Solus Alternative Asset Management LP: investment adviser

Solus serves as the investment advisor and sub-advisor with discretionary trading authority to private pooled investment vehicles, the securities of which are offered to investors on a private placement basis (each, a “Fund” and collectively, the “Funds”). In addition, Solus serves from time to time as the investment advisor with discretionary trading authority to separately managed accounts (“Managed Accounts”). As used herein, the term “Client” generally refers to each Fund and each owner of a Managed Account. As of the date of this Brochure, Solus provides its advisory services to the following multiple investor Funds. SOLUS HEDGE FUNDS Sola Funds – The Sola Funds are a master-feeder structure that employs a credit, event driven distressed strategy. Such strategy and the associated risks are described in more detail at B.2 of this Item 4 and Item 8. As of the date hereof, the Sola Funds are currently comprised of the following entities: •

Offshore Feeder Funds: Sola I 2 (a feeder fund), Sola I (a feeder fund) and SMS Ltd (an ERISA feeder fund) are Cayman Islands entities that generally invest their assets in Sola Ltd (the “Sola Master Fund”) indirectly through an investment in Sola Intermediate Fund Ltd (Sola Intermediate Fund Ltd and Sola C Ltd, each, an intermediate fund). Sola II LLC is a Delaware limited liability company single client feeder fund that generally invests its assets in a single client fund, Sola C Ltd (and thus is categorized along with the non-U.S. Sola funds in this Brochure). Such Funds are referred to herein as the “Offshore Sola Hedge Funds”. Solus Advisors LLC, a Delaware limited liability company and a Solus affiliate, serves as the managing member of Sola II LLC. Solus NL GP LLC, a Delaware limited liability company and a Solus affiliate, serves as a special shareholder of Sola Intermediate Fund Ltd. Sola I and SMS Ltd are no -1-

longer generally available for subscription as those feeder funds are winding down their assets. •

Domestic Feeder Funds: Solus 2 LLC (a feeder fund) and Solus LLC (a feeder fund) are Delaware entities that generally invest their assets in the Sola Master Fund. Such Funds are referred to herein as the “Domestic Hedge Funds”. Solus Advisors LLC, a Delaware limited liability company and a Solus affiliate, is the managing member of Solus LLC. Solus NL GP LLC, a Delaware limited liability company and a Solus affiliate, is a special member of Solus LLC and the managing member of Solus 2 LLC. Solus LLC is no longer generally available for subscription as this feeder fund is winding down its assets.

In addition, in 2019, Solus offered Sola fund investors the option to segregate a single asset within an “L-Band Portfolio” to retain their pro rata interest in the asset such that their interests were not impacted by future subscriptions or withdrawals. In 2020, investors who elected to restructure their Solus LLC, Sola I or SMS Ltd investments into Solus 2 LLC, Sola I 2 or Sola C Ltd elected to move their L-Band Portfolio to such funds. The interests in the L-Band Portfolio in the Offshore Sola Hedge Funds and Domestic Hedge Funds are not available for subscription and, as a result, the terms are not described in this Brochure. Ultra Funds – The Ultra Funds are a single feeder master-feeder structure that employs a credit, event driven distressed strategy. Such strategy and the associated risks are described in more detail at B.2 of this Item 4 and Item 8. The Ultra Funds are comprised of the following entities: •

Offshore Funds: Ultra OC Ltd is a Cayman Islands feeder fund that invests its assets in Ultra Master Ltd. Such Funds are referred to herein as the “Ultra Hedge Funds”, and, together with the Offshore Sola Hedge Funds, the “Offshore Hedge Funds”. Solus Ultra GP LLC, a Delaware limited liability company and a Solus affiliate, serves as the special shareholder of Ultra Master Ltd.

The Offshore Hedge Funds and the Domestic Hedge Funds, collectively, are referred to herein as the “Hedge Funds”.

LONG-TERM OPPORTUNITIES FUNDS Solus Long-Term Opportunities Funds – The Solus Long-Term Opportunities Funds are a master-feeder structure that employs a strategy focused on investing in longer duration and less liquid stressed, distressed and event-driven investments. Such strategy and the associated risks are described in more detail at B.2 of this Item 4 and Item 8. The Solus Long-Term Opportunities Funds are comprised of the following entities: •

Offshore LTO Fund: Solus Long-Term Opportunities Evergreen Fund Offshore LP is a Cayman Islands entity that generally invests its assets in Solus LongTerm Opportunities Fund Master LP (the “LTO Master Fund”) indirectly through -2-

an investment in Solus Long-Term Opportunities Evergreen Fund Intermediate LP (an intermediate fund). Such Funds are referred to herein as the “Offshore LTO Fund”. •

Domestic LTO Funds: Solus Long-Term Opportunities Evergreen Fund LP and Solus Long-Term Opportunities Fund LP are Delaware entities that generally invest their assets in the LTO Master Fund. Such Funds are referred to herein as the “Domestic LTO Funds”.

The Offshore LTO Fund and the Domestic LTO Funds, collectively, are referred to herein as the “Long-Term Opportunities Funds”. Further, Solus Long-Term Opportunities Evergreen Fund LP and Solus Long-Term Opportunities Evergreen Fund Offshore LP are herein referred to as the “Evergreen Class” and Solus Long-Term Opportunities Fund LP is herein referred to as the “LTO Class”. Solus Long-Term Opportunities GP LLC, a Delaware limited liability company and a Solus affiliate, is the general partner of the Long-Term Opportunities Funds. Customized Services for Individual Clients; Customized Services – In addition to the Funds described above, Solus provides advisory services to Managed Accounts, Funds and classes established for certain large institutional investors. Solus also provides co-investment and other opportunities through an SPC Fund structure, as well as an insurance dedicated fund solution through a sub-advisory relationship with SALI Fund Services. Such Clients may employ the same or similar strategies as the Funds described above, a customized investment program with flexible parameters to capitalize on strategic opportunities or some combination thereof. Solus may permit such a Managed Account or Fund Client to have an investment mandate that provides for, among other things, investment guidelines and concentration limits. Solus will seek to adhere to any such mandate in accordance with the objectives, guidelines, limitations, terms, and any other instructions in connection therewith. This Brochure generally includes information about Solus and its relationships with its Clients and affiliates. While much of this Brochure applies to all such Clients and affiliates, certain information included herein applies to specific Clients or affiliates only. Thus, it is crucial for any investor/prospective investor in a Solus Client to closely review the applicable disclosure documents (e.g., a Fund’s Confidential Memorandum or similar disclosure document) with respect to, among other things, the terms, conditions and risks of investing in the particular Client or Clients in which such investor/prospective investor is making or considering an investment. 2.

Investment Strategies and Types of Investments

Solus currently provides advisory services in credit-based strategies, including the following: •

Event driven, distressed strategy: Solus provides advice with respect to eventdriven, distressed and special situation investments both long and short across the entire capital structure. Solus seeks to position and reposition portfolios employing this strategy to attempt to reflect a compelling risk adjusted return. -3-

•

Long only credit strategy: Solus provides advice with respect to portfolios seeking incremental returns by investing in lesser focused-on situations that take time to research and source. Solus focuses on solid asset coverage, substantial free cash flow, management, capital markets and/or adjusted risk return in constructing its long only portfolios. Solus thinks that this strategy is not constrained by a formulaic approach based on benchmarking, industry diversification, ratings or deal size.

•

Long-Term Opportunities strategy: Solus provides advice with respect to investments in longer duration and less liquid stressed, distressed and eventdriven investments, and may invest across a company’s capital structure and in all stages of a company’s lifecycle, including the bankruptcy process. Solus thinks this strategy offers several advantages to investors, including differentiated returns and alignment of interests.

The following is a more detailed description of the strategies employed by Solus Clients. Please note that these are summary descriptions of such strategies. The exact strategy employed with respect to each Client is set forth in and governed by the terms and conditions of the Confidential Memorandum and/or governing documents/investment management agreement of the relevant Client. Thus, any investor or prospective investor in a Solus Client is reminded that the disclosures in this Brochure are qualified by and subject to such Confidential Memorandum/governing documents/investment management agreements. Event Driven, Distressed Strategy Solus’ investment objective for its Clients employing this strategy is to achieve an attractive rate of return through income generation, capital appreciation and asymmetric investment opportunities. Solus seeks to achieve the investment objective by combining its fundamental research process, trading acumen, management expertise and integrated risk management approach to react to changing market conditions by adjusting the portfolio construction to seek to deliver the maximum risk-adjusted performance. Solus is focused on capital structure value investing. Solus seeks to exploit value throughout the capital structure, both long and short, from senior secured loans to restructured equities, capitalizing on Solus’ indepth knowledge of fundamental valuation and market technicals. Solus’ investment flexibility accommodates the repositioning of the portfolio in an effort to reflect what Solus believes are the most compelling risk-adjusted investment opportunities. Solus invests in all parts of a company’s capital structure and in all stages of a company’s life cycle, including the bankruptcy process. Solus’ investments include a broad spectrum of listed and over-the-counter financial products including, but not limited to, bank loans, corporate securities, equities and equity-linked products, derivatives and other financial instruments and investments. Solus may make these investments directly or indirectly by entering into one or more swaps, options, forward contracts or similar derivative transactions. A further description of these strategies and instruments can be found in Item 8. Long Only Credit Strategy Solus’ investment objective for any Clients employing this strategy is to achieve a return that meets or exceeds the S&P Performing Loan Index on an after fee (net) risk adjusted basis -4-

through investments that are primarily focused in the non-investment grade bond and loan markets. Solus seeks to achieve the investment objective by capitalizing on its in-depth knowledge of fundamental valuation and market technicals. Solus’ flexibility is expected to facilitate the timely repositioning of the portfolio in an effort to reflect what Solus believes are the most compelling risk-adjusted investment opportunities. As previously noted, investments in this strategy will typically include financial instruments such as bonds and loans, which instruments are described in more detail in Item 8. Long-Term Opportunities Strategy Solus’ investment objective for any Clients employing this strategy is to generate superior returns by investing in longer duration and less liquid stressed, distressed and eventdriven investments. Solus seeks to achieve the investment objective by primarily utilizing the following investment strategies: •

Stressed/Distressed: This category is comprised of both pre- and postrestructuring investments. Solus will seek to identify undervalued opportunities that can arise from the general malaise that cyclical industries suffer, as well as a result of company-specific stress. As companies come under increased stress, original “par” purchasers of debt are often pressured to sell their holdings, allowing for distressed investors to source the company’s debt at discounted levels at the bottom of the cycle. There are high barriers to entry in this strategy, given the experience and expertise required to analyze complex capital structures, navigate the bankruptcy process, and create catalysts to unlock value.

•

Post-Reorganization Equities: This category is comprised of equity in companies that have recently emerged from bankruptcy. Generally, the characteristics of these companies include low enterprise valuations, strong asset coverage and/or free cash flow generation, minimal debt, new management teams/boards, and multiple paths to value creation. Upon emergence from bankruptcy, many of these equities trade at discounts to their peers due to factors such as a concentrated investor base, restructuring-related taint, and a lack of sellside research coverage. Solus will target companies that are attractive candidates for M&A events, IPO transactions or dividend payments recapitalization financings.

•

Performing Credit: In this yield-focused strategy, Solus will seek out superior returns through investments in high-yield bonds and leveraged loans. Original holders of a company’s debt often have difficulty providing incremental capital to fund additional capital opportunities due to their investment mandate. The number of market participants is limited, as many credit investors are not equipped to perform the internal underwriting (e.g., lack of credit ratings, trading liquidity, sell-side research, etc.) or legal analysis that is essential in evaluating follow-on investment opportunities or other special situation opportunities. Investments in this strategy will be focused on situations where Solus will generally be able to exert influence over a variety of factors, such as structure, terms, covenants and pricing. Opportunities also exist in small- to mid-cap credits due to market participants’ desire for large deal sizes. -5-

•

Liquidations: This category represents a very specific segment of the distressed lifecycle that requires experience in researching liquidating estates and the associated legal process. This strategy focuses on investments in a variety of latestage bankruptcy, liquidation and litigation claims with recoveries that are generally backed by cash and hard assets, so returns generally exhibit low correlation to debt and equity markets. Solus believes there is an opportunity to create asymmetric upside due to potential claims pool reduction, increase in distributable cash and assets, accelerated timing of cash distributions and potential litigation recoveries. Solus will generally focus on investing in the later stages of the process, following confirmation of the plan of liquidation when there is high visibility into recovery mix and a discernible timeline for asset monetization and distributions.

A further description of financial instruments utilized by this strategy can be found in Item 8. Solus seeks to achieve the investment objective of its Clients by combining its fundamental research process, trading acumen and integrated risk management. The descriptions set forth in this Brochure of specific advisory services that Solus offers to Clients, and investment strategies pursued and investments made by Solus on behalf of its Clients, should not be understood to limit in any way Solus’ investment activities. Solus may offer any advisory services, engage in any investment strategy and make any investment, including any not described in this Brochure, that Solus considers appropriate, subject to each Client’s investment objectives and guidelines. The investment strategies Solus pursues on behalf of its Clients are speculative and entail substantial risks. Clients should be prepared to bear a substantial loss of capital. There can be no assurance that the investment objectives of any Client will be achieved. C.

Assets Under Management

As of December 31, 2025, Solus managed approximately $3.2 billion on a discretionary basis, which amount reflects regulatory assets under management. As regulatory assets under management is a regulatory-driven concept, Solus also notes that as of December 31, 2025, Solus managed approximately $3.0 billion based on net asset value calculations. Solus does not manage any assets on a non-discretionary basis as of the date of this Brochure. This Brochure does not constitute an offer to sell or solicitation of an offer to buy any securities. The securities of the Funds are offered and sold on a private placement basis under exemptions promulgated under the Securities Act of 1933 and other applicable state, federal or non-U.S. laws. Significant suitability requirements apply to any prospective investors in the Funds, including requirements that they be “accredited investors” as defined in Regulation D, “qualified purchasers” as defined in the Investment Company Act, or non-”U.S. Persons” as defined in Regulation S. Persons reviewing this Brochure should not construe this as an offer to sell or a solicitation of an offer to buy the securities of the Funds described herein. Any such offer or solicitation will be made only by means of a Confidential Memorandum or similar disclosure documentation. -6-

Although a brief summary of certain Fund fees is provided below, please note that such brief summary is not a substitute for the detailed terms provided in each Fund’s applicable Confidential Memorandum, any supplement thereto and/or governing documents. Fund investors/prospective investors are thus strongly urged to closely review such documents for information with respect to management fee and performance compensation terms. 1.

Management Fees; Performance Compensation

Any management fee paid to Solus shall be referred to herein as a “Management Fee”. Any incentive allocation or carried interest made to a Solus affiliate shall be referred to herein as an “Incentive Allocation” or “Carried Interest”, respectively. Management Fees Hedge Funds: With respect to the generally available classes of Solus 2 LLC and Sola I 2 (i.e., Class NL Interests and Class NL Shares), such funds will generally pay to Solus (or any other person or entity designated by it) a monthly fixed asset-based fee in arrears, of 1.25% per annum, of net asset value as of the last business day of the month for which such Management Fee applies, before giving effect to any withdrawals occurring as of such day. Solely for investors who subscribed to Class NL Interests or Class NL Shares on or prior to 12/01/21, these funds exercised a one-time ability to designate certain investments as special investments as of 12/31/21. No management fee will be charged on any such special investments, and any profits or losses attributable to a special investment will be taken into consideration solely for such investors in their Class NL Interests and Class NL Shares only upon the realization or deemed realization of such special investment. Management Fees can vary and be lower for certain investors depending on, among other things, the amount of assets a particular investor has under management with Solus. In the case of a redemption by an investor other than as of the last day of a month, a pro rata portion of the Management Fee (based on the actual number of days from the beginning of the month) will be paid to Solus. Solus may elect to reduce, waive or calculate differently the Management Fee with respect to any investor in the Hedge Funds, including, without limitation, an investor that is a partner or former partner, affiliate or employee of Solus, members of the immediate families of such persons, and trusts or other entities for their benefit, without the approval of any other investors. -7-

Long-Term Opportunities Funds: Evergreen Class: With respect to the generally available classes, Evergreen Class will generally pay to Solus (or any other person or entity designated by it) a monthly fixed assetbased fee in arrears, of 0.125% (or 1.5% annualized) of net asset value (subject to certain adjustments set forth in detail in the applicable Confidential Memorandum which investors and prospective investors should carefully review) as of the last business day of the month for which such Management Fee applies, before giving effect to distributions, if any, occurring as of such day. Management Fees can vary and be lower for certain investors depending on, among other things, the amount of assets a particular investor has under management with Solus. LTO Class: With respect to what were the generally available classes, LTO Class will generally accrue (or any other person or entity designated by it) a monthly fixed asset-based fee in arrears (but payable at the end of each calendar quarter), of 0.125% (or 1.5% annualized) of the lesser of (x) capital commitment and (y) net asset value (subject to certain adjustments set forth in detail in the applicable Confidential Memorandum which investors and prospective investors should carefully review) as of the last business day of the month for which such Management Fee applies, before giving effect to distributions, if any, occurring as of such day. Management Fees can vary and be lower for certain investors depending on, among other things, the amount of assets a particular investor has under management with Solus. To the extent that a Long-Term Opportunities Fund’s term ends on a date that is not a month-end, the Management Fee for such month will be pro-rated based on the number of days in the relevant period. Solus may, in its sole discretion, reduce, waive or calculate differently the Management Fee with respect to investors in the Long-Term Opportunities Funds, including, without limitation, those that are affiliates, employees, members, partners or former partners of Solus Long-Term Opportunities GP LLC or Solus, members of the immediate families of such persons, trusts or other entities for their benefit. Incentive Allocation; Carried Interest Domestic Hedge Funds: With respect to the generally available classes of Solus 2 LLC (i.e., Class NL Interests), at the end of each fiscal year, Solus NL GP LLC is generally entitled to an Incentive Allocation of 20% of the net capital appreciation (which includes both realized gains and losses and unrealized appreciation and depreciation of financial instruments held in the fund’s portfolio) allocated to Solus NL GP LLC’s capital account from an investor’s capital account, subject to a 4% hurdle, for such fiscal year after deducting the Management Fee and other expenses debited to such investor’s capital account for such fiscal year, subject to a loss carryforward mechanism. The Incentive Allocation can vary and be lower for certain investors depending on, among other things, the amount of assets a particular investor has under management with Solus.

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In the event that a Solus 2 LLC investor in Class NL Interests withdraws all or a portion of its capital account at any time other than at the end of a fiscal year, the Incentive Allocation, if any, that has been accrued with respect to the withdrawn amount of such capital account will generally be reallocated to Solus NL GP LLC’s capital account as set forth above immediately prior to the effective date of such withdrawal. Solus may elect to reduce, waive or calculate differently the Incentive Allocation with respect to any investor, including, without limitation, an investor that is a partner or former partner, affiliate or employee of Solus, members of the immediate families of such persons, and trusts or other entities for their benefit, without the approval of any other investors. Offshore Sola Hedge Funds: With respect to the generally available classes of Sola I 2 (i.e., Class NL Shares), at the end of each fiscal year, Solus NL GP LLC is generally entitled to an Incentive Allocation of 20% of the realized and unrealized appreciation in the net asset value of each such series of shares, subject to a 4% hurdle, for such fiscal year after deducting the Management Fee and other expenses payable for such fiscal year, subject to a loss carryforward mechanism. The Incentive Allocation can vary and be lower for certain investors depending on, among other things, the amount of assets a particular investor has under management with Solus. In the event that Sola I 2 Class NL Shares are redeemed at any time other than at the end of a fiscal year, the Incentive Allocation, if any, that has been accrued with respect to the redeemed shares will be allocated to Solus NL GP LLC as set forth above at the time of such redemption. Solus may elect to reduce, waive or calculate differently the Incentive Allocation with respect to any investor, including, without limitation, an investor that is a partner or former partner, affiliate or employee of Solus, members of the immediate families of such persons, and trusts or other entities for their benefit, without the approval of any other investors. Long-Term Opportunities Funds: Evergreen Class: At the end of each fiscal year, Solus Long-Term Opportunities GP LLC is generally entitled to an Incentive Allocation of 20% of the net capital appreciation (which includes both realized gains and losses and unrealized appreciation and depreciation), subject to an 8% hurdle, for such fiscal year after deducting the Management Fee, and other expenses debited to such investor’s capital account for such fiscal year, subject to a loss carryforward mechanism. The Incentive Allocation can vary and be lower for certain investors depending on, among other things, the amount of assets a particular investor has under management with Solus. LTO Class: Solus Long-Term Opportunities GP LLC is generally entitled to Carried Interest of 20% of an LTO Class investor’s investment proceeds upon a Long-Term Opportunities Fund portfolio investment distribution, after return of 100% of an investor’s contributed capital and an 8% preferred return. Carried Interest can vary and be lower for certain investors depending on, among other things, the amount of assets a particular investor has under management with Solus. Solus Long-Term Opportunities GP LLC may, in its sole discretion, reduce, waive or calculate differently any portion of the Incentive Allocation or Carried Interest (as applicable) with respect to any Long-Term Opportunities Fund investor, including, without limitation, those -9-

that are affiliates, employees, members, partners or former partners of Solus Long-Term Opportunities GP LLC or Solus, members of the immediate families of such persons and trusts or other entities for their benefit. Managed Account and Single Investor Funds; Historic Classes; Customized Services Any management fees and performance compensation charged to Managed Accounts and customized Funds or classes/feeder funds established or operated for certain large institutional investors are and may in the future be different than the fee and performance compensation terms described above. No such Client currently pays fees in advance, except that Solus is paid monthly in advance with respect to the subadvisory services it provides to an insurance dedicated fund arrangement with SALI Fund Services which has fee arrangements similar those of the other Funds (and in the unlikely event of a mid-month compulsory redemption, the Client will be provided a refund of any Solus fees paid in advance for that month determined on a pro-rated basis given the number of days remaining in such month). Fees and performance compensation for such Clients can vary depending on, among other things, the amount of assets in the account, the amount of assets that the investor has in Solus products and the complexity of any guidelines. There are also certain Sola Fund classes no longer being offered that have fee and performance compensation terms that differ from those described above, including, without limitation, classes in Sola I, SMS Ltd and Solus LLC that are being wound down. Investors in any such Managed Accounts, Funds and Fund classes are strongly urged to closely review the applicable governing document/investment management agreement and disclosures for information with respect to management fee and performance compensation terms. B.

Deduction of Fees/Performance Compensation

Fees and performance compensation paid or allocated to Solus or its affiliates by the Funds are generally deducted by Solus from the assets of such Clients. As discussed above, Management Fees are generally deducted/accrued on a monthly basis. Performance compensation is generally deducted on an annual basis, upon realization and/or upon any redemption during a year. C.

Additional Fees and Expenses

The expenses paid by Clients are set forth in detail in each Fund’s relevant Confidential Memorandum, any applicable supplement thereto and/or the Fund’s governing documents and in any Managed Account investment management agreement, respectively. Such expenses may differ among and within Clients. Thus, although the following is a summary of expenses investors in certain Solus Clients will generally bear, it is not an exhaustive or complete list with respect to all Solus Clients. Investors and prospective investors should therefore review the relevant Solus Client’s definitive documents carefully because such documents, and not this Brochure summary, describe the expenses an investor in a particular Solus Client or class thereof may bear. Solus has adopted written expense allocation policies and procedures that require Solus to take reasonable steps to ensure that expenses are appropriately allocated in a manner consistent with Solus’ contractual obligations to its clients and applicable law. Hedge Fund Client Expenses: Such expenses for the commonly held and generally available classes may include, without limitation, investment-related expenses (e.g., brokerage commissions, expenses relating to short sales, clearing and settlement charges, custodial fees, - 10 -

bank service fees, loan closing costs and interest expenses) and other trading-related expenses; investment-related research; professional fees (including, without limitation, expenses of consultants and experts); administrative expenses; accounting expenses; operating expenses (e.g., trade clearance and settlement, corporate action processing, trade confirmation, pricing services, portfolio management reporting software and reconciliation); legal expenses; auditing and tax preparation expenses; costs of printing and mailing reports and notices; reasonable travel and travel-related expenses incurred in connection with the Client; interest on balances due and any other fees and charges of prime brokers, financial counterparties, banks and custodians; any taxes and other governmental charges and duties imposed on or payable by the Client; organizational expenses; corporate licensing; governmental fees and regulatory expenses (including filing fees); assignment fees; establishment of operation of the Clients’ subsidiaries or special purpose vehicles; expenses incurred in connection with the offering and sale of shares and other similar expenses related to the Client; premiums for liability insurance covering the Client’s directors (if any), Solus and its partners, directors, officers, employees and agents; any fees and expenses associated with the organization and conduct of any board of directors’ and any shareholders’ meetings; any fees and expenses associated with maintaining the Client’s registered office; litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the Client’s business; the Management Fee; and other expenses related to the Client as determined in sole discretion of Solus, a Solus affiliate or the board of directors (if any), as applicable. A portion of research-related and brokerage expenses may be paid for by using “soft dollars”, and any research or brokerage products or services that may be paid for with “soft dollars” under Section 28(e) of the U.S. Securities Exchange Act of 1934 may be paid for directly or indirectly by the Client. To the extent that Solus or any of its affiliates pays any of the Client’s fees or expenses, the Client will reimburse such party. Long-Term Opportunities Fund Client Expenses: Such expenses may include, but are not limited to, all costs and expenses with respect to the actual or proposed acquisition, holding, monitoring, hedging or disposition of investments, whether such investments are ultimately consummated or not, including due diligence costs, broken deal expenses (including broken expenses relating to co-investors’ share of any unconsummated co-investment), brokerage commissions, clearing and settlement charges, expenses relating to short sales, bank service fees, fees and expenses of custodians, loan closing costs and interest expenses, interest on balances due and any other fees and charges of prime brokers, financial counterparties, banks and custodians, consultants, experts, travel and entertainment expenses incurred for investment related purposes, outside legal counsel, consultants and accountants, administrator’s fees and expenses; expenses for liability insurance, including directors’ and officers’ liability insurance, fidelity bonds that satisfy the requirements of Section 412 of ERISA, and other insurance expenses; extraordinary expenses (including litigation, indemnification and contribution expenses); taxes and other governmental fees and charges; Management Fees; servicing and special servicing fees; the cost of operational, accounting and portfolio management software and related expenses; fees and expenses related to obtaining research market data (including, without limitation, any information technology hardware, software or other technology incorporated into the cost of obtaining such research and market data); other legal, operating, accounting, tax return preparation and consulting, auditing, appraisal and administrative expenses and fees for outside services; costs and expenses incurred in connection with establishing, operating and administering special purpose vehicles; fees and expenses incurred in connection with governmental and regulatory filings by, or in respect of, the Client and investments (including section 13 and section 16 filings, and other similar filings); costs and - 11 -

expenses incurred in connection with the wind-up and dissolution of the Client, special purpose vehicles and their respective assets and investments; cost of software (including the fees of thirdparty software developers) used by the Solus and its affiliates to track and monitor investments; costs and expenses incurred in connection with meetings of the advisory committee or the LP advisory committee (as applicable) and other permissible expenses of the advisory committee or the LP advisory committee (as applicable); costs and expenses incurred in connection with annual or special meetings of the investors; costs and expenses of printing and mailing periodic reports and notices to investors; and other expenses related to the Client as Solus Long-Term Opportunities GP LLC determines, in its sole discretion. A portion of research-related and brokerage expenses may be paid for by using “soft dollars”, and any research or brokerage products or services that may be paid for with “soft dollars” under Section 28(e) of the U.S. Securities Exchange Act of 1934 may be paid for directly or indirectly by the Client. Managed Account and Single Investor Funds; Customized Services Expenses charged to Managed Accounts and customized Funds or classes/feeder funds established or operated for certain large institutional investors are and may in the future be different than the expense terms described above. Investors in any such Managed Accounts, Funds and Fund classes are strongly urged to closely review the applicable governing document/investment management agreement and disclosures for information with respect to expense terms. As indicated above, Solus Clients will pay brokerage and other portfolio transaction costs. Please see Item 12 of this Brochure for a description of the factors that Solus considers in selecting or recommending broker-dealers for Client transactions and determining the reasonableness of broker compensation. D.

Additional Compensation and Expenses

Hedge Fund Clients: Solus and its affiliates may earn ancillary fees, such as fees and related income from services provided in relation to Hedge Fund Client investments, or in connection with prospective Hedge Fund Client investments, such as advisory fees, due diligence fees, structuring fees, servicing fees, administrative fees, collateral agent fees, success fees, director’s fees, break-up fees or other fees. Generally, any ancillary fees paid to, or related income earned by, Solus or its affiliates in connection with Hedge Fund Client activities will not reduce such Client’s Management Fees or Incentive Allocation. Long-Term Opportunities Fund Clients: Transaction, director’s, consulting, advisory, closing, and breakup fees paid to Solus Long-Term Opportunities GP LLC, Solus or their affiliates in connection with the Long-Term Opportunities Funds’ portfolio investments or unconsummated transactions will first be applied to reimburse Solus Long-Term Opportunities GP LLC, Solus or their affiliates for their out-of- pocket expenses in connection with the transaction giving rise to such fees and 100% of the balance will be applied to reduce (not below zero) the subsequent installments of the Management Fee. Clients, including without limitation Managed Accounts, the insurance dedicated fund sub-advised by Solus for SALI Fund Services and customized Funds or classes/feeder funds - 12 -

established or operated for certain large institutional investors, should refer to each Client’s applicable Confidential Memorandum and any supplement thereto, subscription agreements, investment management agreements and/or other offering documents for additional/supplementary information regarding the applicable Client as well as the fees and expenses paid by the Client.

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Item 5 describes the performance-based compensation charged by Solus generally, and detailed information with respect to such Solus compensation is set forth in more detail in the applicable Confidential Memorandum, any supplement thereto and/or the governing documents. Solus is committed to allocating investment opportunities on a fair and equitable basis and has established policies and procedures to address the conflicts of interest described above in this Item 6. Item 12B further describes Solus’ allocation practices.

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Solus utilizes fundamental and/or technical analysis techniques in formulating advice and managing assets for Clients. Fundamental analysis of a business involves analyzing its financial statements and health, its management and competitive advantages and its competitors and markets. Fundamental analysis is performed on historical and present data but with the goal of making financial forecasts. There are several possible objectives: to conduct a company stock valuation and predict its probable price evolution; to make a projection on a company’s business performance; to evaluate a company’s management and internal business decisions; and to calculate a company’s credit risk. Technical analysis is a method of evaluating securities by relying on the assumption that market data, such as charts of price, volume and open interest, can help predict future (usually short term) market trends. Technical analysis assumes that market psychology influences trading in a way that enables predicting when a stock will rise or fall. Sources of information that Solus uses include: ▪ ▪ ▪ ▪ ▪ ▪ ▪

Financial newspapers and magazines Inspections of corporate activities Research materials prepared by others Corporate rating services Annual reports, prospectuses, filings with the SEC Company press releases Private placement memoranda and other deal documents prepared by commercial banks, investment banks and law firms

Investment strategies used to implement investment advice given to Clients include (as applicable depending on each Client’s investment objective): ▪ ▪ ▪

Long-term purchases (securities held at least a year) Short-term purchases (securities sold within a year) Trading (securities sold within 30 days) - 16 -

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Short sales Margin transactions Option writing, including covered options, uncovered options or spreading strategies Use of bank loans Derivative transactions

Solus seeks to capitalize on investment opportunities for its Clients through various strategies as described more fully in Section B of this Item 8 below and in the applicable offering and/or governing documents of such Clients. Clients Employing an Event Driven, Distressed Strategy: In an effort to achieve the investment objectives identified in the respective offering/governing documents of its Clients employing an event driven, distressed strategy, Solus may invest in a broad range of securities and other financial instruments in both the primary and secondary markets across the entire credit spectrum, including, but not limited to, investment grade, high yield, distressed and special situation investments, which may include long and/or short positions in floating rate senior secured or unsecured loans, loan participations, bonds and other securities issued in public and private markets, common stock, preferred stock, stock warrants and rights, notes or other debentures, convertible securities, options, money market instruments, partnership interests, and other obligations or financial instruments including, but not limited to, those of investment companies, managed accounts, or structured products such as collateralized bond obligations (CBOs), collateralized debt obligations (CDOs), collateralized loan obligations (CLOs), and similar instruments either directly or indirectly by investing in such opportunities through derivative instruments, such as swaps, options, forward contracts, or similar transactions; and invest in private offerings by public companies, “when issued” securities, initial public offerings, securities or other obligations of non-U.S. issuers, and currency exchange transactions. Solus may also, from time to time, direct investments in other instruments that include, but are not limited to, equity, convertibles, asset backed securities, mezzanine debt, warrants, interest rate swaps and caps, revolving loan agreements, distressed securities, securities and obligations of entities which are undergoing or are likely to undergo a reorganization under the federal bankruptcy laws or other extraordinary transactions such as debt restructurings, reorganizations and liquidations outside of bankruptcy. The event driven, distressed strategy typically involves varying degrees of leverage and turnover of portfolio assets (and associated increased trading expenses and possible tax consequences). As a result of using leverage, the Clients employing this strategy may be subject to margin calls, which may require Solus to liquidate assets at inopportune times. Further, as described above, a number of the investments Solus makes are in illiquid or less liquid securities or instruments so that in times of market or industry stress, the monetization of these assets may be difficult or impossible. Long Only Credit Strategy Solus’ investment objective for any Clients employing this strategy is to achieve a return that meets or exceeds the S&P Performing Loan Index on an after fee (net) risk adjusted basis through investments that are primarily focused in the non-investment grade bond and loan markets. Solus seeks to achieve the investment objective by capitalizing on its in-depth - 17 -

knowledge of fundamental valuation and market technicals. Solus’ flexibility is expected to facilitate the timely repositioning of the portfolio in an effort to reflect what Solus believes are the most compelling risk-adjusted investment opportunities. Solus expects to make the following type of investments in this strategy from time to time: U.S.- and non-U.S. denominated leveraged loans; U.S.-and non-U.S. denominated high yield bonds; interest rate swaps; credit default swaps, currency forwards and other investments permitted by the investment program. Any Clients employing this strategy generally do not intend to use leverage. Long-Term Opportunities Strategy Solus’ investment objective for Clients employing this strategy is to generate superior returns by investing in longer duration and less liquid stressed, distressed and event-driven investments. Solus seeks to achieve the investment objective through investments in all parts of a company’s capital structure and in all stages of a company’s life cycle, including the bankruptcy process. Investments will include a broad spectrum of listed and over-the-counter financial products including, but not limited to, public and private corporate debt and equity securities, including bank loans and trade claims, subordinated and mezzanine debt, preferred equity, derivatives and debt or equity linked products and other financial instruments and investments. These investments may be made directly or indirectly, including, for example, by entering into one or more swaps, options, forward contracts or other derivative transactions. Solus is focused on value creation, alpha generation and low correlation to primary asset classes and will seek to maximize the Long-Term Opportunities Funds’ total return by combining eventdriven and opportunistic investments with Solus’ existing industry expertise, extensive restructuring experience and institutional infrastructure. Clients employing this strategy do not currently use leverage although certain types of leverage are permitted. B.

Material, Significant or Unusual Risks Relating to Investment Strategies and Types of Securities

The following risk factors do not purport to be a complete list or explanation of the risks involved in an investment in the Clients advised by Solus. These risk factors include only certain of those risks Solus believes to be material, significant or unusual and relate to particular significant investment strategies (and the types of securities and instruments used to implement those strategies) and methods of analysis employed by Solus. Specifically, as Clients managed by Solus generally may invest in a broad spectrum of financial instruments, all such Clients have substantially similar general risks with respect to a particular class of financial instruments. Thus, there are no distinctions made below with respect to the applicability of these general risks to a particular type of Client. Investors and potential investors in Solus Clients are cautioned that it is crucial to review the risk factors set forth in the applicable Client’s Confidential Memorandum or similar disclosure, any applicable supplement thereto and/or governing documents, because such risk factors are tailored for risks applicable to the specific Client. - 18 -

Short Selling. Short selling involves selling securities which are not owned by the short seller and borrowing them for delivery to the purchaser, with an obligation to replace the borrowed securities at a later date. Short selling allows the seller to profit from a decline in market price to the extent such decline exceeds the transaction costs and the costs of borrowing the securities. The extent to which Solus engages in short sales will depend upon investment strategies and opportunities. A short sale creates the risk of a theoretically unlimited loss, in that the price of the underlying security could theoretically increase without limit, thus increasing the cost to the Client of buying those securities to cover the short position. There can be no assurance that Solus will be able to maintain the ability to borrow securities sold short. In such cases, the Client can be “bought in” (i.e., forced to repurchase securities in the open market to return to the lender). There also can be no assurance that the securities necessary to cover a short position will be available for purchase at or near prices quoted in the market. Purchasing securities to close out a short position can itself cause the price of the securities to rise further, thereby exacerbating the loss. Hedging Transactions. Solus may utilize financial instruments, both for investment purposes and for risk management purposes in order to: (i) protect against possible changes in the market value of the Clients’ investment portfolios resulting from fluctuations in the securities markets and changes in interest rates; (ii) protect the Clients’ unrealized gains in the value of its investment portfolios; (iii) facilitate the sale of any such investments; (iv) enhance or preserve returns, spreads or gains on any investment in the Clients’ portfolios; (v) hedge against a directional trade; (vi) hedge the interest rate, credit or currency exchange rate on any of the Clients’ liabilities or assets; (vii) protect against any increase in the price of any securities Solus anticipates purchasing at a later date; or (viii) act for any other reason that Solus deems appropriate. Solus will not be required to hedge any particular risk in connection with a particular transaction or its portfolios generally. While Solus may enter into hedging transactions to seek to reduce risk, such transactions may result in a poorer overall performance for the Clients than if Solus had not engaged in any such hedging transaction. Moreover, it should be noted that the portfolios will always be exposed to certain risks that may not be hedged. Risks of Investments in Securities Generally. All securities investments risk the loss of capital. No guarantee or representation is made that Solus’ investment programs will be successful. The investment programs are expected to involve, without limitation, risks associated with possible limited diversification, leverage, volatility, tracking risks in hedged positions, security borrowing risks in short sales, credit deterioration or default risks, systems risks and other risks inherent in Solus’ activities. Certain investment techniques which may be used by Solus can, in certain circumstances, magnify the impact of adverse market moves to which the Clients may be subject. In addition, Solus’ investment in securities may be materially affected by conditions in the financial markets and overall economic conditions occurring globally and in particular countries or markets where Solus may invest the Clients’ assets. Solus’ methods of minimizing such risks may not accurately predict future risk exposures. Risk management techniques are based in part on the observation of historical market behavior, which may not predict market divergences that are larger than historical indicators. Also, information used to manage risks may not be accurate, complete or current, and such information may be misinterpreted. - 19 -

Volatility Risk. Solus’ investment programs may involve the purchase and sale of relatively volatile instruments such as CDO Securities (defined below) and derivatives, which are frequently valued based on implied volatilities of such derivatives compared to the historical volatility of underlying financial instruments. Fluctuations or prolonged changes in the volatility of such instruments, therefore, can adversely affect the value of investments held by the Clients. In addition, many non-U.S. financial markets are not as developed or as efficient as those in the U.S., and as a result, price volatility may be higher for the Clients’ investments in such markets. Liquidity Risks. Under certain market conditions, such as during volatile markets or when trading in an instrument or market is otherwise impaired, the liquidity of the Clients’ relatively liquid portfolio positions may be reduced. During such times, Solus may be unable to dispose of certain assets, which would adversely affect the Clients’ ability to rebalance their portfolios or to meet any permitted redemption requests, as applicable. In addition, such circumstances may force Solus to dispose of assets at reduced prices, thereby adversely affecting the Clients’ performance. If there are other market participants seeking to dispose of similar assets at the same time, Solus may be unable to sell such assets or prevent losses relating to such assets. Furthermore, if the Clients incur substantial trading losses, the need for liquidity could rise sharply while their access to liquidity could be impaired. In addition, in conjunction with a market downturn, the Clients’ counterparties could incur losses of their own, thereby weakening their financial condition and increasing the Clients’ credit risks to them. Many non-U.S. financial markets are not as developed or as efficient as those in the U.S., and as a result, liquidity may be reduced for the Client’s investments in such markets. Global Investments; Emerging Markets. Solus may invest a portion of the Clients’ assets in the equity, debt or other securities and instruments of issuers located outside the U.S., including securities of non-U.S. corporations which are traded in non-U.S. markets, as well as CDOs collateralized by emerging market debt. Such investments involve certain considerations not usually associated with investing in securities of U.S. companies or U.S. markets, including political and economic considerations, such as greater risks of expropriation and nationalization, and confiscatory taxation; the potential difficulty of repatriating funds and the ability to exchange local currencies for U.S. dollars; general social, political and economic instability and adverse diplomatic developments; the possibility of imposition of withholding or other taxes on dividends, interest, capital gain or other income; the small size of the securities markets in such countries and the low volume of trading, resulting in potential lack of liquidity and price volatility; greater volatility, less liquidity and smaller capitalization of markets; greater controls on foreign investment and limitations on realization of investments; increased likelihood of governmental involvement in and control over the economy; fluctuations in the rate of exchange between currencies and costs associated with currency conversion; and certain government policies that may restrict Solus’ investment opportunities. In addition, accounting and financial reporting standards that prevail in such countries generally are not equivalent to U.S. standards and, consequently, less information may be available to investors in companies located in such countries than is available to investors in companies located in the U.S. There is also less regulation, generally, of the securities markets in such countries than there is in the U.S., and less developed corporate laws regarding fiduciary duties of officers and directors and the protection of investors. An issuer of securities may be domiciled in a country other than the country in whose currency the instrument is denominated. The values and relative yields of investments in the securities markets of different countries, and their associated risks, are expected to change independently of each other. - 20 -

Exchange Rate Exposure. Solus may invest a portion of the Clients’ assets in the securities of non-U.S. issuers listed on foreign exchanges and denominated in non-U.S. currencies. The Clients, however, value their securities and other assets in U.S. dollars. Solus generally has the authority to hedge non-U.S. dollar positions through currency hedging transactions. There can be no guarantee that financial instruments suitable for hedging currency or market shifts will be available at the time when Solus wishes to use them, or that hedging techniques employed by Solus will be effective. Furthermore, certain currency market risks may not be fully hedged or hedged at all. To the extent unhedged, the value of the Clients’ positions in non-U.S. investments will fluctuate with the U.S. dollar exchange rate. In such cases, an increase in the value of the U.S. dollar compared to the other currencies in which the Clients hold investments will reduce the value of these foreign investments, which may result in a loss to the Clients. Debt Securities Generally. Solus may invest in private and government debt securities and instruments. Debt instruments in which Solus invests may be unrated, and whether or not rated, the debt instruments may have speculative characteristics. The issuers of such instruments (including sovereign issuers) may face significant ongoing uncertainties and exposure to adverse conditions that may undermine the issuer’s ability to make timely payment of interest and principal. Such instruments are regarded as predominantly speculative with respect to the issuer’s capacity to pay interest and repay principal in accordance with the terms of the obligations and involve major risk exposure to adverse conditions. In addition, an economic recession could severely disrupt the market for most of these securities and may have an adverse impact on the value of such instruments. It is also likely that any such economic downturn could adversely affect the ability of the issuers of such securities to repay principal and pay interest thereon and increase the incidence of default for such securities. Investments in Unsecured and Subordinated Debt. Subordinated debt is subject to certain additional risks to the extent that such obligations may be unsecured and/or subordinated to substantial amounts of senior indebtedness, all or a significant portion of which may be secured. Moreover, such obligations may not be protected by financial covenants or limitations upon additional indebtedness. Non-Performing Nature of Debt. It is anticipated that certain debt instruments purchased by Solus will be non-performing and possibly in default. Furthermore, the obligor or relevant guarantor may also be in bankruptcy or liquidation. There can be no assurance as to the amount and timing of payments, if any, with respect to the loans. Stressed Debt. Solus is authorized to invest in securities and other obligations of stressed issuers. Stressed issuers are issuers that are not yet deemed distressed or bankrupt and whose debt securities are trading at a discount to par, but not yet at distressed levels. An example would be an issuer that is in technical default of its credit agreement, or undergoing strategic or operational changes, which results in market pricing uncertainty. Derivative Investments. Certain swaps, options and other derivative instruments may be subject to various types of risks, including market risk, liquidity risk, the risk of nonperformance by the counterparty, including risks relating to the financial soundness and creditworthiness of the counterparty, legal risk and operations risk. The prices of derivative instruments, including futures, swaps, options and credit derivatives, are highly volatile. - 21 -

Payments made pursuant to swap agreements may also be highly volatile. Price movements of futures and options contracts and payments pursuant to swap agreements are influenced by, among other things, interest rates, changing supply and demand relationships, trade, fiscal, monetary and exchange control programs and policies of governments, and national and international political and economic events and policies. The value of futures, options and swap agreements also depends upon the price of the securities underlying them. In addition, the Clients’ assets are also subject to the risk of the failure of any of the exchanges on which their positions trade or of their clearinghouses or counterparties. Solus may buy or sell (write) both call options and put options, and when they write options, they may do so on a “covered” or an “uncovered” basis. A call option is “covered” when the writer owns securities of the same class and amount as those to which the call option applies. A put option is covered when the writer has an open short position in securities of the relevant class and amount. Solus’ option transactions may be part of a hedging strategy (i.e., offsetting the risk involved in another securities position) or a form of leverage, in which the Clients have the right to benefit from price movements in a large number of securities with a small commitment of capital. These activities involve risks that can be substantial, depending on the circumstances. In general, without taking into account other positions or transactions Solus may enter into, the principal risks involved in options trading can be described as follows: when Solus buys an option, a decrease (or inadequate increase) in the price of the underlying security in the case of a call, or an increase (or inadequate decrease) in the price of the underlying security in the case of a put, could result in a total loss of the Clients’ investments in the option (including commissions). Solus could mitigate those losses by selling short, or buying puts on, the securities for which they hold call options, or by taking a long position (e.g., by buying the securities or buying calls on them) in securities underlying put options. When Solus sells (writes) an option, the risk can be substantially greater than when it buys an option. The seller of an uncovered call option bears the risk of an increase in the market price of the underlying security above the exercise price. The risk is theoretically unlimited unless the option is “covered.” If it is covered, the Clients would forego the opportunity for profit on the underlying security should the market price of the security rise above the exercise price. If the price of the underlying security were to drop below the exercise price, the premium received on the option (after transaction costs) would provide profit that would reduce or offset any loss the Clients might suffer as a result of owning the security. Swaps and certain options and other custom instruments are subject to the risk of nonperformance by the swap counterparty, including risks relating to the creditworthiness of the swap counterparty, market risk, liquidity risk and operations risk. Solus may take advantage of opportunities with respect to certain other derivative instruments that are not presently contemplated for use or that are currently not available, but that may be developed, to the extent such opportunities are both consistent with the investment objectives and legally permissible. Special risks may apply to instruments that are invested in by Solus in the future that cannot be determined at this time or until such instruments are developed or invested in by Solus. - 22 -

Forward Trading. Forward contracts and options thereon, unlike futures contracts, are not traded on exchanges and are not standardized; rather, banks and dealers act as principals in these markets, negotiating each transaction on an individual basis. Forward and “cash” trading is substantially unregulated; there is no limitation on daily price movements and speculative position limits are not applicable. The principals who deal in the forward markets are not required to continue to make markets in the currencies or commodities they trade, and these markets can experience periods of illiquidity, sometimes of significant duration. There have been periods during which certain participants in these markets have refused to quote prices for certain currencies or commodities or have quoted prices with an unusually wide spread between the price at which they were prepared to buy and that at which they were prepared to sell. Disruptions can occur in forward markets due to unusually high trading volume, political intervention or other factors. Bank Loans. Solus’ investment programs may include significant investments in bank loans and participations. These obligations are subject to unique risks, including: (i) the possible invalidation of an investment transaction as a fraudulent conveyance under relevant creditors’ rights laws; (ii) so-called lender-liability claims by the issuer of the obligations; (iii) environmental liabilities that may arise with respect to collateral securing the obligations; and (iv) limitations on the ability of Clients to directly enforce their rights with respect to participations. In analyzing each bank loan or participation, Solus compares the relative significance of the risks against the expected benefits of the investment. Successful claims by third parties arising from these and other risks will be borne by the Clients. As secondary market trading volumes increase, new loans are frequently adopting standardized documentation to facilitate loan trading which may improve market liquidity. There can be no assurance, however, that future levels of supply and demand in loan trading will provide an adequate degree of liquidity or that the current level of liquidity will continue. Because of the provision to holders of such loans of confidential information relating to the borrower, the unique and customized nature of the loan agreement, and the private syndication of the loan, loans are not as easily purchased or sold as a publicly-traded security, and historically the trading volume in the loan market has been small relative to the high yield debt market. Fixed Income Securities. Solus may invest in bonds or other fixed-income securities of U.S. and non-U.S. issuers, including, without limitation, bonds, notes and debentures issued by corporations, municipal bonds, debt securities issued or guaranteed by the U.S. Government or one of its agencies or instrumentalities and commercial paper. Fixed income securities pay fixed, variable or floating rates of interest. The value of fixed-income securities in which Solus invests will change in response to fluctuations in interest rates. In addition, the value of certain fixed-income securities can fluctuate in response to perceptions of creditworthiness, political stability or soundness of economic policies. Fixed income securities are subject to the risk of the issuer’s inability to meet principal and interest payments on its obligations (i.e., credit risk) and are subject to price volatility due to such factors as interest rate sensitivity, market perception of the creditworthiness of the issuer and general market liquidity (i.e., market risk). In addition, fixed-income investments are affected by general fixed-income market conditions, such as the volatility and liquidity of the fixed-income market, which are affected by the ability of dealers to “make a market” in fixed-income investments. Decreases in dealer inventories relative to market size can result in greater volatility and illiquidity in the fixed-income market, which could impair a Client’s profitability or result in losses relating to its fixed-income investments. - 23 -

Variable and Floating Rate Securities. In addition to traditional fixed-rate securities, Solus may invest in debt securities with variable or floating rate interest or dividend payments. Variable or floating rate securities bear rates of interest that are adjusted periodically according to formulae intended to reflect market rates of interest. Variable or floating rate securities allow the Clients to participate in increases in interest rates through upward adjustments of the coupon rates on such securities. However, during periods of increasing interest rates, changes in the coupon rates may lag the change in market rates or may have limits on the maximum increase in coupon rates. Alternatively, during periods of declining interest rates, the coupon rates on such securities readjust downward resulting in a lower yield. Solus also may invest in derivative variable rate securities, such as inverse floaters whose rates vary inversely with market rates of interest, or range floaters or capped floaters, whose rates are subject to periodic or lifetime caps, or in securities that pay a rate of interest determined by applying a multiple to the variable rate. Investment in such securities involves special risks as compared to a fixed-rate security. The extent of increases and decreases in the value of derivative variable rate securities and the corresponding change to the net asset value of the Clients in response to changes in market rates of interest generally will be larger than comparable changes in the value of an equal principal amount of a fixed-rate security having similar credit quality, redemption provisions and maturity. The markets for such securities may be less developed and have less liquidity than the markets for conventional securities. Commercial Paper. Solus may invest in commercial paper, which represents short-term unsecured promissory notes issued by banks or bank holding companies, corporations, finance companies, state and local governments, and by public authorities, agencies and instrumentalities. Credit Default Swaps. Like short sales, credit default swaps involve the risk of an unlimited increase in the market price of a particular security. Also like short sales, an investment in a credit default swap involves the posting of collateral that will be returned to the Client upon the termination of the credit default swap. Amounts posted as collateral may be invested in cash or cash equivalent investments and may not generate the same level of return as the Client’s other investments. Repurchase and Reverse Repurchase Agreements. Solus may enter into repurchase and reverse repurchase agreements. When Solus enters into a repurchase agreement, it “sells” securities to a broker-dealer or financial institution, and agrees to repurchase such securities on a mutually agreed date for the price paid by the broker-dealer or financial institution, plus interest at a negotiated rate. In a reverse repurchase transaction, Solus “buys” securities issued from a broker-dealer or financial institution, subject to the obligation of the broker-dealer or financial institution to repurchase such securities at the price paid by Solus, plus interest at a negotiated rate. The use of repurchase and reverse repurchase agreements by Solus involves certain risks. For example, if the seller of securities to Solus under a reverse repurchase agreement defaults on its obligation to repurchase the underlying securities, as a result of its bankruptcy or otherwise, Solus will seek to dispose of such securities, which action could involve costs or delays. If the seller becomes insolvent and subject to liquidation or reorganization under applicable bankruptcy or other laws, Solus’ ability to dispose of the underlying securities may be restricted. It is possible, in a bankruptcy or liquidation scenario, that Solus may not be able to substantiate its interest in the underlying securities. Finally, if a seller defaults on its obligation to repurchase - 24 -

securities under a reverse repurchase agreement, the Clients may suffer a loss to the extent that Solus is forced to liquidate the positions in the market, and proceeds from the sale of the underlying securities are less than the repurchase price agreed to by the defaulting seller. Similar elements of risk arise in the event of the bankruptcy or insolvency of the buyer. “When-Issued” and “Forward Delivery” Securities. To secure prices or yields deemed advantageous at a particular time, Solus may purchase securities on a “when-issued” or on a “forward delivery” basis. In these cases, delivery of the securities will occur beyond the normal settlement period. When-issued securities purchased by Solus may include securities purchased on a “when, as and if issued” basis under which the issuance of the securities depends on the occurrence of a subsequent event, such as approval of a merger, corporate reorganization or debt restructuring. Securities purchased on a when-issued or forward delivery basis may expose the Clients to risk because the securities may experience fluctuations in value prior to their actual delivery. Clients will not accrue income with respect to a when-issued or forward delivery security prior to its stated delivery date. Purchasing securities on a when-issued or forward delivery basis can involve the additional risk that the yield available in the market when the delivery takes place may be higher than that obtained in the transaction itself. Further, in such transactions, Solus will rely on the other party to consummate the trade. Failure of the seller to do so may result in the Clients incurring a loss or missing an opportunity to obtain a price considered to be advantageous. Investments in Distressed Securities. Solus may invest in “below investment grade” securities and obligations of issuers in weak financial condition, experiencing poor operating results, having substantial capital needs or negative net worth, facing special competitive or product obsolescence problems, including companies involved in bankruptcy or other reorganization and liquidation proceedings. Solus also may invest in fee interests and other interests in distressed real estate or real estate-related assets. These securities are likely to be particularly risky investments although they also may offer the potential for correspondingly high returns. Among the risks inherent in investments in troubled entities is the fact that it frequently may be difficult to obtain information as to the true condition of such issuers. Such investments may also be adversely affected by laws relating to, among other things, fraudulent transfers and other voidable transfers or payments, lender liability and the bankruptcy court’s power to disallow, reduce, subordinate, recharacterize debt as equity or disenfranchise particular claims. Such companies’ securities may be considered speculative, and the ability of such companies to pay their debts on schedule could be affected by adverse interest rate movements, changes in the general economic climate, economic factors affecting a particular industry or specific developments within such companies. In addition, there is no minimum credit standard that is a prerequisite to Solus’ investment in any instrument, and a significant portion of the obligations and securities in which Solus invests may be less than investment grade. Any one or all of the issuers of the securities in which Solus may invest may be unsuccessful or not show any returns for a considerable period of time. The level of analytical sophistication, both financial and legal, necessary for successful investment in companies experiencing significant business and financial difficulties is unusually high. There is no assurance that Solus will correctly evaluate the value of the assets collateralizing the Clients’ loans or the prospects for a successful reorganization or similar action. In any reorganization or liquidation proceeding relating to a company in which Solus invests, the Clients may lose their entire investment, may - 25 -

be required to accept cash or securities with a value less than the Clients’ original investment and/or may be required to accept payment over an extended period of time. Under such circumstances, the returns generated from Solus’ investments may not compensate the Clients adequately for the risks assumed. In addition, under certain circumstances, payments and distributions may be disgorged if any such payment is later determined to have been a fraudulent conveyance or a preferential payment. In liquidation (both in and out of bankruptcy) and other forms of corporate reorganization, there exists the risk that the reorganization either will be unsuccessful (due to, for example, failure to obtain requisite approvals), will be delayed (for example, until various liabilities, actual or contingent, have been satisfied) or will result in a distribution of cash or a new security, the value of which will be less than the purchase price to the Client of the security in respect to which such distribution was made. In certain transactions, the Client may not be “hedged” against market fluctuations, or, in liquidation situations, may not accurately value the assets of the company being liquidated. This can result in losses, even if the proposed transaction is consummated. Private Equity Investments. Clients may acquire controlling or minority equity stakes in privately held companies. The success of the these investments in privately held companies that such Clients control will depend in part on Solus’ ability to develop plans and strategies to exploit new business opportunities for such companies as well as Solus’ ability to restructure and effect improvements in the operations of such companies. The activity of developing such plans and strategies and of identifying and implementing operational improvements at portfolio companies entails a high degree of uncertainty. There can be no assurance that the Client will be able to successfully identify and implement such plans, strategies or improvements. The success of the Client’s investments in minority equity stakes of privately held companies will depend in part on the performance and abilities of such companies’ controlling shareholders. Because the Client will not control such companies, the Client’s ability to exit from such investments may be limited. Additionally, the Client is likely to have a reduced ability to influence management of such companies. Solus may also have disagreements with controlling shareholders over the strategy and operations of such companies. As a result of the foregoing, the Client’s equity investments in such companies may perform poorly. Investments in Undervalued Assets. Solus may invest in undervalued assets. The identification of investment opportunities in undervalued assets is a difficult task that often requires complex analysis of potential investments and sophisticated evaluation of micro- and macro- level economic factors. There is no assurance that such investment opportunities will be successfully recognized or acquired. While investments in undervalued assets offer the opportunity for above-average capital appreciation, these investments involve a high degree of financial risk and can result in substantial losses. Returns generated from the Client’s investments may not adequately compensate the Client for the business and financial risks assumed. Clients may be forced to sell, at a substantial loss, assets which it believes are undervalued, if they are not in fact undervalued. In addition, the Client may be required to hold such assets for a substantial period of time before realizing their anticipated value.

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High Yield Securities. Solus may invest in bonds or other fixed-income securities, including without limitation “higher yielding” (including non-investment grade) debt securities. Such securities are generally not exchange-traded and, as a result, these financial instruments trade in the over-the-counter marketplace, which is less transparent and has wider bid/ask spreads than the exchange-traded marketplace. In addition, Solus may invest in bonds of issuers that do not have publicly-traded equity securities, making it more difficult to hedge the risks associated with such investments. Also, the market for credit spreads is often inefficient and illiquid, making it difficult to accurately calculate discounting spreads for valuing financial instruments. High yield securities face ongoing uncertainties and exposure to adverse business, financial or economic conditions which could lead to the issuer’s inability to meet timely interest and principal payments. High yield securities are generally more volatile and may or may not be subordinated to certain other outstanding securities and obligations of the issuer, which may be secured by substantially all of the issuer’s assets. High yield securities may also not be protected by financial covenants or limitations on additional indebtedness. The market values of certain of these lower-rated and unrated debt securities tend to reflect individual corporate developments to a greater extent than do higher-rated securities which react primarily to fluctuations in the general level of interest rates, and tend to be more sensitive to economic conditions than are higher-rated securities. Companies that issue such securities are often highly leveraged and may not have available to them more traditional methods of financing. It is possible that a major economic recession could severely disrupt the market for such securities and may have an adverse impact on the value of such securities. In addition, it is possible that any such economic downturn could adversely affect the ability of the issuers of such securities to repay principal and pay interest thereon and increase the incidence of default of such securities. Risks Associated with Bankruptcy Cases. Many of the events within a bankruptcy case are adversarial and often beyond the control of the creditors. While creditors generally are afforded an opportunity to object to significant actions, there can be no assurance that a bankruptcy court would not approve actions that may be contrary to the interests of the Clients. Furthermore, there are instances where creditors and equity holders may lose their ranking and priority or may be recharacterized as equity. Solus may purchase creditor claims subsequent to the commencement of a bankruptcy case. It is possible that such purchase may be disallowed by the bankruptcy court if the court determines that the purchaser has taken unfair advantage of an unsophisticated seller, which may result in the rescission of the transaction or forfeiture by the purchaser. Additionally, the claim may be disallowed or subordinated if the bankruptcy court determines that the seller engaged in inequitable conduct that harmed other creditors. Generally, the duration of a bankruptcy case can only be roughly estimated. The reorganization of a company usually involves the development and negotiation of a plan of reorganization, plan approval by creditors and confirmation by the bankruptcy court. This process can involve substantial legal, professional and administrative costs to the company and the Clients, it is subject to unpredictable and lengthy delays, and during the process, the company’s competitive position may erode, key management may depart and the company may not be able to invest adequately. In some cases, the company may not be able to reorganize and may be required to liquidate assets. The debt of companies in financial reorganization will, in - 27 -

most cases, not pay current interest, may not accrue interest during reorganization and may be adversely affected by an erosion of the issuer’s fundamental values. Such investments can result in a total loss of principal. Solus may invest in non-U.S. companies. Investment in the debt of financially distressed companies domiciled outside the U.S. involves additional risks. Bankruptcy law and process may differ substantially from that in the U.S., resulting in greater uncertainty as to the rights of creditors, the enforceability of such rights, reorganization timing and the classification, seniority and treatment of claims. In certain developing countries, although bankruptcy laws have been enacted, the process for reorganization remains highly uncertain. Solus, on behalf of Clients, may elect to serve on creditors’ committees, equity holders’ committees or other groups to ensure preservation or enhancement of the Clients’ positions as a creditor or equity holder. A member of any such committee or group may owe certain obligations generally to all parties similarly situated that the committee represents. If Solus concludes that its obligations owed to the other parties as a committee or group member conflict with its duties owed to the Clients, it may resign from that committee or group, and in such case, the Clients may not realize the benefits, if any, of participation on the committee or group. In addition, if a Client is represented on a committee or group, it may be restricted or prohibited under applicable law from disposing of or increasing its investments in such company while it continues to be represented on such committee or group. Reorganizations can be contentious and adversarial. It is by no means unusual for participants to use the threat of, as well as actual, litigation as a negotiating technique. Solus anticipates that during the term of a Client, Solus, the Client and perhaps certain of its shareholders may be named as defendants in civil proceedings. The expense of defending against claims by third parties and paying any amounts pursuant to settlements or judgments would generally be borne by the Client and would reduce net assets. Risk of Investing in Trade Claims. Solus invests in unsecured claims held by entities owed for goods, services or other losses against companies that have filed for bankruptcy protection (such claims, “trade claims”). The prices realized on trade claims could be less than the price originally paid by Solus because of the absence of a regulated market for trade claims. There is decreased transparency of pricing information with respect to trade claims and a risk that such claims may be disallowed or reduced by the bankruptcy court or treated differently from other forms of debt under the debtor’s plan of reorganization approved by the bankruptcy court. Further, because of the absence of a formal market, indices, or regulation of trade claims, trade claims may be illiquid. The Clients may also be subject to actions during the bankruptcy court proceedings, including preference actions and, in certain circumstances, equitable subordination actions, based solely on prior conduct of the seller of such trade claim. Such actions may result in the reduction or disallowance of a trade claim and losses to the purchaser of such claim, and a delay of realization of the value of such trade claim. Further, in the event a seller of a trade claim subsequently becomes insolvent or itself files for bankruptcy protection, the purchaser of such claim may not benefit from any warranties, representations or indemnities provided by the seller to the purchaser in the purchase documents, and, with respect to insolvent claim sellers, be subject to credit and litigation risk. Trade claims are also subject to the credit and recovery risk of the bankrupt company, as well as the general risks associated with bankruptcy cases. In the event these risks materialize with respect to trade claims purchased by - 28 -

Solus, the Clients may suffer significant losses. The Clients may also be subject to the risk that the seller of a trade claim will fail to deliver upon the terms of the investment. In addition, the trade claims market lacks standard documentation, which increases settlement risks. Litigation Risk. Some of the tactics that Solus may use involve litigation. Solus or a Client could be a party to lawsuits either initiated by it, a company in which it invests, other investors, or U.S. Federal, state or non-U.S. governmental bodies. Solus and/or the Clients may be also be defendants in civil proceedings. The expense of prosecuting claims, for which there is no guarantee of success, and/or the expense of defending against claims by third parties and paying any amounts pursuant to settlements or judgments, would generally be borne by the Clients and would reduce net assets. There can be no assurance that any such litigation, once begun, would be resolved in favor of the applicable Clients. Equitable Subordination. Under common law principles that in some cases form the basis for lender liability claims, if a lender (i) intentionally takes an action that results in the undercapitalization of a borrower or issuer to the detriment of other creditors of such borroweror issuer, (ii) engages in other inequitable conduct to the detriment of such other creditors, (iii) engages in fraud with respect to, or makes misrepresentations to, such other creditors or (iv) uses its influence as a stockholder to dominate or control a borrower or issuer to the detriment of other creditors of such borrower or issuer, a court may elect to subordinate the claim of the offending lender or bondholder to the claims of the disadvantaged creditor or creditors (a remedy called “equitable subordination”). Solus does not intend to engage in conduct that would form the basis for a successful cause of action based upon the equitable subordination doctrine; however, because of the nature of the debt obligations, the Clients may be subject to claims from creditors of an obligor that debt obligations of such obligor which are held by the issuer should be equitably subordinated. Leverage and Financing Risk. Solus may leverage Clients’ capital to the extent permitted under the relevant Client’s governing documents/guidelines because Solus believes that the use of leverage may enable certain Clients to achieve a higher rate of return. Accordingly, leverage may take the form of trading on margin, repurchase financings, total rate of return swaps, loans or other instruments Solus deems appropriate. The amount of leverage which such Clients’ may have outstanding at any time may be substantial in relation to their capital. While leverage presents opportunities for increasing total returns, it has the effect of potentially increasing losses as well. Accordingly, any event which adversely affects the value of an investment would be magnified to the extent the investment is leveraged. The cumulative effect of the use of leverage by Solus in a market that moves adversely to levered Clients’ investments could result in a substantial loss to those Clients which would be greater than if such Clients were not leveraged. Solus will borrow funds to increase buying power and potential returns to applicable Clients. Although leverage will increase the investment return of such Clients if an investment purchased with borrowed funds earns a greater return than the amount that such Clients are charged for the use of those funds, the use of leverage will decrease the investment return if such Clients fail to earn as much on investments purchased with borrowed funds as they are charged for the use of those funds. The use of leverage will also allow Solus to borrow in order to make additional investments, thereby increasing the affected Clients’ exposure to assets, such that their - 29 -

total assets are greater than their NAV. The use of leverage will, therefore, magnify the volatility of changes in the value of the investments of such Clients. Borrowings by Solus may be secured by the applicable Client’s portfolio. Under certain circumstances pursuant to the conditions of a loan, the Clients may be required to liquidate all or a portion of their investments to pay off the loan. Liquidation under those circumstances could have adverse consequences. Funds borrowed for leveraging will be subject to interest costs that may or may not be recovered by the return on the Clients’ portfolios. Solus’ participation in some investments may involve significant leverage. Additionally, in some investments, it is anticipated that Solus would retain either the most or one of the most subordinate tranches of an issuer’s securities, which is the most leveraged investment in the issuer’s structure. In general, the anticipated use of short-term margin borrowings results in certain additional risks to the applicable Clients. For example, should the securities pledged to brokers to secure a Client’s margin account declines in value, the Client could be subject to a “margin call,” pursuant to which the Client must either deposit additional funds or securities with the broker or suffer mandatory liquidation of the pledged securities to compensate for the decline in value. In the event of a sudden drop in the value of such Client’s assets, the Client might not be able to liquidate assets quickly enough to satisfy its margin requirements. In certain situations, including situations when a Liquidating SPV may be created to liquidate certain investments held by a Client (if applicable), the Client may need to deliver all or a portion of its investments. The Client may incur substantial costs in connection with deleveraging such capital, which costs may be borne by all investors in such Client. Structured Investments. Solus may invest in interests in entities organized and operated solely for the purpose of restructuring the investment characteristics of other debt securities, including debt securities issued by foreign governments. This type of restructuring involves the deposit with or purchase by an entity, such as a corporation or trust, of specified instruments and the issuance by that entity of one or more classes of securities backed by, or representing interests in, the underlying instruments. The cash flow on the underlying instruments may be apportioned among the newly issued security to create securities with different investment characteristics such as varying maturities, payment priorities and interest rate provisions, and the extent of the payments made with respect to such securities is dependent on the extent of the cash flow on the underlying instruments. Certain classes of such securities may be subordinated to the right of payment of another class. Subordinated structured investments typically have higher yields and present greater risks than unsubordinated structured investments. Solus also may invest in other forms of structured investments, including, for example, debt and equity tranches of collateralized debt obligations (“CDOs”), collateralized bond obligations (“CBOs”) and collateralized loan obligations (“CLOs”) issued by partnerships or corporations, many of which have no significant operating history. The underlying collateral for CDOs, CBOs, CLOs and similar structured investments may consist of securities that are rated below investment grade, securities of non-U.S. issuers, municipal obligations and derivatives thereof, and also may consist of pools of securities that may be significantly different than the security held by the Clients in terms of credit quality, liquidity and other attributes, and while - 30 -

such debt obligations are structured to benefit from varying degrees of overcollateralization, cash flow or other requirements, there is no assurance that such structuring will fully protect principal and interest due on such obligations. Such securities are generally illiquid. Collateralized Obligations Generally. Solus may invest in collateralized debt obligations such as CDOs and CLOs. The portfolio may include a variety of different types of products including CDO and CLO equity, multi-sector CDO equity, trust preferred CDO equity and CLO debt. CDOs are subject to credit, liquidity and interest rate risks, which are each discussed in greater detail above. The CDO equity purchased by Solus will most likely be unrated or noninvestment grade. As a holder of CDO equity, Solus will have limited remedies available upon the default of the CDO. Solus may be unable to find a sufficient number of attractive opportunities to meet its investment objective or fully invest its committed capital. For example, from time to time, the market for CDO transactions has been adversely affected by a decrease in the availability of senior and subordinated financing for transactions, in part in response to regulatory pressures on providers of financing to reduce or eliminate their exposure to such transactions. CDOs often invest in concentrated portfolios of assets. The concentration of an underlying portfolio in any one obligor would subject the related CDOs to a greater degree of risk with respect to defaults by such obligor and the concentration of a portfolio in any one industry would subject the related CDOs to a greater degree of risk with respect to economic downturns relating to such industry. The value of the CDOs owned by the Clients generally will fluctuate with, among other things, the financial condition of the obligors or issuers of the underlying portfolio of assets of the related CDO (“CDO Collateral”), general economic conditions, the condition of certain financial markets, political events, developments or trends in any particular industry and changes in prevailing interest rates. Consequently, holders of CDOs must rely solely on distributions on the CDO Collateral or proceeds thereof for payment in respect thereof. If distributions on the CDO Collateral are insufficient to make payments on the CDOs, no other assets will be available for payment of the deficiency and following realization of the CDOs, the obligations of such issuer to pay such deficiency generally will be extinguished. CDO Collateral may consist of high-yield debt securities, loans, asset-backed securities (“ABS”) and other securities, which often are rated below investment grade (or of equivalent credit quality). High-yield debt securities generally are unsecured (and loans may be unsecured) and may be subordinated to certain other obligations of the issuer thereof. The lower ratings of high-yield securities and below investment grade loans reflect a greater possibility that adverse changes in the financial condition of an issuer or in general economic conditions or both may impair the ability of the related issuer or obligor to make payments of principal or interest. Such investments may be speculative. Subordination of CDO Debt and CDO Equity. The Clients’ portfolios may contain CDO equity and subordinate CDO debt. Subordinate CDO debt generally is fully subordinated to the related CDO senior tranches. CDO equity generally is fully subordinated to any related CDO debt. To the extent that any losses are incurred by a CDO in respect of its related CDO Collateral, such losses will be borne first by the holders of the related CDO equity, next by the holders of any related subordinated CDO debt and finally by the holders of the related CDO senior tranches. In addition, if an event of default occurs under the governing instrument or underlying investment, as long as any CDO senior tranches are outstanding, the holders thereof generally will be entitled to determine the remedies to be exercised under the instrument - 31 -

governing the CDO. Remedies pursued by such holders could be adverse to the interests of the holders of any related subordinated CDO debt and/or the holders of the related CDO equity, as applicable. Mandatory Redemption of CDO Senior Tranches and CDO Debt. Under certain circumstances, cash flows from CDO Collateral that otherwise would have been paid to the holders of any related CDO debt and the related CDO equity will be used to redeem the related CDO senior tranches. This could result in an elimination, deferral or reduction in the interest payments, principal repayments or other payments made to the holders of such CDO debt or such CDO equity, which could adversely impact the returns to the holders of such CDO debt or such CDO equity. Optional Redemption of CDO Senior Tranches and CDO Debt. An optional redemption of a CDO could require the collateral or portfolio manager of the related CDO to liquidate positions more rapidly than would otherwise be desirable, which could adversely affect the realized value of the items of CDO Collateral sold (and which in turn could adversely impact the holders of any related CDO debt, and/or the holders of the related CDO equity). ABS and MBS Generally. The investment characteristics of ABS and mortgage-backed securities (“MBS”) differ from traditional debt securities. Among the major differences are that interest and principal payments are made more frequently, usually monthly, and that the principal may be prepaid at any time because the underlying loans or other assets generally may be prepaid at any time. ABS and MBS Subordinated Securities. Investments in subordinated MBS and ABS involve greater credit risk of default than the senior classes of the issue or series. Default risks may be further pronounced in the case of MBS and ABS secured by, or evidencing an interest in, a relatively small or less diverse pool of underlying loans. Certain subordinated securities absorb all losses from default before any other class of securities is at risk, particularly if such securities have been issued with little or no credit enhancement or equity. Such securities, therefore, possess some of the attributes typically associated with equity investments. Commercial MBS. Mortgage loans on commercial properties often are structured so that a substantial portion of the loan principal is not amortized over the loan term but is payable at maturity and repayment of the loan principal thus often depends upon the future availability of real estate financing from the existing or an alternative lender and/or upon the current value and salability of the real estate. Therefore, the unavailability of real estate financing may lead to default. Most commercial mortgage loans underlying MBS are effectively nonrecourse obligations of the borrower, meaning that there is no recourse against the borrower’s assets other than the collateral. If borrowers are not able or willing to refinance or dispose of encumbered property to pay the principal and interest owed on such mortgage loans, payments on the subordinated classes of the related MBS are likely to be adversely affected. The ultimate extent of the loss, if any, to the subordinated classes of MBS may only be determined after a negotiated discounted settlement, restructuring or sale of the mortgage note, or the foreclosure (or deed in lieu of foreclosure) of the mortgage encumbering the property and subsequent liquidation of the property. Foreclosure can be costly and delayed by litigation and/or bankruptcy. Factors such as - 32 -

the property’s location, the legal status of title to the property, its physical condition and financial performance, environmental risks, and governmental disclosure requirements with respect to the condition of the property may make a third party unwilling to purchase the property at a foreclosure sale or to pay a price sufficient to satisfy the obligations with respect to the related MBS. Revenues from the assets underlying such MBS may be retained by the borrower and the return on investment may be used to make payments to others, maintain insurance coverage, pay taxes or pay maintenance costs. Such diverted revenue is generally not recoverable without a court appointed receiver to control collateral cash flow. ABS. ABS are not secured by an interest in the related collateral. Credit card receivables, for example, are generally unsecured and the debtors are entitled to the protection of a number of state and federal consumer loan laws, many of which give such debtors the right to set off certain amounts owed on the credit cards, thereby reducing the balance due. Most issuers of ABS backed by automobile receivables permit the servicers to retain possession of the underlying obligations. If the servicer were to sell these obligations to another party, there is a risk that the purchaser would acquire an interest superior to that of the holders of the related ABS. In addition, because of the large number of vehicles involved in a typical issuance and technical requirements under state laws, the trustee for the holders of the ABS may not have a proper security interest in all of the obligations backing such ABS. Therefore, there is a possibility that recoveries on repossessed collateral may not, in some cases, be available to support payments on these securities. The risk of investing in ABS is ultimately dependent upon payment of consumer loans by the debtor. The collateral supporting ABS is of shorter maturity than certain other types of loans and is less likely to experience substantial prepayments. ABS are often backed by pools of any variety of assets, including, for example, leases, mobile home loans and aircraft leases, which represent the obligations of a number of different parties and use credit enhancement techniques such as letters of credit, guarantees or preference rights. The value of an ABS is affected by changes in the market’s perception of the asset backing the security and the creditworthiness of the servicing agent for the loan pool, the originator of the loans or the financial institution providing any credit enhancement, as well as by the expiration or removal of any credit enhancement. RMBS. Holders of residential mortgage-backed securities (“RMBS”) bear various risks, including credit, market, interest rate, structural and legal risks. RMBS represent interests in pools of residential mortgage loans secured by one to four family residential mortgage loans. Such loans may be prepaid at any time. Residential mortgage loans are obligations of the borrowers thereunder only and are not typically insured or guaranteed by any other person or entity, although such loans may be securitized by government agencies and the securities issued are guaranteed. The rate of defaults and losses on residential mortgage loans will be affected by a number of factors, including general economic conditions and those in the geographic area where the mortgaged property is located, the terms of the mortgage loan, the borrower’s “equity” in the mortgaged property and the financial circumstances of the borrower. If a residential mortgage loan is in default, foreclosure of such residential mortgage loan may be a lengthy and difficult process, and may involve significant expenses. Furthermore, the market for defaulted residential mortgage loans or foreclosed properties may be very limited.

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Investments in RMBS may experience losses or reduced yield if, for example, (i) the borrower of an underlying residential mortgage loan defaults or is unable to make payments, (ii) the underlying residential mortgage loans are prepaid, (iii) there is a general decline in the housing market, or (iv) violations of particular provisions of certain federal laws by an issuer of RMBS limit the ability of the issuer to collect all or part of the principal of or interest on the related underlying loans. Prepayment Risk. The frequency at which prepayments (including voluntary prepayments by the obligors and liquidations due to defaults and foreclosures) occur on loans underlying MBS and ABS will be affected by a variety of factors including the prevailing level of interest rates as well as economic, demographic, tax, social, legal and other factors. Generally, mortgage obligors tend to prepay their mortgages when prevailing interest rates fall below the existing interest rates on their mortgage loans. Although ABS are generally less likely to experience substantial prepayments than are MBS, certain of the factors that affect the rate of prepayments on MBS also affect the rate of prepayments on ABS. However, during any particular period, the predominant factors affecting prepayment rates on MBS and ABS may be different. In general, “premium” securities (securities whose market values exceed their principal or par amounts) are adversely affected by faster than anticipated prepayments, and “discount” securities (securities whose principal or par amounts exceed their market values) are adversely affected by slower than anticipated prepayments. Since many MBS and ABS will be discount securities when interest rates are high, and will be premium securities when interest rates are low, these MBS and ABS may be adversely affected by changes in prepayments in any interest rate environment. The adverse effects of prepayments may impact the Clients’ portfolios in two ways. First, particular investments may experience outright losses, as in the case of an interest-only security in an environment of faster actual or anticipated prepayments. Second, particular investments may underperform relative to hedges that Solus may have constructed for these investments, resulting in a loss to the Client’s overall portfolio. In particular, prepayments (at par) may limit the potential upside of many MBS and ABS to their principal or par amounts, whereas their corresponding hedges often have the potential for unlimited loss. Real Estate-Related Securities. Solus may invest in securities issued by entities which invest in real estate such as “real estate investment trusts” (“REITs”). Real estate investments generally will be subject to the risks incident to the ownership and operation of commercial real estate and/or risks incident to the making of nonrecourse mortgage loans secured by real estate. Such risks include, without limitation, the risks associated with both the domestic and international general economic climates; local real estate conditions; risks due to dependence on cash flow; risks and operating problems arising out of the absence of certain construction materials; changes in supply of, or demand for, competing properties in an area (as a result, for instance, of over-building); the financial condition of tenants, buyers and sellers of properties; changes in availability of debt financing; energy and supply shortages; changes in the tax, real estate, environmental, and zoning laws and regulations; various uninsured or uninsurable risks; natural disasters; and the ability of the Clients or third-party borrowers to manage the real properties. In addition, the Clients may incur the burdens of ownership of real property, which - 34 -

include the paying of expenses and taxes, maintaining such property and any improvements thereon, and ultimately disposing of such property. Complexity and Market Shifts. Many of the securities and other financial instruments in which Solus invests are complex, and their market values are highly sensitive to changes in interest rates and/or prepayments. Returns on mortgage-backed securities, collateralized mortgage obligations (“CMOs”) and stripped mortgage-backed securities may be affected by relatively small changes in interest rates, prepayments or both. These security types, together with callable and putable bonds and other option-like instruments, are sensitive to changes in the volatility of interest rates. Solus’ ability to rebalance the portfolio could be reduced by a variety of factors such as very rapid changes in interest rates, spreads and volatility conditions, and by market dislocations caused by other factors such as unanticipated political and economic changes. Insolvency Risks. Various laws enacted for the protection of creditors may apply to the issuers of the CDO Collateral (solely for purposes of this risk factor, an “Insolvent Company”). The information in this paragraph and the following paragraph is applicable with respect to U.S. issuers of CDO Collateral. Insolvency considerations may differ with respect to non-U.S. issuers of CDO Collateral. If a court in a lawsuit brought by an unpaid creditor or representative of creditors of an Insolvent Company, such as a trustee in bankruptcy, were to find that the issuer did not receive fair consideration or reasonably equivalent value for incurring the indebtedness constituting the CDO or CDO Collateral (as applicable) and, after giving effect to such indebtedness, the Insolvent Company (i) was insolvent, (ii) was engaged in a business for which the remaining assets of the Insolvent Company constituted unreasonably small capital or (iii) intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature, such court could determine to invalidate, in whole or in part, such indebtedness as a fraudulent conveyance, to subordinate such indebtedness to existing or future creditors of the Insolvent Company or to recover amounts previously paid by such issuer in satisfaction of such indebtedness. The measure of insolvency for purposes of the foregoing will vary. Generally, an Insolvent Company would be considered insolvent at a particular time if the sum of its debts were then greater than all of its property at a fair valuation or if the present fair saleable value of its assets were then less than the amount that would be required to pay its probable liabilities on its existing debts as they became absolute and matured. There can be no assurance as to what standard a court would apply in order to determine whether the Insolvent Company was “insolvent” after giving effect to the incurrence of the indebtedness constituting the CDO or CDO Collateral (as applicable) or that, regardless of the method of valuation, a court would not determine that the Insolvent Company was “insolvent” upon giving effect to such incurrence. In addition, in the event of the insolvency of an Insolvent Company, payments made on such CDO or CDO Collateral (as applicable) could be subject to avoidance as a “preference” if made within a certain period of time (which may be as long as one year) before insolvency. In general, if payments on a CDO or CDO Collateral (as applicable) are avoidable, whether as fraudulent conveyances or preferences, such payments can be recaptured from the initial recipient (such as the Clients). However, a court in a bankruptcy or insolvency proceeding would be able to direct the recapture of any such payment only to the extent that such court has jurisdiction over such holder or its assets. Moreover, it is likely that avoidable payments could not be recaptured directly from a holder that has given value in exchange for its interest, in good - 35 -

faith and without knowledge that the payments were avoidable. Nevertheless, there can be no assurance that a Client will be able to avoid recapture on this or any other basis. The preceding discussion is based upon principles of U.S. Federal and state laws. Insofar as the Clients’ portfolios consist of the obligations of non-U.S. obligors, the laws of certain foreign jurisdictions may provide for avoidance remedies under factual circumstances similar to those described above or under different circumstances, with consequences that may or may not be analogous to those described above under U.S. Federal and state laws. Default and Recovery Rates of Loans and High Yield Securities. There are varying sources of statistical default and recovery rate data for loans and high yield securities and numerous methods for measuring default and recovery rates. The historical performance of the high yield market or the leveraged loan market is not necessarily indicative of its future performance. Contingent Liabilities. From time to time, the Clients may incur contingent liabilities in connection with an investment. For example, Solus may purchase from a lender a revolving credit facility that has not yet been fully drawn. If the borrower subsequently draws down on the facility, the Clients would be obligated to fund the amounts due. Solus may also enter into agreements pursuant to which the Clients agree to assume responsibility for default risk presented by a third party, and may, on the other hand, enter into agreements through which third parties offer default protection to the Clients. Ability to Lend on Advantageous Terms: Competition and Supply. Solus may purchase loans. Solus’ success in this area will depend, in part, on its ability to obtain loans on advantageous terms. In purchasing loans, Solus will compete with a broad spectrum of lenders, many of which have substantially greater financial resources and are better known than Solus. Increased competition for, or a diminution in the available supply of, qualifying loans could result in lower yields on such loans, which could reduce returns to Clients. Fraud. Of paramount concern in lending is the possibility of material misrepresentation or omission on the part of a borrower. Such inaccuracy or incompleteness may adversely affect the valuation of the collateral underlying a loan or may adversely affect the ability of Solus to perfect or effectuate a lien on the collateral securing the loan. Solus will rely upon the accuracy and completeness of representations made by borrowers to the extent reasonable, but cannot guarantee such accuracy or completeness. Under certain circumstances, payments to the Clients may be reclaimed if any such payment or distribution is later determined to have been a fraudulent conveyance or a preferential payment. Swap Agreements. Solus may enter into swap agreements and options on swap agreements (“swaptions”). These agreements can be individually negotiated and structured to include exposure to a variety of different types of investments, asset classes or market factors. Solus, for instance, may enter into swap agreements with respect to interest rates, credit defaults, currencies, securities, indexes of securities and other assets or other measures of risk or return. Depending on their structure, swap agreements may increase or decrease the Clients’ exposure to, for example, equity securities, long-term or short-term interest rates, foreign currency values, credit spreads or other factors. Swap agreements can take many different forms and are known - 36 -

by a variety of names. Solus is not limited to any particular form of swap agreement if consistent with the investment objectives of the relevant Client. Whether Solus’ use of swap agreements or swaptions will be successful will depend on its ability to select appropriate transactions for the Clients. Swap transactions may be highly illiquid and may increase or decrease the volatility of the Clients’ portfolios. Moreover, the Clients bear the risk of loss of the amount expected to be received under a swap agreement in the event of the default or insolvency of its counterparty. If a counterparty were to become insolvent, the Clients bear the risk that it may not receive the return of its posted collateral or that the collateral may take some time to return. The Clients will also bear the risk of loss related to swap agreements, for example, for breaches of such agreements or the failure of the Clients to post or maintain required collateral. Many swap markets are relatively new and still developing. It is possible that developments in the swap markets, including potential government regulation, could adversely affect the Clients’ ability to terminate existing swap transactions or to realize amounts to be received under such transactions. In addition, various regulatory initiatives underway now require certain derivatives to be cleared through a clearinghouse. Risks associated with clearinghouses include decreased availability of customizable derivatives in over-the-counter market, more onerous and frequent margin calls, dynamic margin requirements (i.e., fluctuating margin requirements) and systemic risk from the potential failure of a clearinghouse. Limitations Due to Regulatory Restrictions. Solus may seek to acquire a significant stake in certain financial instruments. In the event such stake exceeds certain percentage or value limits, the Clients may be required to file a notification with one or more governmental agencies or comply with other regulatory requirements. Certain notice filings are subject to review that require a delay in the acquisition of the financial instrument. Compliance with such filing and other requirements may result in additional costs to the Clients, and may delay the Clients’ ability to respond in a timely manner to changes in the markets with respect to such financial instruments. Taxes and Derivatives. The regulatory and tax environment globally for derivative instruments in which Solus may participate is evolving, and changes in the regulation or taxation of such investments may materially adversely affect the value of such investments and the ability of Solus to pursue its investment strategies. Futures Contracts. The value of futures depends upon the price of the financial instruments, such as commodities, underlying them. The prices of futures are highly volatile, and price movements of futures contracts can be influenced by, among other things, interest rates, changing supply and demand relationships, trade, fiscal, monetary and exchange control programs and policies of governments, and national and international political and economic events and policies. In addition, investments in futures are also subject to the risk of the failure of any of the exchanges on which Solus’ positions trade or of its clearing houses or counterparties. Futures positions may be illiquid because certain commodity exchanges limit fluctuations in certain futures contract prices during a single day by regulations referred to as “daily price fluctuation limits” or “daily limits.” Under such daily limits, during a single trading day no trades may be executed at prices beyond the daily limits. Once the price of a particular futures - 37 -

contract has increased or decreased by an amount equal to the daily limit, positions in that contract can neither be taken nor liquidated unless traders are willing to effect trades at or within the limit. This could prevent Solus from promptly liquidating unfavorable positions and subject the Clients to substantial losses or prevent it from entering into desired trades. In extraordinary circumstances, a futures exchange or the CFTC could suspend trading in a particular futures contract, or order liquidation or settlement of all open positions in such contract. Exchange-Traded Funds. Solus may invest in ETFs, which are shares of publicly-traded unit investment trusts, open-end funds, or depository receipts that seek to track the performance and dividend yield of specific indexes or companies in related industries. These indexes may be either broad-based, sector, or international. However, ETF shareholders are generally subject to the same risk as holders of the underlying securities they are designed to track. ETFs are also subject to certain additional risks, including, without limitation, the risk that their prices may not correlate perfectly with changes in the prices of the underlying securities they are designed to track, and the risk of trading in an ETF halting due to market conditions or other reasons based on the policies of the exchange upon which the ETF trades. In addition, the Clients may bear, along with other shareholders of an ETF, their pro rata portion of the ETF’s expenses, including management fees, which can have a material adverse effect on the return on capital of the Clients. Illiquid Portfolio Investments. Solus may make investments in securities or other assets, such as bank loans, that are subject to legal or other restrictions on transfer or for which no liquid market exists. The market prices, if any, for such investments tend to be volatile and may not be readily ascertainable, and Solus may not be able to sell them when it desires to do so or to realize what it perceives to be their fair value in the event of a sale. The sale of restricted securities and illiquid investments often requires more time and results in higher brokerage charges or dealer discounts and other selling expenses than does the sale of securities eligible for trading on national securities exchanges or in the over-the-counter markets. Solus may not be able to readily dispose of such illiquid investments and, in some cases, may be contractually prohibited from disposing of such investments for a specified period of time. Restricted securities and other types of illiquid assets may sell at a price lower than similar investments that are not subject to restrictions on resale. Assets and liabilities for which no such market prices are available will generally be carried on the books of the Clients at fair value (which may be cost) as reasonably determined by Solus. There is no guarantee that fair value will represent the value that will be realized by the Clients on the eventual disposition of the investment or that would, in fact, be realized upon an immediate disposition of the investment. Investments in Real Estate. Solus may invest a portion of its assets directly in real estate that Solus believes is undervalued, nonrecourse mortgages where the mortgagor is not a significant operating company and in the securities or obligations of single purpose companies whose primary asset is real estate. Risks associated with real estate investments include (i) lack of demand for commercial or housing space in a locale, (ii) changes in general economic or local conditions, (iii) changes in supply of, or demand for, similar or competing properties in an area, (iv) uncertainty of cash flow to meet loan and other fixed obligations, (v) changes in interest rates, (vi) unavailability of mortgage financing which may render the sale or refinancing of property difficult, (vii) changes in tax, real estate, environmental and zoning laws and (viii) - 38 -

potential U.S. taxation on income effectively connected with the conduct of a U.S. trade or business and taxes levied on non-U.S. persons (such as the Clients) which own U.S. real estate. Additionally, in connection with the ownership (direct or indirect) of real properties, the Clients may face potential costs and liabilities related to environmental laws, such as those related to the removal of hazardous and toxic substances. Real Estate Investments Are Not as Liquid as Certain Other Types of Assets. Real estate investments are not as liquid as other types of investments and this lack of liquidity may tend to limit Solus’ ability to react promptly to changes in economic or other conditions. In addition, significant expenditures associated with real estate investments, such as mortgage payments, real estate taxes and maintenance costs, are generally not reduced when circumstances cause a reduction in income from the investments. The Clients may need to comply with certain legal, tax and other requirements prior to liquidating such investments. Relative Value. To the extent Solus implements such strategy, the success of the relative value investment strategy will depend on Solus’ ability to identify and exploit perceived inefficiencies in the pricing of securities, financial products, or markets. Identification and exploitation of such discrepancies involve uncertainty. There can be no assurance that Solus will be able to locate investment opportunities or to exploit pricing inefficiencies in the securities markets. A reduction in the pricing inefficiency of the markets in which Solus may seek to invest will reduce the scope for the Clients’ investment strategies. In the event that the perceived mispricings underlying the Clients’ positions were to fail to converge toward, or were to diverge further from, relationships expected by Solus, the Clients may incur losses. A relative value investment strategy may result in high portfolio turnover and, consequently, high transaction costs. In addition, a relative value strategy is designed to be uncorrelated with respect to the movements in equity markets and risk-free interest rates. Depending upon the investment strategies employed and market conditions, unforeseen events involving such matters as political crises, or changes in currency exchange rates or interest rates, forced redemptions of securities, or general lack of market liquidity may have a material adverse effect on such strategy. “Market Neutral” Strategies. A portfolio manager that uses “market neutral” trading strategies generally does not make trades which it considers to constitute directional “bets” on absolute price movements. Instead, it attempts to exploit relative mispricings among interrelated instruments (securities/securities; securities/derivatives; securities/futures; derivatives/futures and futures/futures). Mispricings, even if correctly identified, may not be corrected by the market, at least within a timeframe over which it is feasible for the portfolio manager to maintain a position. Even pure arbitrage positions can result in significant losses if a portfolio investment is not able to maintain both sides of the position until expiration/maturity. A portfolio investment may trade at a high degree of leverage and could be forced to liquidate positions prematurely in order to meet margin calls, causing an otherwise “pure” arbitrage position to result in major losses. Structured Note Risk. Solus may also invest in structured notes, variable rate mortgagebacked and asset-backed securities, each with rates of interest that vary based on a designated floating rate formula or index. The value of these investments is closely tied to the absolute levels of such rates or indices, or the market’s perception of anticipated changes in those rates or indices. The movements in specific indices or interest rates may be difficult or impossible to hedge. - 39 -

Equity Price Risk. The Clients’ investment portfolios may include long and short positions in equity securities of public and private, listed and unlisted companies. Equity securities fluctuate in value in response to many factors, including, among others, the activities and financial condition of individual companies, geographic markets, industry market conditions, interest rates and general economic environments. In addition, events such as the domestic and international political environments, terrorism and natural disasters, may be unforeseeable and contribute to market volatility in ways that may adversely affect investments made by Solus. Convertible Arbitrage. Convertible arbitrage strategies involve investing in convertible securities that appear incorrectly valued relative to their theoretical value. The strategy consists of the purchase (or short sale) of a convertible security coupled with the short sale (or purchase) of the underlying security for which the convertible security can be exchanged to exploit price differentials. Solus may seek to hedge out the risk inherent in the stock; the remaining risk may or may not be hedged. Convertible arbitrage strategies generally involve spreads between two or more positions. To the extent the price relationships between such positions remain constant, no gain or loss on the position will occur. Such positions do, however, entail a substantial risk that the price differential could change unfavorably, causing a loss to the spread position. Substantial risks also are involved in borrowing and lending against such investments. The prices of these investments can be volatile, market movements are difficult to predict, and financing sources and related interest and exchange rates are subject to rapid change. Certain corporate securities may be subordinated (and thus exposed to the first level of default risk) or otherwise subject to substantial credit risks. Capital Structure Arbitrage. To the extent Solus implements such strategy, the success of the capital structure arbitrage strategy will depend on the ability of Solus to identify and exploit the relationships between movements in different financial instruments within an issuer’s capital structure (including, bank debt, convertible and non-convertible senior and subordinated debt and preferred and common stock). Identification and exploitation of these opportunities involve uncertainty. There can be no assurance that Solus will be able to locate investment opportunities or to correctly exploit price discrepancies. A reduction in the pricing inefficiency of the markets in which Solus will seek to invest will reduce the scope for Solus’ investment strategies. In the event that the perceived mispricings underlying the Clients’ positions fail to materialize, these investment strategies could be unsuccessful or result in losses. Structured Product Arbitrage. The structured product arbitrage strategies will involve the purchase or sale of various categories of structured products and derivatives. To the extent Solus implements such strategies, the success of these strategies will depend on Solus’ ability to identify and exploit the inefficient pricing of portfolio risk and the implicit correlations of time to default. In the event that the perceived mispricings underlying the Clients’ positions were incorrect, the Clients could incur losses. In addition, the lack of an established, liquid secondary market for some structured products (including CDOs) may make it difficult to realize the perceived value of such securities. Merger Arbitrage. Merger or “risk” arbitrage strategies attempt to exploit merger activity to capture (or sell short) the spread between current market values of securities and their values after successful completion of a merger, restructuring or similar corporate transaction. Merger - 40 -

arbitrage investments often incur significant losses when anticipated merger or acquisition transactions are not consummated. The consummation of mergers, tender offers and exchange offers can be prevented or delayed by a variety of factors, including: (i) regulatory and antitrust restrictions; (ii) political factors; (iii) industry weakness; (iv) stock-specific events; and (v) failed financings. Merger arbitrage positions also are subject to the risk of overall market movements. To the extent that a general increase or decline in equity values affects the stocks involved in a merger arbitrage position differently, the position may be exposed to loss. Merger arbitrage strategies also depend for success on the overall volume of merger activity, which historically has been cyclical in nature. Convertible Securities. Convertible securities are stocks or other securities that may be converted into or exchanged for a specified amount of common stock of the same or different issuer within a particular period of time at a specified price or formula. The value of a convertible security is a function of its “investment value” (determined by its yield in comparison with the yields of other securities of comparable maturity and quality that do not have a conversion privilege) and its “conversion value” (the security’s worth, at market value, if converted into the underlying common stock). The investment value of a convertible security is influenced by changes in interest rates, with investment value declining as interest rates increase and increasing as interest rates decline. The credit standing of the issuer and other factors may also have an effect on the convertible security’s investment value. The conversion value of a convertible security is determined by the market price of the underlying common stock. If the conversion value is low relative to the investment value, the price of the convertible security is governed principally by its investment value. To the extent the market price of the underlying common stock approaches or exceeds the conversion price, the price of the convertible security will be increasingly influenced by its conversion value. A convertible security generally will sell at a premium over its conversion value by the extent to which investors place value on the right to acquire the underlying common stock while holding a fixedincome security. Generally, the amount of the premium decreases as the convertible security approaches maturity. A convertible security may be subject to redemption at the option of the issuer at a price established in the convertible security’s governing instrument. If a convertible security held by the Clients is called for redemption, the Clients will be required to permit the issuer to redeem the security, convert it into the underlying common stock or sell it to a third party. Any of these actions could have an adverse effect on the Clients’ ability to achieve their investment objectives. Preferred Stock. Preferred stock generally has a preference as to dividends and upon the event of liquidation over an issuer’s common stock, but it ranks junior to debt securities in an issuer’s capital structure. Preferred stock generally pays dividends in cash (or additional shares of preferred stock) at a defined rate, but unlike interest payments on debt securities, preferred stock dividends are payable only if declared by the issuer’s board of directors. Dividends on preferred stock may be cumulative, meaning that, in the event the issuer fails to make one or more dividend payments on the preferred stock, no dividends may be paid on the issuer’s common stock until all unpaid preferred stock dividends have been paid. Preferred stock may also be subject to optional or mandatory redemption provisions. - 41 -

Stock Index Options. Solus may purchase and sell call and put options on stock indices listed on securities exchanges or traded in the over-the-counter market. A stock index fluctuates with changes in the market values of the stocks included in the index. Because the value of an index option depends upon movements in the level of the index rather than the price of a particular stock, whether the Clients will realize gains or losses from the purchase or writing of options on indices depends upon movements in the level of stock prices in the stock market generally or, in the case of certain indices, in an industry or market segment, rather than movements in the price of particular stocks. Accordingly, successful use by Solus of options on stock indices will be subject to Solus’ ability to correctly predict movements in the direction of the stock market generally or of particular industries or market segments. This requires different skills and techniques than predicting changes in the price of individual stocks. Similar elements of risk arise in the event of the bankruptcy or insolvency of the buyer. IPO Securities. Solus may purchase securities of companies in initial public offerings or shortly thereafter. Special risks associated with these securities may include a limited number of shares available for trading, unseasoned trading, lack of investor knowledge of the company and limited operating history. These factors may contribute to substantial price volatility for the shares of these companies and, thus, for the value of the Clients’ interests. The limited number of shares available for trading in some initial public offerings may make it more difficult for Solus to buy or sell a significant number of shares without an unfavorable impact on prevailing market prices. In addition, some companies in initial public offerings are involved in relatively new industries or lines of business, which may not be widely understood by investors. Some of these companies may be undercapitalized or regarded as developmental stage companies, without revenues or operating income, or the near-term prospects of achieving them. Small- and Medium-Capitalization Companies. Solus may invest a portion of its assets in the securities of companies with small- to medium-sized market capitalizations. While Solus believes they often provide significant potential for appreciation, such securities, particularly of companies having small capitalization, involve higher risks in some respects than do investments in securities of larger companies. For example, prices of securities of small-capitalization and even medium-capitalization companies are often more volatile than prices of securities of largecapitalization companies and the risk of bankruptcy or insolvency of many smaller companies (with the attendant losses to investors) is higher than for larger, “blue-chip” companies. In addition, due to thin trading in the securities of some small-capitalization companies, an investment in those companies may be illiquid. The securities of less seasoned and smallercapitalized companies are often traded in the over-the-counter market and have fewer market makers and wider price spreads, which may in turn result in more abrupt and erratic price movements and make the Clients’ investments more vulnerable to adverse general market or economic developments than would investments in large, more established companies. It is more difficult to obtain information about less seasoned and smaller-capitalized companies because they tend to be less well known and have shorter operating histories and because they tend not to have significant ownership by large investors or be followed by many securities analysts. Additionally, these companies may have limited product lines, markets or financial resources, or they may be dependent upon a limited management group that may lack depth and experience. Investments in larger and more established companies present certain advantages in that such companies generally have greater financial resources, more extensive research and - 42 -

development, manufacturing, marketing and service capabilities, more stability and greater depth of management and technical personnel. Position Limits. Position limits imposed by various regulators may also limit Solus’ ability to effect desired trades. Position limits are the maximum amounts of gross, net long or net short positions that any one person or entity may own or control in a particular financial instrument. All positions owned or controlled by the same person or entity, even if in different accounts, may be aggregated for purposes of determining whether the applicable position limits have been exceeded. Thus, even if Solus does not intend to exceed applicable position limits, it is possible that different accounts managed by Solus or its affiliates may be aggregated. If at any time positions managed by Solus were to exceed applicable position limits, Solus would be required to liquidate positions, which might include positions of the Clients, to the extent necessary to come within those limits. Further, to avoid exceeding the position limits, Solus might have to forego or modify certain of its contemplated trades. Catastrophe Risks. Clients may be subject to the risk of loss arising from direct or indirect exposure to various catastrophic events, including the following: hurricanes, earthquakes and other natural disasters; terrorism; and public health crises, including the occurrence of a contagious disease. To the extent that any such event occurs and has a material effect on global financial markets or specific markets in which Clients participate (or has a material effect on locations in which Solus operates) the risks of loss can be substantial and could have a material adverse effect on Clients and the investors’ investments therein.

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As stated in Item 4, Solus provides a variety of investment advisory services as described therein. Solus Advisors LLC serves as the managing member of Solus LLC, and Solus NL GP LLC serves as a special member of Solus LLC and managing member of Solus 2 LLC. Solus NL GP LLC also serves as special shareholder of Sola Intermediate Fund Ltd. Solus Long-Term Opportunities GP LLC serves as the general partner of each of the Long-Term Opportunities Funds. As described in Item 5, Incentive Allocations and/or Carried Interest are made by certain Solus Clients including the Domestic Hedge Funds, the Offshore Sola Hedge Funds and the Long-Term Opportunities Funds to Solus Advisors LLC, Solus NL GP LLC and Solus LongTerm Opportunities GP LLC (as applicable and respectively), while Management Fees charged to such Clients are generally paid to Solus. Solus Advisors LLC, Solus Opportunities 1 GP LLC, Solus Opportunities 2 GP LLC, Solus Advisors Opportunities 3 GP LLC, Solus Advisors Opportunities 4 GP LLC, Solus Opportunities 5 PE GP LLC, Solus Ultra GP LLC, Solus NB Advisors LLC and Solus SPC GP LLC serve as general partner, managing member or special shareholder to customized funds, including without limitation, single investor Funds established for large institutional investors.

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Solus requires its personnel to disclose certain private securities transactions and holdings initially upon becoming associated with Solus and annually thereafter. Subject to the Code, at times, Solus and Solus’ personnel invest on behalf of themselves through their own accounts in securities and other instruments that would be appropriate for, are held by, or may fall within the investment guidelines of Solus’ Clients. Solus and Solus’ personnel have given and may give advice or take action for their own accounts that may differ from, conflict with or be adverse to advice given to or action taken for Clients. Solus and Solus’ personnel at times have relationships with companies whose securities are in or are being considered for the portfolios of Solus’ Clients. Solus has established policies and procedures to monitor and address these conflicts and will endeavor to address conflicts with respect to investment opportunities in a manner it deems equitable to the extent possible under the prevailing facts and circumstances. The Code also includes informational wall and insider trading prevention policies and procedures (the “Insider Trading Prevention Policies”) that are designed to prevent and detect the misuse of material non-public information. Solus personnel are required to certify to their compliance with the Code, including the Insider Trading Prevention Policies, on an annual basis. Upon written request, investors or prospective investors of the Clients may obtain a copy of Solus’ Code by contacting Solus’ Client Services department at request@soluslp.com. B.

Securities in which Solus or a Related Person Has a Material Financial Interest 1.

Cross Trades

From time to time, subject to applicable obligations under the Employment Retirement Income Security Act of 1974, as amended, as well as Client or investment guidelines and restrictions, Solus, in certain limited circumstances, directs one Client account to sell investments to another Client account through an internal cross transaction in which Solus will receive no compensation. In most cases an independent pricing mechanism will be used to ensure objectivity. However, there could be times in which that pricing mechanism is not feasible or fair to the Clients, and a different type of pricing mechanism may be utilized based upon the principles of fairness to both Clients.

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2.

Principal Transactions

To the extent that any such cross transaction is a principal transaction due to the ownership interest in the Client account by Solus and its personnel, Solus will comply with the requirements of Section 206(3) of the Advisers Act and provide written notification to the Client and obtain Client consent either prior to the cross transaction or prior to its settlement. C.

Investing in Securities (Including Contemporaneous Transactions) that Solus or a Related Person Recommends to Clients and Other Potential Conflicts

Solus may from time to time invest its own excess funds in securities or instruments in which Solus may invest its Clients’ assets. Similarly, Solus’ personnel have made and may from time to time make personal investments in securities or instruments in which Solus invests its Clients’ assets. Solus and/or its personnel have bought, sold or held and may buy, sell or hold securities or other instruments for its own or their own accounts while entering into different investment decisions for one or more Client accounts. The Code addresses the possible conflicts arising out of personal trading of Solus personnel by, among other things, generally requiring Solus personnel to pre-clear securities transactions and generally imposing a ninety (90) day holding period on securities purchased by such personnel. The above-referenced personal trading policies and procedures seek to address the risk that personal trading activities may adversely affect the prices and availability of other securities or instruments held by or potentially considered for one or more Clients. Potential conflicts also may arise due to the facts that: ▪ ▪

Solus and/or its personnel have investments in some Clients but not in others or may have different levels of investments in the various Clients; and Clients pay different levels of fees to Solus.

In addition, Solus has given advice and may give advice or take action with respect to the investments of one or more Client accounts that may not be given or taken with respect to other Client accounts with similar investment programs, objectives, and strategies. Accordingly, Client accounts with similar strategies will not necessarily hold the same securities or instruments or achieve the same performance. At times, Solus also advises Client accounts with conflicting programs, objectives or strategies. These activities also may adversely affect the prices and availability of other securities or instruments held by or potentially considered for one or more Client accounts. Further, Solus advises Managed Account Clients wholly owned by certain current/former principals of Solus. Such Managed Account Clients are not expected to purchase any new investments (but may protect existing investments, e.g., make follow-on investments). Instead, such Managed Account Clients are expected to realize their existing investments over time consistent with Solus’ fiduciary duties and then be wound down. Solus employs a number of policies and procedures designed to address these conflicts. Solus’ personnel or affiliates at times have relationships with companies whose securities are in or are being considered for the portfolios of Solus’ Clients. To address this fact, Solus personnel are required to disclose to the Solus Compliance department certain relationships (e.g., directorships, family members that work in the financial services industry). As a result of such - 47 -

policies and procedures, these potential conflicts can be considered prior to making an investment or other decision for a Client that may be affected by any such relationship. From time to time Solus acquires securities or other financial instruments of an issuer for one Client account which are senior or junior to securities or financial instruments of the same issuer that are held by, or acquired for, another Client account (e.g., one Client account may acquire senior debt while another Client account may acquire subordinated debt). Solus recognizes that conflicts may arise under such circumstances and will endeavor to treat all Clients fairly and equitably.

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Accordingly, the commissions and other transaction costs (which may include dealer markups or markdowns) charged to the Clients by brokers or dealers in the foregoing circumstances may be higher than those charged by other brokers or dealers that may not offer such products and services. From time to time, Solus may execute over-the-counter trades on an agency basis rather than on a principal basis. In these situations, the broker used by Solus may acquire or dispose of a security through a market-maker (a practice known as “interpositioning”). The transaction may thus be subject to both a commission and a markup or markdown. Solus believes that the use of a broker in such instances is consistent with its duty of obtaining best execution for its Clients. The use of a broker can provide anonymity in connection with a transaction. In addition, a broker may, in certain cases, have greater expertise or greater capability in connection with both accessing the market and executing a transaction. The majority of bond dealers and commercial banks, as principals, effect bank loan transactions. Some loan transactions involve market makers that may earn a mark up on the transaction. Less frequently, brokers may be used, in which case only a small number of brokers typically are available, particularly for transactions involving distressed bank loans. Brokers may provide Solus with capital introduction, marketing assistance, consulting with respect to technology, operations, equipment, commitment of capital, access to company management and access to deal flow. Neither Solus nor its Clients will separately compensate any broker for any of these services. Solus has adopted policies and procedures that seek to identify and prevent the provision of such services from improperly influencing the selection of brokers. 1. Research and Other Soft Dollar Usage; Broker Considerations. Solus does not currently use formal soft dollar arrangements but has the right to do so. If Solus uses soft dollar arrangements, or receives soft dollar benefits, brokerage and research services provided to Solus in exchange for certain levels of brokerage business may include research reports on particular industries and companies, economic surveys and analyses, advice from legal, strategic, financial and industry consultants and advisors, recommendations as to specific securities and other services (e.g., research- and trading-related computer software) providing lawful and appropriate assistance to Solus in connection with its investment advisory responsibilities. Any use of commissions or “soft dollars” or soft dollar benefits generated by Solus’ Clients through agency and certain riskless principal transactions to pay for brokerage or research and research-related services will fall within the safe harbor created by Section 28(e) of - 49 -

the Securities Exchange Act of 1934, as amended. Under Section28(e), brokerage and research services obtained with “soft dollars” generated by one of Solus’ Clients may be used by Solus to service other Solus Clients, including Clients that may not have paid for the soft dollar benefits. Where brokerage or research services obtained with soft dollars provides both research and nonresearch assistance to Solus (e.g., a “mixed use” item), Solus will not seek to allocate soft dollar benefits to Client accounts in proportion to the soft dollar credits the Client accounts generate. Solus will make a reasonable allocation of any cost paid for with soft dollars. Brokers sometimes suggest a level of business they would like to receive in return for the various brokerage and research services they provide. Actual brokerage business received by any broker may be less than the suggested allocation, but can (and often does) exceed the suggested level, because total brokerage is allocated on the basis of all of the considerations described above. A broker is not excluded from receiving business because it has not been identified as providing brokerage or research services. Instead, brokers are selected on a best execution basis. Solus notes that if it were to use Client brokerage commissions to obtain products or services that are not Client expenses (it currently does not), Solus would obtain a benefit because it would not have to pay for such services. As a result, in such circumstances, Solus would have an incentive to select or recommend a broker based on its own interest in receiving research or other products and services, rather than selecting brokers based on the Client’s interest in receiving best execution. The investment programs of Solus’ Clients emphasize active management of the Clients’ portfolios. As a result, portfolio turnover and brokerage commission expenses may exceed those of other investment entities of comparable size. 2.

Brokerage for Client Referrals.

Neither Solus nor any related person receives Client referrals from any broker-dealer or third party that provides brokerage services to the Solus Clients. Solus personnel, however, will from time to time speak at or participate in conferences and programs sponsored by prime brokers and attended by persons and entities interested in investing in hedge funds. These conferences and programs may be a means by which Solus can be introduced to potential investors in its Clients. The prime brokers are not compensated by Solus, Solus’ Clients, or potential investors for providing such capital introduction opportunities. Such capital introduction services have assisted and may assist Solus in raising Client capital and thus pose a potential conflict of interest in that Solus would have an incentive to select or recommend a broker based on its own interest in receiving capital introduction services, rather than selecting brokers based on the Client’s interest in receiving best execution. Solus may utilize capital introduction and marketing assistance provided by brokerdealers for the Clients subject to its obligation to allocate brokerage to those providers on the basis of best execution. Solus has adopted policies and procedures that seek to ensure that Solus remain vigilant about not acting on this potential conflict of interest when selecting what brokers to use to execute Client transactions.

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3.

Directed Brokerage.

Currently, there are no directed brokerage arrangements in place between Solus and its Clients. In the future, a Managed Account may be permitted (in Solus’ discretion) to designate a particular broker-dealer to effect transactions. If this occurs, Solus’ ability to obtain best execution may be impaired and the Managed Account may not obtain best execution. In addition, Managed Accounts that designate a particular broker-dealer may not receive efficiencies that are available to other Clients (including Funds) that participate in an aggregated trade. Orders directed to a particular broker-dealer shall be entered after Solus places its orders for Clients who have not designated a particular broker-dealer, and Solus assumes no responsibility for any adverse consequences that may occur as a result from the use of a designated broker-dealer. B.

Order Aggregation

It is Solus’ policy to allocate investment opportunities to its Clients fairly and equitably, to the extent practicable, over a period of time. Solus will have no obligation to purchase, sell or exchange any security or financial instrument for any Client which Solus may purchase, sell or exchange for another Client if Solus believes in good faith at the time the investment decision is made that such transaction or investment would be unsuitable, impractical or undesirable for the Client. If it is determined by Solus that it would be appropriate for more than one Client to participate in an investment opportunity, Solus will seek to execute orders for all such participating Clients on a fair and equitable basis. Due to the nature of the fixed income and other financial markets, as well as specific Client investment guidelines and objectives, pro rata allocation of investment opportunities will not always be desirable or feasible. When allocating investment opportunities among Clients, Solus will consider with respect to each Client such factors as the relative amounts of capital available for new investments, the investment objectives, investment programs, term and portfolio positions of the Clients, the availability of leverage, relative exposure to market trends, transaction costs, the manner in which the investment in question is likely to affect the amount of available capital after the investment is made, investment guidelines and restrictions, concentrations and diversification within an account, tax and regulatory issues, the nature and size of existing portfolio holdings and cash positions, risk/return objectives and anticipated redemptions and subscriptions (liquidity). In certain circumstances, Solus gives special consideration to certain Clients such as new Clients (including those in which Solus or its affiliates may have an interest) with a substantial amount of available cash. With respect to initial public offerings of securities (“new issues”), Solus will determine which Clients are suitable and eligible to receive such new issues, taking into consideration the factors described above. Whenever practicable, new issues will be allocated pro rata among all suitable and eligible Clients in proportion to their relative capital balances, as determined by Solus in its sole discretion. If Solus determines that the purchase or sale of the same security is in the best interest of more than one Client, Solus may, but is not obligated to, aggregate orders placed simultaneously in order to obtain best execution and reduce transaction costs, to the extent permitted by applicable law. When an aggregated order is filled through multiple trades at different prices on the same day, each participating Client will receive the average price with transaction costs allocated pro rata based on the size of each Client’s participation in the order (or allocation in the event of a partial fill) as determined by Solus. In the event of a partial fill, allocations maybe - 51 -

modified on a basis that Solus deems to be appropriate, including, for example, in order to avoid odd lots or de minimis allocations. Generally, trades that are not aggregated are processed in the order they are placed with the broker or counterparty selected by Solus. As a result, certain trades in the same security or instrument for one Client (including a Client in which Solus and its affiliates may have a direct or indirect interest) may receive more or less favorable prices or terms than another Client and orders placed later may not be filled entirely or at all, based upon the prevailing market prices at the time of the order or trade. In addition, some opportunities for reduced transaction costs and economies of scale may not be achieved.

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Certain investors may request additional information and reporting, and, although such additional information and reporting will generally (but may not always) be available to all investors in the same Fund, some investors may not request, and therefore not receive, such additional information. Solus expects to provide annual audited financial statements to its Clients and investors in the Funds within 120 days of the applicable Client’s fiscal year end to the extent required under applicable law. In addition, Solus personnel may from time to time participate in portfolio reviews with investors in the Funds.

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Audits for such funds are distributed to Fund investors within 120 days of each such Fund’s fiscal year end. Thus, Solus does not need to comply with certain of the requirements of Rule 206(4)-2 of the Investment Advisers Act of 1940, as amended (the custody rule). Investors in the Funds also receive their capital account statements directly from Solus’ administrator on a monthly basis. Investors should carefully review such statements and the annual audit. Investors in Solus Clients should carefully compare the account statements received from the administrator to any statements provided by Solus. Solus may not have custody of the assets or securities of Managed Account Clients. The custodian of any such Managed Accounts may maintain custody of those assets and securities. Such Managed Accounts may receive account statements directly from that qualified custodian. The owners of any such Solus-advised Managed Accounts are urged to compare account statements received from the qualified custodian with any account statements received from Solus.

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In instances that pertain to a Managed Account, any investment guidelines and restrictions must be provided to Solus in writing. Solus was granted discretionary trading authority over each Client, including through entering into investment management agreements, subadvisor agreements or similar arrangements.

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Upon written request, investors of the Clients may obtain a copy of the proxy policies and procedures and details as to how the securities or corporate actions were voted in their respective portfolios by contacting Solus’ Client Services department at request@soluslp.com. To the extent that Solus does not have authority to vote proxies on behalf of a Solusadvised Managed Account, such Managed Account retains the responsibility for receiving and voting proxies for any and all securities maintained in its portfolio. When Solus becomes aware that securities held in a client account have become the subject of a class action lawsuit, Solus will evaluate whether it is in the best interests of the client to participate in the class action.

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