontario Securities Commission.

In addition, TECC has key person insurance on the lives of its founders, Arif N.

Bhalwani and Dr. David G. Alexander in the amount of CAD$2,000,000 each.

All insurance is brokered through Willis Canada, a subsidiary of Willis Group

Holdings PLC, a USD$6 Billion insurance broker. Currently, all insurance is

underwritten by ACE Group, rated AA- for financial strength by Standard & Poor’s

and A+ by A.M. Best.

3.9.2 For each area of risk insured

in 3.9.1 above, please

provide the name of the

insurer, the level of cover

purchased, the renewal date

of the policy and any key

exclusions or non-standard

terms.

See above.

3.10 BUSINESS CONTINUITY PROGRAMMES

3.10.1 Who is responsible for the

implementation of the

business continuity

programme(s) at the

investment manager?

The Manager has a disaster recovery plan (“DRP”) for its operations and

employees in case of emergency. The objective and scope of the DRP is to manage

and protect the Manager’s assets over a limited period of time, sufficient to

permit the Manager to retrieve and recover data, and to renew operations

quickly.

All data in the Manager’s internal systems are backed up daily to redundant local

servers and offsite servers for recovery in case of a disaster. Copies of all mission

critical applications and electronic files are maintained at offsite servers. The

fail-over and backup capabilities of the Manager’s servers are regularly tested.




manager’s offsite trading

policy, including, without

limitation, which staff

members are authorised to

trade when out of the

office, any limits on this

activity, the process for

ensuring that offsite trades

are booked or captured on a

timely basis and the front

office confirmation process.

N/A

3.10.3 Does the investment

manager have an alternate

relocation site(s)? If so, how

was each such location

determined, how is it

provisioned and for how long

can it sustain business

operations?

See above and refer to the DRP.

3.10.4 Does the investment

manager have an alternate

power source and/or an

alternate voice services

provider?

See above and refer to the DRP.



PART 4: THE FUND

THE FOLLOWING QUESTIONS SHOULD BE ANSWERED ONLY IN RELATION TO THE PARTICULAR FUND IN QUESTION.

□ IF A MASTER/FEEDER STRUCTURE EXISTS AND THIS QUESTIONNAIRE RELATES TO A FEEDER FUND, PLEASE TICK THE BOX

TO THE LEFT AND ANSWER THE QUESTIONS IN THIS SECTION TREATING THE STRUCTURE AS A WHOLE. WHERE RELEVANT AND NECESSARY FOR CLARITY, USE THR TERM “FUND” TO REFERENCE THE FUND TO WHICH THIS QUESTIONNAIRE RELATES AND THE TEFM “MASTER FUND” TO REFER TO THE MASTER FUND.

4.1 INVESTMENT STRATEGY

4.1.1 Describe the fund’s

investment strategy in as

much detail as possible, which

may include a discussion of

the types of market conditions

under which the fund’s

strategy is expected to

perform best and worst.

In general, the investment strategy of the Fund will be to provide ABL to

selected borrowers that meet or exceed the Fund’s strict and disciplined

investment criteria. For these purposes, ABL is broadly defined as privately

originated and negotiated loans to companies, special purpose vehicles or

individuals, in amounts determined by a borrowing base dependent on values of

specific secured assets or pools of assets. ABL sub-strategies may include

commercial credit, project and contract finance, accounts receivable finance or

factoring, purchase order finance, inventory finance, real estate finance, mining

offtake and mineral resources finance, consumer finance, trade and commodity

finance, structured equipment finance, leasing, and intellectual property

monetization.

The Fund focuses on identifying short-term, ABL investment opportunities

primarily in Canadian companies that are otherwise unable to access financing.

These companies are often overlooked or underappreciated by the general

financial community due to size, perceived riskiness, complexity or timing. In

order to protect the capital of an ABL investment, while retaining the potential

for upside, the Fund will seek senior asset-level overcollateralization based on a

liquidation premise of value, and will emphasize ABL investments in companies

that have sound business models and strong management teams.

Integral to the Fund’s investment strategy is capital preservation through senior

liens on collateral assets with visible potential cash flows and/or liquidation or

break-up values. This increases the downside protection for ABL investments in

the event of default and where collateral assets have to be repossessed and

realized. Furthermore, where the underlying businesses of portfolio companies

are fundamentally sound, there is a lower likelihood of serious default and

greater options for recovery and avoidance of investment loss.

The Fund will seek to achieve superior long-term performance through a strict

and disciplined credit selection strategy. The credit selection process is designed

with the objective of reducing risks to capital while attempting to maximize

opportunities for income and capital appreciation. The foundation of this

strategy is rigorous, bottom-up fundamental analysis that emphasizes asset-level

overcollateralization based on liquidation value, identifying good companies that

are overlooked or out-of-favour, and diversification based on asset-type,

investment size, as well as company and industry exposures. Each potential

investment must also have an identifiable catalyst that will enable the borrower

to retire the loan within a reasonable period of time, usually within two (2)

years.



The Fund will execute its investment strategy through the unique insight and

experience of the Manager. Portfolio construction by the Manager in respect of

each of the Fund’s investments will involve (i) origination and term sheet

construction, (ii) due diligence on collateral and business strength, (iii) risk

rating assignment and preparation of an investment summary, (iv) the Manager’s

investment committee, (v) monitoring of the investment by collateral tracking

and covenant testing, and (vi) risk rating updates, audits and appraisals.

The ABL investments acquired by the Fund will generally be originated and

negotiated by the Manager or its affiliates, and may consist of all types of ABL

debt obligations. The ABL debt obligations may have varying terms with respect

to overcollateralization, seniority or subordination, purchase price,

convertibility, interest terms, and maturity, but will consist primarily of passive

positions (that is, positions in which, the Fund does not participate or seek to

participate in management or control) in middle-market ABL loans that have

limited liquidity. In the course of making ABL investments, the Fund may also

acquire common or preferred stock, warrants to purchase common or preferred

stock, revenue or royalty participations, and other equity interests or

participations, from time to time.

The Fund believes that a minimum return of at least five (5) percentage points

above the prevailing risk free rate (as determined by the Manager) will be

required for the Fund to make ABL investments, especially those loans to middle

market companies where information is not always publicly available. Each

potential ABL investment must also have an identifiable catalyst that will enable

the borrower to retire the loan within a reasonable period of time, usually

within one year. Such deleveraging can come from a variety of sources,

including projected free cash flow, accelerating earnings, the possibility of

equity issuance, improved operations, asset sales, mergers and acquisitions,

refinancing or corporate restructuring.

The Fund will seek, through portfolio construction, to minimize the specific risk

of any single investment and to reduce the overall volatility of returns. The

Fund may have certain limitations with respect to size, industry, and geography

concentration of its ABL investments, as determined by the Manager; however,

there can be no assurance that these limitations will not be exceeded from time

to time.

Any unallocated cash will be held by the Fund until such time as the Fund

identifies attractive investment opportunities or requires additional funding for

portfolio management purposes. Any reserve cash held by the Fund will be used

to manage cash flows, meet unfunded loan commitments, pay expenses, and

facilitate redemption payments. Such reserve will be held in an interest-

bearing account or invested in money-market funds, other short-term

instruments or government Treasury bills

The Fund intends to make ABL investments in companies domiciled primarily in

Canada and the United States but may make selective investments in companies

domiciled in other OECD countries with creditor-friendly laws, satisfactory to

the Manager, and where the Manager believes it has proprietary insight or

informational advantage.



The Fund is not obligated to hedge against fluctuations in the value of the

Fund’s individual ABL investments as a result of changes in market interest

rates, currency changes, or other events, but intends to mitigate such risks

through structuring and favourable ABL loan terms (including, but not limited

to, interest rate floors, availability reserves, and assignment rights). The

Manager shall have sole discretion in determining when or whether to engage in

hedging strategies

4.1.2 What makes this fund’s

strategy or approach unique

There are few experienced participants and it requires diverse and specialized

skills to succeed. The Manager believes its ability to access the diverse

knowledge base of its experienced team is vital in giving it the flexibility to

pursue and undertake different types of asset-based lending transactions and

capture opportunities that other participants do not have the desire or

capability to execute.

4.1.3

What is your target return and

risk for the fund? Please

indicate if you measure this

against a benchmark or hurdle

rate.

TECM targets investments that can generate gross annual returns of 20% or more

over their respective holding periods with a hurdle rate of 8%.

4.1.4 In what asset class or classes is

the fund typically investing?

The Fund will invest in privately negotiated ABL loans across multiple sectors and

industries.

4.1.5 What would be the typical

range of gross and net

exposure for the fund? Does

the fund have a long or a short

bias and what is the

normalised net exposure?

The Fund’s strategy is long-biased.

4.1.6 In what regions and countries

is the fund typically investing?

The Fund intends to make ABL investments in companies domiciled primarily in

Canada and the United States but may make selective investments in companies

domiciled in other OECD countries with creditor-friendly laws, satisfactory to

the Manager, and where the Manager believes it has proprietary insight or

informational advantage.

4.1.7 Does the strategy only invest

in instruments with a

minimum liquidity (trading

volume per day)? If so, please

identify this minimum.

There is no minimum liquidity trading volume due to the illiquid nature of the

investment assets and the lack of any organized exchange or secondary market.

The investments are primarily in privately negotiated asset-based lending

transactions for companies that are unable to access traditional capital.

4.1.8 If the fund invests primarily in

equities, please indicate in

which market cap bands the

fund is typically trading.

N/A

4.1.9 Please indicate any particular

sector or industries in which

the fund is more active.

The Fund intends to invest across different sectors and industries.

4.1.10 What would be the annual

turnover (expressed as volume

traded/average capital) of the

fund?

N/A



4.1.11 What is the average holding

period for the fund’s

underlying investments?

The Fund will generally hold positions until they mature, are prepaid, paid down,

liquidated, or sold. Given that the pricing and structure of investments provides

underlying borrowers with incentives for early repayment, the Fund expects

average holding periods of up to 24 months.

4.1.12 What is the average position

size as a percentage of

capital?

10%-15% but due to investments being directly-sourced and because positions are

high conviction, greater concentration is possible from time to time

4.1.13 Is there a maximum position

size?

Not formerly, but Fund targets position limit of less than 30% of AUM.

4.1.14 List the instrument types

traded by the fund as a

percentage of gross total open

positions currently held.

If the proportions shown differ

materially from typical

historic levels for the fund,

please note and explain the

variance.

Loans: >99%

Warrants: <1% (these warrants are attached to certain loans)

4.1.15 Who has ultimate authority for

the management of the fund’s

portfolio and how are portfolio

management decisions made?

Who has the investment

decision making authority of

the fund? If there is an

investment committee,

provide the names of the

members of that committee

and indicate whether each

person named is an executive

or non-executive member.

Arif N. Bhalwani

Arif N. Bhalwani and Dr. David G. Alexander are members of a TECC Credit

Committee that reviews the credit quality of all potential issuers. Mr. Bhalwani

recommends investments to the Fund and determines allocations across all

mandates. He has the ultimate authority for the management of the Fund’s

portfolio.

4.1.16 How is capital allocated to

specific trading strategies or

portfolio managers/traders?

There is only one trading strategy and one portfolio manager for the Fund.

4.1.17 How regularly are capital

allocations reviewed and what

are the primary factors

considered as part of each

review?

N/A

4.2 RISK MANAGEMENT

4.2.1 Who has ultimate authority

for the risk management of

the fund? If there is a risk

management committee,

provide the names of the

members of that committee

and indicate whether each

person named is an executive

or non-executive member.

Arif N. Bhalwani Arif N. Bhalwani and Dr. David G. Alexander are members of the Board of Directors and decide on critical risk matters, such as hedging policies and use of leverage, affecting the Fund. The Manager manages the portfolio of the Fund in accordance with its strict internal control policies and procedures.

Arif N. Bhalwani is the UDP of the Manager and has ultimate authority for the

risk management for the Manager’s portfolios.

4.2.2 How many personnel are in

the risk team?

2



4.2.3 How are the fund’s directors

involved in the oversight of

the fund’s risk management

process?

The Manager, through its affiliate TECC, has robust internal controls and

procedures in place over each stage of the investment cycle: origination,

structuring and analysis, investment approval, settlement and funding,

monitoring, and accounting (including valuation). The Manager’s directors

oversee the Fund’s risk management process.

4.2.4 Which systems or applications

does the investment manager

use to manage risk and from

where are the underlying

models, positional data and

market data sourced?

The Manager employs industry-recognized asset-based lending investment

management software to monitor and analyze underlying collateral risks. The

Manager has developed a proprietary risk management system designed to

evaluate credit risks and ongoing changes in asset quality.

4.2.5 List the primary risk measures

and limits used to manage the

risk profile (e.g. VaR limits,

stressed loss limits, net and

gross exposure limits, other

leverage limits, etc).

The Fund will seek, through portfolio construction, to minimize the specific risk

of any single investment and to reduce the overall volatility of returns. The Fund

may have certain target limitations with respect to size, industry, and geography

concentration of its ABL investments, as determined by the Manager; however,

there can be no assurance that these limitations will not be exceeded from time

to time.

4.2.6 Does the investment manager

operate stop loss or other

trading limits for the fund

and, if so, how are these set,

monitored and controlled?

Please respond with respect

to both individual position and

portfolio stop/losses.

Due to the illiquid nature of the investment assets and the lack of any organized

exchange or secondary market, a stop-loss limit is not applicable. The principal

risk management objective of the Fund is capital preservation and investments

are selected and structured to limit downside risks while still providing for

positive return expectations.

4.2.7 How are breaches of risk

limits handled and how it is

ensured that any necessary

remedial action has been

taken?

Active position monitoring on daily basis with collateral surveillance and valuation

assessments each month. Dominion over issuer cash allows for compulsory

reductions in exposure due to sudden collateral shortfalls. Remedial measures

could consist of increased monitoring, appointment of TECC staff, selling of

assets, or increase in collateral.

4.2.8

Does the chief risk officer

have the power to shut down

the fund’s positions?

N/A

4.2.9 List any third party risk

reporting services to which

the investment manager

provides data, indicating date

of engagement, the

funds/accounts covered, the

types of data provided and

the reporting frequency.

N/A

4.3 COUNTERPARTY RISK

4.3.1 How is counterparty risk

measured, managed and

controlled?

RBCITS is counterparty for standard OTC FX forward transactions, which require

the Fund to post sufficient collateral margin. Since the Fund only uses FX

derivatives for hedging purposes, settlement is netted across positions. RBCIS is

rated AA-/A-1+ by S&P and has more than $4 trillion in assets under admin.

4.3.2 Describe if this is a formalised

process and what is captured

to monitor the

counterparties?

Annual face to face meetings, and receipt and review of annual Report on

Controls (prepared in compliance with ISAE 3402,SSAE 16 and CSAE 3416).



4.3.3 Who owns and reviews the

escalation process if a

counterparty is in stress or

market volatility?

CFO and Portfolio Manager

4.3.4

Please provide an estimate of

the number of ISDA

counterparties being used by

the investment manager.

1

4.3.5 How much leverage does the

fund use and how is this

measured (i.e. state the

convention used) and

controlled?

The Fund does not rely on leverage to meet its investment objective; however,

leverage may be appropriate under certain circumstances. The Fund may

leverage its capital, from time to time, if it reasonably believes that use of

borrowings may enable the Fund to achieve a higher rate of return or if funds are

required for the continued operation of the Fund (including, for example,

making a payment of redemption proceeds). Accordingly, the Fund may pledge

its assets in order to make such borrowings. Notwithstanding the foregoing, at no

time will the total leverage of the Fund exceed 100% of the Net Asset Value of

the Fund (including any short-term borrowings).

Subject to the foregoing limitation on the use of leverage, the Fund may obtain

letters of credit/financial guarantees instead of cash borrowings. In all cases,

the recourse of any borrowing will be limited to the assets of the Fund.

4.3.6

If the fund has employed

leverage, please state the

peak leverage level and

lowest leverage level (to

date).

The Fund has not used any leverage since inception.

4.3.7 Do you have tri-partite

agreements between the

prime brokers and custodians

in place? Does the prime

broker have to seek margin

release from the custodian?

No prime broker required.

4.3.8 What is the fund’s typical

margin to equity?

N/A

4.4 LIQUIDITY RISK

4.4.1 How is liquidity measured and

controlled?

The investments made by the Fund are illiquid and not readily marketable;

however, the Manager endeavours to select investments that are short-term in

nature and are expected to be repaid within two years.

4.4.2 As per the table provided,

how long would it take in

normal market conditions,

stressed market conditions to

liquidate the fund without

incurring unusual costs?

1 day 5 days 2 weeks month +

Normal

conditions

6 months

Stressed

conditions

24 months



4.4.3 How do you ensure that the

liquidity terms provided to

investors appropriately

reflect the underlying

liquidity of the fund’s assets

and how would any mismatch

be handled?

An investment in the Fund is intended to be a long-term investment. However,

Unitholders may request redemption on 180 days’ notice subject to early

redemption charges in the first or second year, depending on the class of Units

being redeemed. If redemptions, in the aggregate, equal 10% or more of the

outstanding Units, then the Manager may elect to pay the redemption value over

12 months. The Manager may hold back up to 20% of the redemption amount to

provide for an orderly disposition of assets of the Fund, and may suspend

redemptions at any time.

The Manager typically maintains an allocation to cash of approximately 20% and

because maturity terms of ABL investments are staggered and ABL investments

have cash flow sweep and amortization terms from borrowers, there is ongoing

liquidity to meet payment obligations.

4.5 OPERATIONAL RISK

4.5.1 Describe the operational risk

management framework for

the fund, control processes

and accountability structures

currently operating within the

investment manager. Is there

a defined and documented

policy for the management of

operational risk?

The Manager has robust internal controls and procedures in place over each

stage of the investment cycle: origination, structuring and analysis, investment

approval, settlement and funding, monitoring, and accounting (including

valuation). The breadth of staffing and systems is more than sufficient for the

conduct of investments by the Fund, and ensures adequate segregation of duties

between investment approval and monitoring. No single person is authorized to

move assets outside the Fund, and all reporting and investment-related decisions

always involve two or more personnel.

4.5.2 How does the investment

manager ensure that

employees understand their

responsibilities for

implementing the operational

risk framework and associated

controls?

The Manager maintains and regularly updates an Internal Control Manual, and a

Policies and Procedures Manual, which govern all operational activities. All

employees agree in writing to adhere to the manuals.

4.5.3 Has the fund ever been

subject to fraud or attempted

fraud?

No

4.5.4

How are corporate actions

and proxy voting managed?

The Fund does not typically hold shares of public companies but, in the course of

making ABL investments, may receive equity kickers in its borrowers.

Manager does not delegate proxy-voting decision making to third parties. It takes

reasonable steps to vote all proxies received. A proxy voting policy is available

upon request.

4.5.5 Describe generally how the

investment manager is

addressing cyber security risks

that it faces.

Secure server environment with firewall at server-level and latest AVS at each

desktop, with monthly diagnostics and testing each month by local IT provider.

4.6 INVESTMENT RESEARCH

4.6.1 Describe the typical flow of an

investment idea from its

inception to the execution of

a trade. Please include a

description of how investment

ideas are ranked and selected.

Investments must meet Manager’s strict investment criteria to be selected. See

firm presentation for details of investment criteria and process.



4.6.2

Describe any in-house research

capacity and explain how

externally generated research

is used.

The majority of research is generated internally through the Manager’s team’s

experience, insights, and networks.

The research, analysis, and due diligence process may include research reports

on particular industries and companies, economic surveys and analysis, legal

searches and precedents, news, Internet searches, outside data services (e.g.,

Bloomberg, Capital IQ, LCD News, Thomson One), background investigations,

and other services that provide appropriate assistance to the Fund.

4.6.3 Which external research

services are used? List the

providers, the type of

research services provided and

a brief outline of the cost of

these services.

Bloomberg L.P. ~$30,000 per year

Thomson Reuters ~$30,000 per year

Thomsone One ~$30,000 per year

Capital IQ ~$20,000 per year

LCD News ~10,000 per year

4.6.4

Do you employ the services of

expert networks? If yes, how

are they monitored?

On a transaction by transaction basis. TECM and TECC may utilize industry

experts to provide market insights, due diligence, asset valuations, and ongoing

monitoring of transactions.

4.6.5 Describe your process and

practice for the back testing

of investment ideas.

N/A

4.6.6

Has the investment manager,

or any staff member,

published or commissioned any

research/academic papers?

Please provide details.

Dr. David G. Alexander has published the following academic papers:

“Earnings management and post-IPO governance: Guidelines for the

entrepreneur.” Entrepreneurial Practice Review, Vol. 1 (2010).

“Corporate governance and earnings management: Beyond agency theory and

secondary data.” International Journal of Corporate Governance, Vol. 2 (2010).

“The impact of three board characteristics, moderated by CEO attributes, on

earnings management.” DBA dissertation, Nova Southeastern University,

Florida, USA (2011).

The Manager has not commissioned any specific research, other than primary

research in connection with its due diligence of potential investment

opportunities.

4.7 TRADING

4.7.1 Describe the fund’s trade

lifecycle and provide a

systems flow diagram and a

description of the technology

used.

Trades are allocated at the time of Manager approval of an investment and

issuance of a commitment letter (or similar agreement) to the borrower on a pro-

rata basis according to order size and investable assets of each account.

4.7.2 Which staff members are

authorised to trade on behalf

of the fund? Please list their

names and outline the scope

of their trading responsibility.

If the investment manager has

a separate trade execution

team, identify which persons

listed are on it and outline

their relevant experience.

Arif N. Bhalwani is responsible for selecting and allocating the investments for

the Fund and is authorized to trade on behalf of the Fund.



4.7.3 Describe the limit structures

within which employees

operate for the fund including

who determines the limits,

how they are controlled and

the process followed if limits

are breached.

Arif N. Bhalwani is responsible for determining limits based on the investment

restrictions of each account. The Board of Directors reviews each trade at time

of investment and compliance with the Fund terms on at least a monthly basis.

4.7.4 Who enters the executed

trades into the front office

systems and from where is the

trade information sourced?

N/A

4.7.5 How are trades confirmed

with the counterparty? Who is

responsible for this, when is it

done and how do you ensure

that all trades have been

confirmed and reconciled

against instructions and

inventory?

All transactions are completed with major law firms and financing proceeds are

typically routed via such law firms’ escrow accounts in order to ensure all loan

conditions and collateral requirements are satisfied prior to closing.

4.7.6 Please describe the trade

allocation process (including

the handling of partial or split

fills and the timing of trade

allocation). Please also

describe the controls in place

to ensure that trades are

allocated fairly across

different investment vehicles.

Trades are allocated at the time of Manager approval of an investment and

issuance of a commitment letter (or similar agreement) to the borrower.

Investments are allocated on a pro-rata basis to all funds with substantially

similar strategies on a pro-rata basis according to order size and investable

assets of each account.

4.7.7 Does the manager undertake

any portfolio level hedging?

If so, please describe (i) who

is responsible for this activity,

(ii) any limits placed on this

activity, and (iii) the

methodology used to allocate

the profit or loss from these

trades to the underlying funds

or accounts.

Hedging is not integral to achieving investment objective due to the low market

correlation of assets. The Manager may hedge unwanted currency exposures

from time to time, provided such hedging opportunities are available on terms

that the Manager considers to be economically attractive.

The Fund is not obligated to hedge against fluctuations in the value of the

Fund’s individual ABL investments as a result of changes in market interest

rates, currency changes, or other strategies. events, but intends to mitigate

such risks through structuring and favourable ABL loan terms (including, but not

limited to, interest rate floors, availability reserves, and assignment rights). The

Manager shall have sole discretion in determining when or whether to engage in

hedging.


manager’s policy regarding

trading errors in respect of

the fund. Please indicate any

ways in which this policy

differs from trade error

policies in effect with respect

to other vehicles you manage

using a similar strategy.

There has been no history of any trading errors due to multiple party

involvement in the trade execution process. All transactions are completed with

major law firms and financing proceeds are typically routed via such law firms’

escrow accounts in order to ensure all loan conditions and collateral

requirements are satisfied prior to closing.



4.7.9 Have there been any material

trading errors in the past two

years? If so, please (i)

quantify the P&L impact or

cost and which entity did it

relate to and (ii) outline the

steps taken to ensure that the

error could not re-occur.

No.


make use of “soft dollars”,

dealing commission or

commission sharing

arrangements? If so, explain

how they are managed and

attach any policies covering

these areas. Describe the type

of research services purchased

with fund assets (including

soft/dealing commission), by

content and form, and how

the quality and cost of such

services are assessed.

No.


have any relationships which

might reduce its trading

flexibility or threaten best

execution?

No.

4.7.12 Describe the operational

processes and parties used to

support and verify the fund’s

trading activity from trade

booking to confirmation,

accounting and settlement.

Highlight the key controls and

reconciliations of the fund’s

trading activity, including:

(i) the frequency with

which each control or

reconciliation is

performed

(ii) the party responsible for

the control or

reconciliation

(iii) the exception reporting

and issue escalation

process.

Note: If the same operational

process is used to support

multiple trading entities

complete this section once

and cross reference for

subsequent funds.

TECACT’s trades are loans. Trades are booked into the NAV by the administrator

and reconciled by the finance department. The NAV is calculated monthly but

cash is monitored and recorded daily for movements related to each loan

(advances, repayments, interest and fee payments, etc.).

Trade tickets are created and signed for each advance and reconciled to cash

movement. Billing statements are issued to each borrower monthly that are

reconciled to cash movements, trade tickets and the NAV. Billing statements are

created by the operations department and reviewed for accuracy by the finance

department and the administrator. When loans are repaid a final payout

statement is issued to the borrower with the same controls as the monthly billing

statements.

Any exceptions or reconciliations are dealt with immediately and are done by the

finance department in conjunction with the portfolio manager, operations

department and the administrator.



4.7.13 Does the fund make any

payments to specific trading

groups within the investment

manager that are a function of

gross trading profits and which

reduce the net profits to the

investor?

No.


engage in cross trading

involving the fund? If so,

describe the process, purpose,

the general amounts and

frequency. Please also

indicate how and when the

price at which such trades are

made is determined.

No.

4.7.15 Does the fund permit principal

trading? If so, what is the

process used to obtain any

required investor consents.

N/A. The Fund is usually one of several participants in loans syndicated across

accounts managed or advised by the Manager.

4.8 EXECUTING BROKERS

4.8.1 List all executing brokers

used, the types of trades

executed with each and the

name of the clearing or prime

broker to whom executed

trades are given-up.

There are no executing brokers or prime broker.

4.8.2

Is there any affiliated broker

dealer through which the fund

is trading investor capital?

No.

4.8.3

Describe how potential

conflicts of interest with

respect to executing brokers

are identified, managed and

monitored.

There are no executing brokers.

4.9 TREASURY

4.9.1 Describe the cash

management policy used for

the fund.

Any unallocated cash will be held by the fund until such time as the Fund

identifies attractive investment opportunities or requires additional funding for

portfolio management purposes. Any reserve cash held by the Fund will be used

to manage cash flows, pay expenses, and facilitate redemption payments. Such

reserve will be held in an interest-bearing account or invested in money-market

funds, other short-term instruments or government Treasury bills.

4.9.2 How are transfers of securities

or payments of cash effected

for the fund?

Through the trustee via written instructions signed by two authorized signatories of

the Manager.

4.9.3 Who is responsible for

preparing wires or transfer

requests? How are they

checked and who is authorised

to approve them?

The finance department prepares wires or transfer requests (usually prepared by

the controller and checked by the CFO). Two authorized signatories of the

Manager, one of which is always the portfolio manager for trade related matters,

are required to release wires.



4.9.4 What proportion of the fund’s

NAV is held in unencumbered

cash? How is unencumbered

cash calculated, monitored

and controlled?

The Fund intends to maintain cash levels of 20-30%. Cash positions are reconciled

as as frequently as required, usually daily but no less often than monthly.

4.9.5 Where is the fund’s

unencumbered cash currently

held? Does the investment

manager or the fund have any

other relations(s) with the

relevant entity and does any

party have a legal interest in

the unencumbered cash held

by that party?

Cash is held in accounts at RBC Investor Services Trust and at Royal Bank of

Canada. TECACT uses RBC Investor Services Trust as it’s trustee (for

recordkeeping, custody services and administration) as well as the Fund’s FX

forward counterparty. TECACT is the only party that has a legal interest in the

unencumbered cash held by TECACT.

The investment manager also has bank accounts at Royal Bank of Canada.

4.10 FUND GOVERNANCE

4.10.1 List the fund’s current

directors, their date of

appointment, a brief

biography for each, details of

any other directorships they

hold and any potential

conflicts of interest,

including, but not limited to,

any immediate familial

relationships with any

employee of the investment

manager or its affiliates and

any business relationships

with the investment manager

or its affiliates that are not

arms length commercial

arrangements available to the

public at large.

Arif N. Bhalwani

Arif N. Bhalwani is a Director, Chairman, President, Chief Executive Officer,

Portfolio Manager, and Managing Director of TECM. He is also a founder and

President of TECC, an affiliate that specializes in the origination, analysis,

servicing, monitoring and management of senior, secured commercial loans,

including, without limitation, working capital revolving lines of credit, fixed asset

term loans, mortgages, leases, acquisition financing, deferred sales contracts,

and structured credits. From its inception in October 2005 until July 2008, TECC

originated, underwrote, and serviced asset-based loans for a major Canadian

pension fund under a CAD$300 Million capital commitment, and generated

average annual net returns of approximately 13% during this period, with no

investment losses. In 1998, Mr. Bhalwani co-founded Pinnacle Capital, a highly-

regarded early-stage, specialty venture capital and private equity firm, and

registered limited market dealer, based in Toronto, Canada, with a successful

ten-year track record of investing its own capital and advising on over $100

Million in third-party funds. Pinnacle Capital has made successful private

investments in a wide range of industries, including information technology,

Internet and new media, energy services, advanced manufacturing, and

biotechnology. From 1995 to 1997, Mr. Bhalwani was a major shareholder and

director of a large Canadian construction contractor that he helped turn around

and eventually sell. He has also founded, managed, and sold companies in the

retail automotive and computer services industries. Mr. Bhalwani is a member of

the CFA Institute, the Canadian Venture Capital and Private Equity Association,

and the Turnaround Management Association. He is also a director of the

Commercial Finance Association. Mr. Bhalwani received a Master of Business

Administration from the Queen’s School of Business, completed post-graduate

studies at Harvard Business School, and holds the Chartered Financial Analyst

designation



Dr. David G. Alexander

Dr. David G. Alexander is a Director, Vice-Chairman, and Managing Director of TECM.

He is also a founder, Director, and Managing Director of TECC. Dr. Alexander has an

extensive and distinguished career in asset-based finance and commercial credit, and

has held management and executive positions at Business Development Bank, RoyNat,

Traders/Guaranty, Tuckahoe Leasing, and The CIT Group. As an entrepreneur, he

helped lead a management buyout at Tuckahoe Leasing in 1991 and, as CFO, helped

with the company's turnaround and eventual sale to Textron Financial in 1995. From

1995 to 1999, Dr. Alexander was founder and CEO of Securcor Ltd., a commercial

finance company he sold to The CIT Group in 1999. Dr. Alexander subsequently

became President and CEO of The CIT Group's Canadian operations, and led the

successful portfolio build in ABL products until the company's merger with Newcourt

Credit. In 2000, Dr. Alexander joined Pinnacle Capital, a successful Canadian early-

stage venture capital and private equity firm, where he provided strategic advice and

corporate governance to selected portfolio companies, and participated in

combination private debt/equity placements. Dr. Alexander received a Doctorate in

Business Administration from the H. Wayne Huizenga School of Business and

Entrepreneurship in Florida, a Master of Business Administration from the Richard Ivey

School of Business, and is a Certified Management Accountant. He is a Certified

Corporate Director (ICD.D). In addition, Dr. Alexander is a past Governor of the

Society of Management Accounts of Ontario, and was formerly a trustee, chair of

audit and finance and member of the investment committee of the Healthcare of

Ontario Pension Plan (HOOPP), which has approximately CAD$26 Billion in net assets

under management.

4.10.2 Does the fund indemnify the

directors? Please describe

any indemnity provided.

The Manager and its related entities, affiliates, subsidiaries and agents, and their

respective directors, partners, officers and employees and any other person will at

all times be indemnified and saved harmless by the Fund from and against all legal

fees, judgments and amounts paid in settlement, actually and reasonably incurred

by them in connection with the Manager’s services provided pursuant to the Trust

Agreement, provided that the Trustee has reasonable grounds to believe that the

action or inaction that caused the payment of the legal fees, judgments and

amounts paid in settlement was in the best interests of the Fund and provided that

such person or companies shall not be indemnified by the Fund where: (i) there has

been negligence, wilful misconduct or dishonesty on the part of the Manager or

such other person; (ii) a claim is made as a result of a misrepresentation contained

in any current offering memorandum or like offering documents of the Fund

distributed or filed in connection with the issue of Units and officers, directors or

partners of the Manager have granted a contractual right of action forming part of

any current offering memorandum or like offering documents of the Fund; or (iii)

the Manager has failed to fulfill its standard of care or other obligations as set forth

in the Trust Agreement, unless in an action brought against such persons or

companies they have achieved complete or substantial success as a defendant.

4.10.3 How often does the fund’s

board meet and where are

board meetings usually held?

The Manager’s Board of Directors meets on a quarterly basis at the offices of the

Manager in Toronto, Canada.

4.10.4 How many directors are

required for the board to be

quorate?

A quorum of two Board of Directors members is required.



4.10.5

Which reports or matters are

considered or reviewed by the

directors at each board

meeting?

Risk reports, portfolio attribution and statistics, compliance report (including

annual CCO report), financial statements and NAV reports of the Fund,

valuations, operations audits, regulatory matters and submissions, service

provider assessments and appointments.

4.10.6

Does the board consider

reports or take advice from

third parties other than its

regular service providers

identified in this

questionnaire?

No

4.10.7

Who has the authority to

appoint third party service

providers such as lawyers,

administrators, auditors,

brokers, prime brokers,

depositaries/custodians and

to establish relationships with

new counterparties (i.e. fund

governing body only,

investment manager through

delegated authority, service

providers through delegation

arrangements (with or without

prior approval, etc)?

The Manager.

4.10.8 Describe the due diligence

process used to (i) select the

fund’s service providers, (ii)

assess and monitor the

activities of the fund’s service

providers taking into account

the full range and quality of

their respective services, and

(iii) assess and monitor the

financial soundness of the

service provider in the case of

any administrator, depositary

and prime broker.

The Manager only engages experienced service providers with established

reputations. Due diligence for all service providers includes, without limitation,

telephone interviews, personal meetings and site visits, reference checks,

insurance verification, and internal control assessments (where applicable).

The service providers’ internal controls must meet a similar level of assurance as

the Manager, and the Manager requires independent verification that the service

providers’ controls environment is designed and operating effectively. A SAS 70

report or similar document is required from each service provider, where

applicable.

4.10.9 Describe how potential

conflicts of interest with

respect to the fund’s service

providers are identified,

managed, monitored and

disclosed to the investors.

There are no conflicts of interest with respect to the Fund’s service providers.

4.10.10 Who holds the fund’s voting

shares (or equivalent)?

N/A



4.11 FEES AND EXPENSES

4.11.1

Provide the following

information with respect to

the management fees for each

class:

(i) the management fee paid

in the last three completed

financial years as an

aggregate amount for each

class, in each case expressed

in the base currency of the

fund and as a percentage of

the average NAV; and

(ii) the current rate of the

management fee for each

class, the basis on which it is

calculated, the frequency of

payment and whether

calculations and payments are

made in arrears.

(i) 2013 $4,734 (0.5% of avg NAV); 2014: 80,255 (1.3% of avg NAV)

(ii) Manager receives a management fee from the Fund attributable to each of the

Class A Units, Class D Units, Class F Units, Class FD Units, Class I Units, and Class

ID Units. No Management Fee is payable by the Fund to the Manager in respect of

Class E and Class ED Units. Each class of Units is responsible for the Management

Fee attributable to that class.

Class A Units:

The Fund pays the Manager a Management Fee equal to 1/12 of 2.0% of the Net

Asset Value of the Class A Units, plus any applicable taxes, calculated and

payable on a monthly basis.

Class D Units:


Asset Value of the Class D Units, plus any applicable taxes, calculated and


Class E Units:

There is no Management Fee payable by the Fund to the Manager in connection

with the Class E Units.

Class ED Units:

There is no Management Fee payable by the Fund to the Manager in connection

with Class ED Units.

Class F Units:


Asset Value of the Class F Units, plus any applicable taxes, calculated and


Class FD Units:

The Fund pays the Manager a Management Fee equal to 1/12 of 1.0% of the Net Asset Value of the Class FD Unit, plus any applicable taxes, calculated and payable on a monthly basis.

Class I Units:

Subject to the discretion of the Manager, investors who purchase Class I Units

must either (i) enter into an agreement with the Manager which identifies the

monthly Management Fee negotiated with the investor which is payable by the

investor directly to the Manager; or (ii) enter into an agreement with the Fund

which identifies the monthly Management Fee negotiated with the investor,

which is payable by the Fund to the Manager. In each circumstance, the monthly

Management Fee, plus any applicable taxes, is calculated based on the Net Asset

Value of the Class I Units as at the most recent Valuation Date and payable on a

monthly basis.



Class ID Units:

Subject to the discretion of the Manager, investors who purchase Class ID Units

must either (i) enter into an agreement with the Manager which identifies the

monthly Management Fee negotiated with the investor which is payable by the

investor directly to the Manager; or (ii) enter into an agreement with the Fund

which identifies the monthly Management Fee negotiated with the investor,

which is payable by the Fund to the Manager. In each circumstance, the monthly

Management Fee, plus any applicable taxes, is calculated based on the Net Asset

Value of the Class ID Units as at the most recent Valuation Date and payable on a

monthly basis.

4.11.2

Provide the information

indicated in the table with

respect to the performance

fees, if any, for each class.

Indicate, where relevant, any

performance fee amounts that

have vested, but have been

deferred and remain to be

paid by the fund and the

schedule of any remaining

payments.

Category Fund

Annual percentage All Classes 20%

Calculation methodology

If the increase in the Net Asset Value per

Unit of the particular class of Units (before

calculation and accrual for the

Performance Fee) from January 1 (or the

inception date of the class of Units, as the

case may be) to December 31 of a

particular fiscal year exceeds 8% (the

“Hurdle Rate”) for the same period (or

prorated for partial periods of less than 12

months) and such return is between 8% and

10% on an annualized basis, then any

amount above the Hurdle Rate shall be

payable to the Manager as a Performance

Fee, plus applicable taxes. If the increase

in the Net Asset Value per Unit of the

particular class of Units (before calculation

and accrual for the Performance Fee) in the

particular fiscal year exceeds the Hurdle

Rate and is 10% or more on an annualized

basis, then 20% of the entire return

(including, for greater certainty, the Hurdle

Rate) shall be payable to the Manager as a

Performance Fee, plus applicable taxes.

If the performance of a particular class of

Units in any year is positive but less than

the Hurdle Rate (the “Shortfall Amount”),

then no Performance Fee will be payable

in that year in respect of that class of

Units, however, the Shortfall Amount shall

not be carried forward to subsequent

fiscal years. If the performance of a

particular class of Units in any year is

negative (a “Negative Return”), than the

amount of such Negative Return will be

added to the subsequent year’s Hurdle

Rate when calculating whether a

Performance Fee is payable for that class

of Units in such fiscal year. The

Performance Fee in respect of each class

of Units will be calculated and accrued

monthly and will be payable on an annual

basis.



Hurdle rate (Y/N) Y

Reset of high water mark

Y

Equalisation methodology, if any

The Performance Fee is calculated at a

unit class level based on the increase in

the Net Asset Value of the unit class, after

adjusting for subscriptions and

redemptions. No share equalization

approach is used.

Frequency of payment and vesting schedule

Annualy

Amount of performance fees paid in last three financial years of the fund, expressed in the base currency of the fund and in basis points

2013: $25,521 (1.4% of avg NAV); 2014: $58,514 (0.95% of avg NAV)

4.11.3 Break down and quantify the

major categories of other fees

or expenses charged directly

to this fund. Please use

amounts from the last audited

financial statements and add

notes to explain any

exceptional or material costs.

Show amounts in both the

base currency of the fund and

basis points.

See annual audited financial statements. Besides management and performance

fees the major expenses are Administrative Fees ($123,251) and Audit Fees

($18,290). These amounts equate to 1.17% and 0.17% of the December 31, 2014

NAV respectively.

The Manager aborbed $59,277 in expenses on behalf of the Fund in 2014.

4.11.4 Do all investors in this fund

pay the same fees? If not,

please explain by type or

category of investor and

detail how these

arrangements are

documented, how any fee

rebates are handled and any

policies covering this area.

All investors pay the same fees with the exception of management fees

depending on which share class they are invested in (see Section 4.11.1)

4.11.5 Quantify any unamortised

launch costs, the remaining

amortisation period and

explain the policy for

amortising these costs.

At October 31, 2015 there are $85,586 of unamortized fund launched costs. They

are being amortized over five years beginning September 2013 and concluding

August 2018.



4.12 SUBSCRIPTIONS

4.12.1 Is the fund open to new

subscriptions and, if so, when

can new subscriptions be

made and how much notice is

required?

Monthly subscriptions.

Units may be purchased as at the close of business on a Valuation Date provided

that a duly completed subscription form and payment of the applicable

subscription amount are received by RBC Investor Services Trust (the Service

Provider to the Fund on behalf of the Fund) or the Manager (in cases where the

subscription is processed through the Manager acting in its capacity as Exempt

Market Dealer) by no later than 4:00 p.m. (Toronto time) on such Valuation Date

(the “Subscription Deadline”). The issue date for subscription orders received

and accepted after 4:00 p.m. (Toronto time) on a Valuation Date will be the

next Valuation Date. No certificates evidencing ownership of Units will be

issued to Unitholders.

4.12.2 What is the minimum initial

subscription amount?

$150,000. Units are being offered on a continuous basis to an unlimited number

of eligible subscribers: (i) who qualify as “accredited investors”; (ii) who are

prepared to invest a minimum initial subscription amount of $150,000; or (iii)

otherwise qualify to purchase Units pursuant to another available exemption

from the prospectus requirement under applicable securities legislation in the

Offering Jurisdictions. The minimum initial investment in Units for subscribers

who qualify as “accredited investors” is $10,000.

4.12.3 Are subscription fees charged? No

4.12.4 What is the minimum amount

for any subsequent

subscription?

$5,000

4.12.5 Are certain share classes of

the fund available in different

currencies or unavailable to

some investors (e.g. due to

eligibility criteria)? List the

terms for different classes and

note whether they are

currently open for

subscription.

All classes of Units are denominated in CAD.

Class A,,$1,000 denominations - Open

Class D, $1,000 denominations - Open

Class E, $1,000 denominations - Open

Class ED $1,000 denominations – Open

Class F, $1,000 denominations - Open

Class FD, $1000 denominations - Open

Class I, $1,000 denominations - Open

Class ID, $1,000 denominations - Open

4.12.6 Are there any capacity

constraints for the fund or any

share class?

TECM believes that the capacity of the Fund is approximately $250 Million,

although a firm cap has not been set.

4.13 REDEMPTIONS

4.13.1 Are redemptions processed at

NAV, on the basis of a

bid/offer spread or based on

some other method?

Processed at NAV.

4.13.2 When can investors redeem

from the fund and how much

notice is required?

Monthly with 180 days’ notice.

4.13.3 Describe the terms of any

lock-up period and whether it

applies to all investors.

Class A, Class E, Class F: 2% charge in 1st year.

Class D, Class ED, Class FD: 2% charge in 1st year, 1% in 2nd year.



4.13.4 Describe the methodology

used to process fund

redemptions where there are

multiple subscriptions from a

particular investor, some or

all of which are within the

lock-up period, if any.

FIFO

4.13.5

How much of the fund’s NAV

is locked up? Provide a table

showing when the lock-ups

expire and for what amount.

None

4.13.6 Has the redemption notice

period of the fund ever been

waived or changed and, if so,

under what circumstances?

No

4.13.7 Has any investor in the fund

ever been given better terms

through the use of “side

letters”, or a most favoured

nation clause? Please provide

a summary of the terms

agreed.

Yes. The Manager signed a fees arrangement agreement with Fiera Capital on

May 30, 2014 with respect to the Fund that provides for reduced management

and performance fees upon Fiera Capital achieving certain minimum amounts of

invested capital (at cost).

4.13.8 Under what circumstances can

redemptions be suspended

and which party or entity has

the right to suspend

redemptions?

At any time that the Manager decides in its discretion.

4.13.9 Detail any times when

redemptions have been

suspended and include

background as to why it was

necessary.

Redemptions have never been suspended.

4.13.10 Describe how and when

redemption proceeds are

paid, whether interest is paid

on redemption proceeds and,

if so, how it is calculated.

Payment of the redemption amount will generally be made to the redeeming

Unitholder not later than the 30th day following the applicable Valuation Date (or

60 days following a Valuation Date if such Valuation Date is the Fund’s fiscal

year-end) for which such redemption is effective. Interest is not paid on

redemption proceeds.

4.13.11 Does the fund have the right

to redeem “in specie” or “in

kind”? If so, please describe

under what circumstances “in

specie” or “in kind”

redemption might be

considered, the types of asset

which might be delivered, the

valuation policy and how the

process would be managed.

No.

4.13.12 Has the fund ever redeemed

“in specie” or “in kind”? If

so, please describe the

background circumstances and

the type of assets distributed.

No.



4.13.13 Describe any gates (fund-

level, class-level or investor-

level), the way in which the

gate threshold is determined,

the circumstances under

which the gate would be

applied and the treatment of

any requested redemption

amount in excess of the gate.

N/A

4.13.14 Which party or entity has the

right to operate or waive the

operation of the gate?

N/A

4.13.15 Detail any times when gates

have been operated on fund

redemptions and include

background as to why it was

necessary to operate the

gate.

N/A

4.13.16 Has the fund ever created a

side pocket or similar (e.g.

synthetic side pocket,

liquidating trust)? If so,

please describe the

background circumstances,

the type and amount of assets

transferred, the fees charged

and for how long it was

operated.

No

4.13.17 If you answered yes to

4.13.16, please describe the

accounting and reporting

policy used in the side pocket

for the residual fund, new

vehicle and composite.

N/A

4.14 TRANSFERS AND OTHER SECONDARY MARKET TRANSACTIONS

4.14.1 Describe the terms, if any,

under which an investor may

request that the fund makes

the transfer of all or part of

the investor’s holding to

another person.

N/A

4.14.2 Describe any means by which

an investor may make a

secondary market transfer.

N/A



4.15 PERFORMANCE, REPORTING AND INVESTOR PROFILE IF THE FUND IS A MASTER FUND, PLEASE LOOK THROUGH ANY FEEDER FUNDS WHEN RESPONDING TO QUESTIONS 4.15.5, 4.15.6, 4.15.7 AND 4.15.8 IN THIS SECTION.

4.15.1 Identify and explain:

(i) the five largest monthly

gains since inception of

the fund (expressed in

%),

(ii) the five largest monthly

losses since inception of

the fund (expressed in

%).

(i) Class A: 3.42%. 1.27%. 1.23%, 1.08%, 1.00%

(ii) None

4.15.2

To which performance

databases/data aggregators

does the investment manager

report regarding the fund’s

performance?

None

4.15.3 With respect to any regular

fund correspondence or

reporting sent to investors,

describe the frequency of

distribution and, where

possible, how the information

is distributed.

Monthly portfolio snapshots, quarterly (in-depth) performance reporting,

including position detail, attribution data, and commentary. Annual audit

report, any additional independent valuer opinion, and Manager’s investment

review and outlook. Information is distributed via mail or email.

4.15.4 What portfolio data does the

investment manager provide

to investors and with what

frequency and on what time

lag?

Monthly portfolio snapshots, describing loan amount, status, condition, collateral,

NAV, and material events. Provided within 30 days of month-end.

4.15.5

Provide a breakdown of the

fund by investor type:

Type of Investor % of NAV

Non-financial corporations

Banks (proprietary)

Non-bank broker-dealers

Insurance companies

Other financial institutions 74.2%

Pension plans/funds

General government

Endowments/foundations/charities

Family offices 21.4%

U.S. registered investment companies

Fund of funds

High net worth individuals 0.4%

Sovereign wealth funds

Key employees of the investment manager

4.0%

Other

TOTAL 100%

4.15.6 What percentage of the fund’s

NAV was held by the largest

single investor or group of

investors acting together?

74.2%



4.15.7 Does the fund have a seed

investor? If so, please describe

their relationship with the

investment manager and its

partners or employees and

highlight any areas where

their terms, rights, ability to

influence the investment

manager or access to

information are different to

those of other investors.

Yes, Arif N. Bhalwani.

4.15.8 What have been the five

largest capital withdrawals

from the fund since inception?

Please provide the (i) date of

the withdrawal, (ii) the % of

NAV as of the withdrawal

date, (iii) whether it was a

full or partial redemption, (iv)

whether any fund gate or

other liquidity restriction was

imposed and the reason for

the withdrawal (if known).

The Manager voluntarily redeemed two accredited investors due to small size and

high administrative burden: (i) April 30, 2015: 0.01% of NAV; and (ii) April 30,

2015: <0.01% of NAV. Full withdrawal. No gate or other restrictions imposed.

4.15.9 Are any of the key individuals

(at the investment manager)

investors in the fund? If so,

what portion do they own in

the aggregate?

Yes. 4.0%

4.15.10 How are the investments by

partners/employees or

related parties structured?

Please explain the key terms

and highlight any differences

between the terms of the

partners, employees, any

related parties and those of

other investors.

All employees are motivated to invest a pre-determined portion of bonuses into

one or more funds advised by TECM. Founders and employees, and their

relatives, invest in either Class E or Class ED Units which pay no management

fees.

4.16 VALUATION

4.16.1 Who has the ultimate

authority for the valuation of

the fund’s assets? If there is a

valuation committee, provide

the names of the members of

that committee and indicate

whether each person named is

an executive or non-executive

member.

The Net Asset Value of the Fund is determined by RBCITS, who may consult with

the Manager and the auditors of the Fund.

4.16.2 Discuss whether and to what

extent members of the


portfolio management team

are involved in the valuation

of the fund’s assets and how

any resultant conflicts of

interest are managed.

The Fund’s investments in loans are measured at amortized cost and are reviewed

monthly for possible impairment. They are categorized as loans and receivables

for IFRS purposes. There are no conflicts of interest.



4.16.3 How are the fund’s directors

involved in the oversight of

the valuation process?

Directors give final approval of monthly valuations.

4.16.4 When was the pricing and

valuation policy last updated

and by whom was the current

version approved?

Valuation policy is in accordance with IFRS which went into effect January 1,

2014.

4.16.5 Who calculates the NAV of the

fund? How often is it

calculated and how is it

reconciled and approved?

Does the investment manager

operate a shadow NAV

process?

The Net Asset Value of the Fund is determined by RBCITS, who may consult with the Manager and the auditors of the Fund. The NAV is calculated and reconciled on a monthly basis. TECM does complete a shadow NAV to ensure consistency.

4.16.6

If the administrator is

involved in the valuation

process, indicate in which

capacity.

□ Valuation of some or all assets as an external valuer

□ Calculation of NAV as a valuation service provider

□ Neither

Both

4.16.7 Has the fund’s NAV ever been

restated? If so, please explain

when this occurred, the

reasons for the restatement

and action(s) taken to ensure

that the underlying issue

requiring the restatement was

resolved.

No.

4.16.8 Is an independent third party

or independent valuation

expert used to value some or

all of the fund’s assets? If,

so: (i) which assets are

covered? (ii) how often are

the assets valued?

(iii) from where does the third

party/valuation expert source

transactional and market

data?

TECM has retained KPMG LLP (Canada) to conduct at least annual reviews and

valuations of the Fund’s assets. In addition, the Fund has retained BDO Canada

LLP to conduct periodic valuation and policy compliance audits.

4.16.9 What percentage of the fund

is not independently valued?

0%

4.16.10

If the independent valuation

expert is not the

administrator, describe the

process whereby the fund

values are verified (noting

who is responsible for

verification), any differences

or disputes are resolved and

the values are delivered to

the administrator and used in

NAV calculation.

N/A

4.16.11 Are any models used in

valuations?

No



4.17 BANK ACCOUNTS PLEASE REPEAT THIS SECTION FOR EACH FUND BANK ACCOUNT NOT PREVIOUSLY MENTIONED

4.17.1 Name of parties with whom

fund’s bank accounts are

held.

RBC Investor Services Trust and Royal Bank of Canada

4.17.2 Describe the purpose of the

account and typical balances

held on the account.

To receive subscriptions and pay redemptions; to fund investments and collect

interest and fees and loan repayments; to pay expenses. Balances fluctuate

depending on levels of investments at any given time.

4.17.3 List all individuals authorised

to operate the account.

RBCIS Investor Services Trust – They will only act on written instructions or

approval from Arif N. Bhalwani.

Royal Bank of Canada – Arif N. Bhalwani, Brian Hick, Christopher Kwan (subject to

controls set up for outgoing wires).

4.17.4 What are the limitations on

how the account moneys can

be used or transferred?

Controls in place for outgoing wires. All expenses must be approved by the

portfolio manager. Two authorized signatories for movement of funds, with one

of them being portfolio manager if related to trades.

4.18 TAX MATTERS

4.18.1 Does the fund do its

accounting in accordance with

FIN48 or another similar

standard?

N/A – FIN 48 is a U.S. standard. Fund accounted for using IFRS.

4.18.2 Are subscriptions or

redemptions of interests in

the fund subject to stamp or

registration taxes in the

jurisdiction in which it is

incorporated?

No.

4.18.3 Is the fund subject to any tax

on gross/net assets in the

jurisdiction in which it is

incorporated?

No.

4.18.4 Please state the status of the

fund for the purposes of each

of the following tax

information reporting

regimes:

U.S. FATCA

UK arrangements with

the Crown Dependencies

and Overseas Territories

EU Savings Directive

Please confirm that the fund

(either itself or through its

delegate) employs due

diligence procedures that

meet the requirements of the

regimes and is not, nor is

likely to be, in default of its

obligations under the regimes.

N/A – Canadian Investors only.



4.18.5 Please identify any tax

legislation of any jurisdiction

that may affect the treatment

for tax purposes of investors

in the fund and which it is the

policy of the fund and/or the

investment manager to

provide information to

investors or take other steps

to enable investors to comply

with obligations under such

legislation.

N/A – FIN 48 is a U.S. standard. Fund accounted for using IFRS.

4.18.6 Has the fund made an election

under U.S. “check the box”

rules or other entity

classification rules to be

treated for the purposes of

the taxes of any jurisdiction

(where it is a corporation in

legal form) as a partnership or

tax transparent entity or

(where it is a partnership in

legal form) as a corporation or

tax opaque entity?

N/A – not subject to U.S. tax.

PART 5: FUND SERVICE PROVIDERS THE FOLLOWING QUESTIONS SHOULD BE ANSWERED IN RELATION TO ALL OF THE FUND’S KEY SERVICE PROVIDERS, OTHER THAN THOSE WHO WILL HAVE FILLED OUT PARTS 1, 2.1, 2.3 AND 3 OF THIS QUESTIONNAIRE. WHERE THERE IS MORE THAN ONE SERVICE PROVIDER OF A PARTICULAR DESCRIPTION, PROVIDE A SEPARATE SET OF ANSWERS FOR EACH AND DIFFERENTIATE BETWEEN THEM BY MARKING THEM “A”, “B”, “C”, ETC.

5.1 AUDITOR

5.1.1 Organisation name (legal name

and any other business names

used, if applicable):

KPMG LLP

5.1.2 Principal business address:

333 Bay Street, Suite 4600, Bay Adelaide Centre,

Toronto, Ontario, M5H 2S5

5.1.3 Telephone: 416-777-8500

5.1.4 Website:

www.kpmg.ca

5.1.5

Primary contact:

name:

title:

telephone:

e-mail:

James Loewen

Partner

416-777-8427

[email protected]

5.1.6

Who appointed the auditors? □ Fund governing body

□ Master fund governing body

AIFM/investment manager

□ Other (indicate who):

http://www.kpmg.ca/




5.1.7

What was the effective date of

the appointment under the

engagement letter?

Since 2008. However, TECC has had a professional relationship with KPMG LLP in

Canada since October 2005, and the principals of the Manager have had a

professional relationship with the same firm for over twenty years.

5.1.8 Have the fund’s financial

statements ever been qualified

in any way?

No

5.1.9 Has the auditor been changed

in the last three years? If so,

please provide the name of the

former service provider and

explain the reason for the

change.

No

5.1.10

Provide details of any audit-

related services provided by the

auditing firm to either the fund

or the investment manager.

KMPG is the auditor of the Fund and due to the nature of the Fund’s ABL

investments performs a valuation of each investment before completing audit.

5.1.11 Provide details of any non-audit

services provided by the

auditing firm to either the fund

or the investment manager.

None.

5.2 FUND COUNSEL

5.2.1 Organisation Name: McMillan LLP

5.2.2 Address:


Toronto, Ontario M5J 2T3

5.2.3 Telephone: 416-865-7284

5.2.4 Website:

www.mcmillan.ca


name:

title:

telephone:

e-mail:

Margaret C. McNee

Partner

416-865-7284

[email protected]

5.2.6 When did the fund appoint its

legal adviser? Briefly describe

the type of advice they have

supplied throughout the

relationship.

2008. Development of fund-related legal documents and assistance with

regulatory applications and filings and development of certain legal and

compliance policies.

5.2.7 Has the fund switched legal

advisers in the last three years?

If so, please provide the name

of the former service provider

and explain the rationale for

the change.

No

5.3 LOCAL COUNSEL IN THE JURISDICTION OF FUND’S ESTABLISHMENT

5.3.1 Organisation Name: Same as 5.2.1. through 5.2.7

5.3.2 Address: Same as 5.2.1. through 5.2.7

http://www.mcmillan.ca/




5.3.3 Telephone: Same as 5.2.1. through 5.2.7

5.3.4 Website: Same as 5.2.1. through 5.2.7


name:

title:

telephone:

e-mail:

Same as 5.2.1. through 5.2.7

5.3.6 When did the fund appoint this

law firm as local counsel?

Briefly describe the type of

advice they have supplied

throughout the relationship.


5.3.7 Has the fund switched local law

firms in the last three years? If

so, please provide the name of

the former service provider and

explain the rationale for the

change.


5.4 ADMINISTRATOR/TRUSTEE/SERVICE PROVIDER

5.4.1 Organisation name (legal name



RBC Investor & Treasury Services

5.4.2 Principal business address:



5.4.3 Telephone: 416-955-2975

5.4.4 Website:

www.rbcits.com

5.4.5

Primary contact:

name:

title:

telephone:

e-mail:

Shamela Motar

Manager, Client Services

416-955-6099

[email protected]

5.4.6 Who appointed the

administrator?

□ Fund governing body




5.4.7 Who, in addition to the

administrator, is a party to the

administration agreement?

Fund

□ Master fund

□ AIFM/investment manager


5.4.8 What was the effective date of


agreement?

June 14th, 2013

http://www.rbcits.com/




5.4.9

Describe the services provided

to the fund by the

administrator including the

frequency with which each

service is provided and the

location from which the

administrator provides the

service.

Pursuant to the Trust Agreement, the Fund has retained RBC Investor Services

Trust to act as custodian of the Portfolio securities and other assets of the Fund.

Pursuant to a valuation and record-keeping services agreement dated as of May

17, 2013 (the “Services Agreement”), the Fund has retained RBC Investor

Services Trust to provide certain valuation and record-keeping services to the

Fund. As compensation for the custodial, valuation and record-keeping services

rendered to the Fund, the Service Provider will receive such fees from the Fund

as the Manager may approve from time to time. The Service Provider will be

responsible for the safekeeping of all of the investments and other assets of the

Fund delivered to it and will act as the custodian of such assets, other than those

assets transferred to another entity as collateral or margin.

5.4.10 Does the fund have a service

level agreement with the

administrator? If so, please

summarise the primary service

levels agreed, the associated

sanctions if these levels are not

achieved and remedial action is

not effective within the agreed

time period.

No

5.4.11 Detail the checks used by the

investment manager to verify

that the administrator is

performing its duties

effectively.

Monthly reconciliation of NAV with internal records. Daily bank account

reconciliations. Continuous informal reviews of RBCIS performance. Formal

annual reviews with RBCIS personnel.

5.4.12 Under what situations does the

administrator accept liability

for the non-performance or

inadequate performance of the

services provided to the fund?

Under what circumstances

would the fund or investment

manager be required to

indemnify the administrator?

The Service Provider is required to exercise same care, diligence and skill that a

reasonable prudent person would exercise in comparable circumstances. It is

liable to the Fund if it fails to comply with this standard of care or in the case

of negiglence, wilful misconduct or lack of good faith.

The Service Provider, its affiliates, subsidiaries and Agents, and their respective

directors, officers, and employees (each an “Indemnified Party”) shall be

indemnified and saved harmless by the Fund and, to the extent that the Fund is

not sufficient for such purpose at any time, by the Manager, from and against

all costs, expenses (including reasonable costs of litigation and reasonable legal

fees and expenses), damages, claims, actions, demands and liabilities to which

the Indemnified Party may become subject as a result of any act or omission in

connection with the services provided by the Service Provider.

5.4.13 List any systems or applications

provided to the investment

manager by the administrator

which are critical to the

ongoing operations of the fund.

None

5.5 DEPOSITARY/CUSTODIAN PLEASE REPEAT THIS SECTION FOR EACH DEPOSITARY, CUSTODIAN, SUB-CUSTODIAN OR OTHER DELEGATE OF A DEPOSITARY NOR PREVIOUSLY MENTIONED UNDER SECTION 5.6 (PRIME BROKERS) BELOW.

5.5.1 CONTACT INFORMATION

5.5.1.1 Organisation name (legal name

and other business names used,

if applicable):

RBC Investor & Treasury Services

5.5.1.2 Principal business address:





5.5.1.3 Telephone: 416-955-2975

5.5.1.4 Website:

www.rbcits.com

5.5.1.5 Primary contact:

name:

title:

telephone:

e-mail:

Shamela Motar

Manager, Client Serviices

416-955-6099

[email protected]

5.5.2 CONTRACTUAL ARRANGEMENTS

5.5.2.1 Who appointed the

depositary/custodian? (tick all

that apply)





5.5.2.2

Who, in addition to the

depositary/custodian, is a party

to the contract covering

depositary/custody services?

(tick all that apply)

□ Fund

□ Master fund



5.5.2.3

What was the effective date of


agreement?

May 10, 2013

5.5.2.4

How much notice does either

party need to provide to

terminate the

depositary/custody agreement?

90 Days

5.5.2.5 Does the fund have a service

level agreement with the

depositary/custodian? If so,

please summarise the primary

service levels agreed, the

associated sanctions if these

levels are not achieved and

remedial action is not effective

within the agreed time period.

N/A

5.5.3 CUSTODY FUNCTIONS AND OTHER CORE SERVICES

5.5.3.1 Describe the types of asset held

in safekeeping/custody by this

depositary/custodian.

ABL investments (embodied by promissory notes and loan agreements).

5.5.3.2 Describe the types of assets

that are not held in

safekeeping/custody.

Private or non-traded share purchase warrants held in Manager’s vault.

5.5.3.3 Describe the segregation status

of the fund’s assets at the

depositary/custodian.

Fund’s assets are held exclusively for the Fund and not commingled with any

other entity.

http://www.rbcits.com/




5.5.3.4 Identify the core services

provided by the

depositary/custodian and for

any such services being

provided by the

depositary/custodian as a

delegate, identify the relevant

delegating entity.

Custody/safekeeping of financial instruments

Custody/safekeeping of non-financial instruments

Cash monitoring

Verification and oversight (e.g. (i) verification that the fund’s shares/units

or equivalent are calculated in accordance with applicable laws, (ii) recording

whether the fund’s commitment capital, contribution and distribution of capital

are accurate, and (iii) perform ex-post controls and verifications of processes

and procedures.)

Facilitation of corporate actions

□ Other (please provide description):

5.5.3.5

Does the depositary/custodian

perform duties (reconciliations

of trades, cash and positions,

cash flow monitoring etc.)

independently from the

administrator, replicating them

in their own systems?

No.

5.5.3.6 Does the depositary have a

security interest in the assets of

the fund, if so, what form of

security interest does it have

and is it limited in any way?

No

5.5.3.7

Are there any custody functions

delegated to any other

custodian? If yes please provide

details for which markets these

functions are delegated, and

the related network

management controls in place

to monitor the arrangements.

Please also describe any related

liability discharge

arrangements.

No.

5.6 PRIME BROKERS PLEASE REPEAT THIS SECTION FOR EACH PRIME BROKER OR EXCHANGE-TRADED DERIVATIVE CLEARING BROKER USED.

5.6.1 CONTACT INFORMATION

5.6.1.1 Organisation name (legal name



N/A as the Fund does not use a Prime Broker.

5.6.1.2 Principal business address: N/A

5.6.1.3 Telephone: N/A

5.6.1.4 Website: N/A

5.6.1.5 Primary contact:

name:

title:

telephone:

e-mail:

N/A



5.6.2 CONTRACTUAL ARRANGEMENTS

5.6.2.1

Who appointed the prime

broker? (tick all that apply)



□ AIFM/investment manager

□ Other (indicate who): N/A

5.6.2.2

Who, in addition to the prime

broker, is a party to the

contract covering prime

brokerage services (excluding

custody functions)? (tick all

that apply)

□ Fund

□ Master fund

□ Investment manager

□ Depositary


5.6.2.3

Who, in addition to the prime

broker, is a party to the

contract covering custody

functions? (tick all that apply)

□ Fund

□ Master fund

□ Investment manager

□ Depositary


5.6.2.4 What was the effective date of

the appointment under each

agreement?

N/A

5.6.2.5

Does the agreement specify (i)

the possibilities of transfer and

reuse of fund assets, (ii) that

the prime broker is required to

comply with the fund rules or

instruments of incorporation,

and (iii) that the

depositary/custodian, if any,

will be informed of the

contract?

N/A

5.6.2.6

Does the agreement require the

prime broker to meet the

applicable regulatory

requirements for holding

financial instruments in

custody, segregation of

accounts and establishment and

maintenance of cash accounts?

N/A

5.6.2.7

Does the prime brokerage

agreement require the prime

broker to provide the

depositary data regarding the

value of assets held in custody

by the prime broker or over

which that prime broker has

exercised a right of reuse?

N/A

5.6.2.8 Does the prime brokerage

agreement contain any trigger

events or thresholds which

would allow either party to

terminate the agreement or

would allow the prime broker

to change margin or other key

terms?

N/A



5.6.2.9 How much notice does either

party need to provide to

terminate the prime brokerage

agreement?

N/A

5.6.2.10 Does the fund have a service

level agreement with the prime

broker? If so, please summarise

the primary service levels

agreed, the associated

sanctions if these levels are not

achieved and remedial action is

not effective within the agreed

time period.

N/A

5.6.3 CUSTODY FUNCTIONS

5.6.3.1 How much cash is (i) typically

held and (ii) currently held with

the prime broker?

N/A

5.6.3.2 Does the prime broker also act

as a custodian for some or all of

the fund's assets? If so, list the

types of asset for which custody

is provided by the prime

broker.

N/A

5.6.3.3 Are any custody functions

delegated by the prime broker

to any other custodian/sub-

custodian? If so, please provide

details.

N/A

5.6.3.4 Are the fund’s assets held in

custody with the prime broker

held in the fund’s own name

and are they segregated from

the prime broker’s assets?

N/A

5.6.4 MARGIN/REHYPOTHECATION/TRANSFERS AND REUSE OF ASSETS

5.6.4.1 What level of rehypothecation

is allowed by the prime broker

and how is indebtedness

calculated?

N/A

5.6.4.2 What are the processes used by


administrator to validate

margin calls?

N/A

5.6.4.3 To what extent is margining

calculated on a cross-basis?

What assets can be provided as

an acceptable margin?

N/A

5.6.4.4 Can the prime broker

rehypothecate client assets,

and how does this impact the

location where the asset is

held, its legal title transfer and

other operational aspects?

N/A



5.6.4.5 Does the prime broker have a

security interest in the assets of

the fund, if so, what form of

security interest does it have

and is it limited in any way?

N/A

Documents

DUE DILIGENCE QUESTIONNAIRE - Third Eye · DUE DILIGENCE QUESTIONNAIRE THIRD EYE CAPITAL ALTERNATIVE CREDIT TRUST The information provided herein is correct as of October 31,