Blue Torch Capital LP: investment adviser

The Firm provides discretionary investment management to privately placed pooled investment vehicles (“Private Funds”), separately managed accounts (“SMAs”) and special purpose investment vehicles (“SPVs”, collectively with the Private Funds and SMAs, the “Clients”) based on their respective investment objectives. The Firm’s primary investment focus is the debt assets of middle market companies, in particular “companies in transition”. Blue Torch defines “companies in transition” as companies requiring a solutions-oriented lender with experience underwriting complex situations, be undergoing operational, financial, legal or regulatory transformations or hurdles, or require financing solutions within an accelerated time period. As of December 31, 2025, Blue Torch manages $8,557,577,688 in regulatory assets under management on a discretionary basis. The Firm does not manage any assets on a non-discretionary basis. The Firm provides its advisory services as described in the investment program of the relevant Client’s investment management agreement, or in the case of Private Funds, the fund’s offering memorandum or as set forth in such Client’s organizational documents, the subscription documents related to an investment in such Client, and/or the investment management agreement with such Client. As a general matter, the Firm does not tailor its investment advice to any particular underlying investor of a Private Fund or SPV. In addition to providing investment advisory services to its Clients, Blue Torch or an affiliate serves as collateral manager servicer, agent or in other capacities to CLOs, and other structured vehicles. Blue Torch Finance typically serves as Administrative Agent and/or Collateral Agent in certain investments in which the Private Funds and SMAs participate. In addition, the Firm both has the right to and does enter into agreements, such as side letters, with certain investors in the Private Funds that can in each case provide for terms of investment that are more favorable than the terms provided to other investors in the Private Funds. Such terms can include the waiver or reduction of management and/or incentive fees/allocations, the provision of additional information or reports, rights related to specific regulatory requests or requirements of certain clients, more favorable transfer rights, more favorable liquidity or other rights. Certain Clients (and/or underlying investors) also negotiate for investment exposure (or investment limitations) with respect to specific industries, sectors, geographic regions or investments. These rights, benefits and privileges are not always made available to all investors in a Private Fund nor in some cases are they required to be disclosed to all investors in a Private Fund. Any such extension or disclosure is governed by a Client’s organizational document and/or investment management agreement Persons reviewing this Form ADV Part 2A should not construe this as an offering of any of the Private Funds described herein, which will only be made pursuant to the delivery of a private placement memorandum, subscription agreement and/or similar documentation to prospective investors.

Blue Torch does not participate in any wrap fee programs or advise client assets on a non-discretionary basis.

Management Fees will accrue daily and will be pro-rated for any partial period. If an investor should withdraw from a Private Fund or a client terminate a separate account before the end of a billing period, unearned, pre-paid fees (prorated for the remaining portion of the billing period) will be refunded directly to the Private Fund, underlying investor, or separate account in accordance with the terms of the Private Fund’s offering documents, organizational documents and/or investment management agreement, as applicable. Blue Torch has the ability to negotiate fees with each client or investor, and can, in its discretion, waive fees for certain investors. In certain instances, Blue Torch and/or its affiliates receive transaction, directors’, consulting, advisory, management, monitoring, closing, break-up, servicing, disposition or administration fees and other similar fees in connection with the investments and potential investments (“Other Fees”). 100% of such Other Fees, if any, can be applied to reduce the management fee for the quarterly period (net of certain expenses. To the extent any offset would reduce the management fee for a given quarterly period below zero, such offsets will be carried forward and reduce future instalments of the management fee. In certain circumstances, Blue Torch has the ability to retain a portion of such fees without a corresponding offset. Performance-Based Allocations or Fees For the Private Funds it is anticipated that an affiliate of the Firm will in general receive a performancebased allocation (subject to certain exceptions as described below) on terms set forth in the offering documents for the Private Funds; subject to the return of capital contributions to investors and subject to a preferred return to investors of generally 6%, catch-up distributions to the affiliate and/or other performance hurdles as more fully described in the offering documents for the Private Funds. Compensation to the Firm is negotiable and is set forth and described in each Client’s offering documents, organizational documents and/or investment management agreement. Certain investors in the Private Funds negotiate for and pay reduced performance-based allocations or fees and/or reduced management fees. Blue Torch has the ability to waive performance-based fees for certain clients or

investors. Additional Expenses and Fees Clients and investors are anticipated to bear some or all of the following costs and expenses, which will be outlined in full in the relevant offering document, organizational document or investment management agreement: (i)

all fees, costs and expenses incurred in connection with the organization and startup of a Private Fund or other Client any feeder vehicles sponsored by the Firm, a general partner or managing member of a Private Fund or its affiliates, including legal and accounting fees, printing costs, travel and out-of-pocket expenses, and all costs and expenses incurred in connection with the offering of interests in a Private Fund or other Client, including compliance with any blue sky laws and AIFMD and costs and expenses incurred in connection with the preparation, distribution, printing and negotiation of any offering document (including any amendments or supplements thereto), any other marketing documents and organizational documents;

(ii)

all expenses attributable to investment activities, operations and administration of a Client, or a general partner or managing member of a Private Fund and Blue Torch on behalf of a Client;

(iii)

any and all fees, costs and expenses incurred in connection with the evaluation, diligence, discovery, sourcing, investigation, development, researching, negotiation, financing, structuring, acquisition, consummation, monitoring, holding, maintaining, hedging, management or disposition of Investments (whether or not consummated) and temporary investments, including (A) sales commissions and fees, non-refundable deposits and costs and expenses, loan fees, syndication fees, private placement fees, brokerage and sales fees and commissions, appraisal fees, research fees, dealer spreads, interest and clearing and settlement charges, bank charges, commitment fees, transfer taxes and premiums, underwriting commissions and discounts, expenses relating to short sales, break-up fees; (B) fees and expenses related to market data (including, without limitation, expenses incurred in connection with any multimedia, analytical, database, news or third-party research or information services, systems, reports and subscriptions and similar items, including participation in industry investor conferences); (C) professional fees and expenses, including legal (including costs of specialist internal counsel where a Client would otherwise engage external counsel), accounting, auditing, investment banking, third-party industry and due diligence experts (including, without limitation, for asset, credit and risk analytics, and loss mitigation), valuation and appraisal fees, finders, originators, consulting (including fixed and/or performance fees and/or joint venture or other revenue share arrangements and expenses (including travel expenses) of consultants, advisors and insurance consultants), oversight servicer and asset servicer fees and expenses (including fixed and/or performance fees and/or joint venture or other revenue share arrangements); (D) filing, compliance and other related fees, interest and related expenses and custodial (if required by applicable law), depositary, trustee, record keeping and other administration fees and expenses, operations fees and expenses and reconciliation expenses; (E) travel, lodging and related expenses; and (F) all other fees, costs and expenses related to the evaluation, discovery, investigation, development, acquisition, monitoring, maintenance or disposition of potential or actual Investments (whether or not consummated), or short-term investments;

(iv)

any and all fees, costs and expenses incurred in implementing or maintaining third-party software tools, programs or other technology for the benefit of the Clients (including, without limitation, any and all costs and expenses of any investment, books and records, portfolio or side letter compliance and reporting systems, including, without limitation, consultant, software licensing, data management and recovery services fees, expenses and Bloomberg subscription service fees and the costs of establishing computer and systems connectivity with the administrator and other third party service providers);

(v)

any and all costs and expenses and any other payments incurred in connection with the incurrence of leverage and indebtedness, including payments of, or in relation to, borrowings, rolls, reverse purchase agreements, credit facilities, transfer agreements used in connection with transfers of investments to and from another Client and/or to other entities, securitizations, margin financing and derivatives and swaps, and including payments of, or in relation to, any fees, principal or interest on a Client’s and any special purpose entity or feeder vehicle’s borrowings and indebtedness;

(vi)

any and all auditing and accounting expenses of a Client, including, fees, costs and expenses incurred in connection with a Client’s and any feeder vehicle’s financial statements, reports, notices, tax returns, any tax filings and Schedules K-1 (or similar schedules), including the costs of creating, printing and distributing such financial statements, notices, reports, tax returns, tax filings and Schedules K-1 (or similar schedules) and the costs of implementing or maintaining client reporting and management software;

(vii)

any and all taxes and other governmental charges that are incurred or payable by the Client and any feeder vehicle (including transfer taxes and premiums and entity-level taxes and fees associated with corporate licensing, but excluding any U.S. or non-U.S. withholding taxes that are attributable to some but not all partners as well as any imputed underpayment, interest and penalties imposed pursuant to the new partnership income tax audit rules for U.S. federal tax purposes or any comparable state, local or foreign income tax audit rules)

(viii) any and all fees and expenses of the Client’s “tax matters partner” or “partnership representative” of the Client; (ix)

any and all fees, costs and expenses relating to the maintenance of registered offices, corporate licensing and similar expenses;

(x)

regulatory and compliances fees, costs and expenses directly related to a Client (including fees, costs and expenses related to the registration, qualification and or exemption under any applicable U.S. federal, state, or local laws, rules or regulations such as blue sky fees and a Client’s reasonable share of the Firm’s reporting obligations directly related to a Client, such as Form PF) and fees payable to Cayman Islands Registrar of Companies and Registrar of Exempted Limited Partnerships and expenses incurred in connection therewith. For the avoidance of doubt such fees shall not include the preparation or annual update of Blue Torch’s Form ADV, the preparation and update of Blue Torch’s compliance manual or the registration of Blue Torch with the SEC as an investment adviser;

(xi)

any and all insurance premiums, fees or expenses in connection with insuring the activities of

the Clients and any feeder vehicle, the general partner or managing member of a Private Fund, the Firm and/or their respective affiliates including cybersecurity, errors and omissions, fidelity bonds, general partner liability, directors’ and officers’ liability and similar coverage for any person acting on behalf of a Client, the general partner of a Private Fund, the Firm, and/or their respective affiliates; (xii)

any and all costs and expenses (including accounting, legal or regulatory fees and expenses) incurred to comply with any law or regulation related to the activities of the Clients (including legal or regulatory fees and expenses of the general partner of a Private Fund, the Firm, the Clients and/or any of their respective affiliates in connection with ongoing compliance, filing and reporting obligations under applicable US legislation, the Foreign Account Tax Compliance Act (“FATCA”) or any other applicable laws) or incurred in connection with any litigation or governmental inquiry, investigation or proceeding involving a Client, the general partner of a Private Fund, the Firm or their respective affiliates, including the amount of any judgments, settlements or fines paid in connection therewith;

(xiii) any and all costs and expenses incurred in connection with communications and reports (including the delivery thereof) and distributions to the Clients, the investors and investors in any feeder vehicle and to provide access to a database; (xiv) any and all costs, fees and expenses incurred in connection with distributing proceeds to the Clients, the investors and to the investors in any feeder vehicle; (xv)

any and all costs and expenses incurred in connection with any meeting of the investors or any advisory committee, including, without limitation, travel, meal, and lodging and related expenses;

(xvi) out-of-pocket expenses incurred by members of any advisory committee and their representatives in connection with the fulfillment of their duties, including, without limitation, travel expenses incurred in connection with attending meetings (including, without limitation, transportation, meal, and lodging expenses), advisory committee member indemnification and insurance expenses; (xvii) any and all fees, costs and expenses incurred in connection with the formation and organization, operation and restructuring of any feeder vehicle, AIV, SPV, subsidiary, Investment holding entity or special purpose entity, including, without limitation, legal, administration, compliance and accounting expenses, entity level taxes, fees and other governmental charges; (xviii) any and all of a Client’s administrative fees, costs and expenses, including the fees and costs of an administrator, the fees, costs and expenses of negotiating an administrative services agreement with an administrator, expenses associated with data fees from the administrator and fees, costs and expenses associated with maintaining and reviewing a Client’s books and records; (xix) any fees, costs and expenses of any professionals and advisors who provide services to, or for the benefit of, a Client, including the fees of any accountants, counsel, or valuation experts; (xx)

any fees, costs and expenses in connection with claims relating to investments, and collecting

monies due to a Client, (xxi) any and all fees, costs and expenses incurred in connection with the dissolution, winding up or termination of a Client, any feeder vehicle, the general partner of Private Fund or any special purpose entity; (xxii) any and all fees, costs and expenses incurred in connection with any amendments, modifications, revisions or restatements to the constituent documents of a Client, any feeder vehicle or any investment holding entity or special purpose entity set up for the purpose of pursuing a Client’s investment policy; (xxiii) any and all fees, costs and expenses incurred in connection with computing the value and attributes of the assets of a Client, any special purpose entity and any feeder vehicle (including, without limitation and as applicable, any and all fees, costs and expenses associated with advisors, independent pricing services or data and third-party valuation consultants, service contracts for quotation equipment and related hardware and software, phone and internet charges); (xxiv) any and all litigation costs and expenses incurred in connection with (including costs and expenses incurred in connection with, as well as the amount of where applicable, or amounts owed in respect of) the investigation, prosecution, defense, judgment, fine or settlement of litigation and other extraordinary expenses including, costs and expenses related to, and the amount of, a Client’s indemnification); (xxv) any and all fees, costs and expenses related to or in connection with any governmental inquiry, investigation or proceeding involving a Client or any feeder vehicle, including the amount of any judgments, settlements or fines paid in connection therewith; (xxvi) any and all fees, costs and expenses incurred by a Client, any feeder vehicle, the general partner or managing member of a Private Fund, the Firm, or their respective affiliates or employees, or any service provider for, or resulting from, any hedging transactions; (xxvii) fees, costs and expenses related to any sale, assignment, transfer or pledge of interests in a Client, unless otherwise charged to or borne by the applicable investor or transferee; (xxviii) costs and expenses incurred in connection with the performance of loan origination, servicing, management, agenting, closing, settlement and due diligence services; (xxix) expenses (including, without limitation, legal and accounting costs and travel expenses) associated with any investment that is not consummated, including any portion thereof that would have been allocated to potential co-investors had such investment been consummated; (xxx)

any other fees, costs and expenses incurred by the general partner or managing member of a Private Fund, the Firm, a Client, any feeder vehicle or any of their respective affiliates relating specifically to a Client or any entity that directly or indirectly holds any investment; and

(xxxi) any and all fees, costs and expenses incurred in connection with the consent to, and transfer of, loans originated by other Clients, including the costs of any independent representative or committee appointed to approve the value of any such loans to be transferred to, and purchased by, a Client and any and all fees, costs and expenses paid to any independent representative appointed to make the investment decision to purchase such loans, and any costs incurred in connection with the transfer itself. Blue Torch has adopted and implemented policies and procedures that govern the allocation of any shared expenses among Client accounts in a fair and equitable manner.

To mitigate this conflict, all investment decisions and allocations will be made in accordance with the Firm’s Investment Allocation Policy discussed under Item 11 below (as in effect at the relevant time), which is designed to ensure that all Clients are treated fairly and equitably in the allocation of investments.

The offering and organizational documents of each Private Fund will set forth the minimum amounts required for investment by prospective investors in such Private Funds. These minimum amounts can be waived by Blue Torch or an affiliate. Investors should read the offering and organizational documents in full and consult with their advisors prior to making an investment.

While the primary focus is internally generated loans to middle market businesses, Blue Torch also pursues investments in: (a) the participation and secondary markets; (b) loans to borrowers in conjunction with buyouts or recapitalizations by private equity firms; and (c) bank backlogs. Investments can take the form of loans, notes, corporate debt securities, bridge loans, assignments, loan participations, total return swaps and other derivatives and other debt instruments or obligations; unsecured debt, mezzanine debt, asset backed securities, convertible debt, debtor-in-possession financings and equity and equity like securities. It is expected that the loans in which Blue Torch Clients’ will invest will primarily be term loans (whether as a part of single-tranche financing or a multi-tranche financing, including as a “unitranche financing”), but Blue Torch, on behalf of its Clients, can also originate or invest in revolving credit facilities. While debt assets generally will be senior and secured by first liens on a substantial majority of a borrower’s assets, they also can be junior and can be collateralized by a variety of assets across all industries. In addition, Blue Torch, on behalf of its Clients, could acquire equity and equity-related securities in connection with a debt asset, including as a result of a reorganization, workout or as a consequence of a loan foreclosure or foreclosure on the collateral securing such investment. Leverage will be an integral part of a Client’s investment strategy. Blue Torch will employ leverage and hedging strategies as it deems appropriate. While Blue Torch intends to generally apply the investment strategy and process set forth herein to Clients’ investments, Blue Torch pursues a wide variety of strategies consistent with the relevant Client agreements and has the discretion modify or depart from such investment process, approach, techniques and procedures as Blue Torch determines appropriate to accomplish a Client’s investment objectives. Risk of Loss The descriptions contained herein of specific strategies engaged in by the Clients should not be understood as in any way limiting the Clients’ investment activities. The investment strategy employed by Blue Torch on behalf of its Clients involves a substantial degree of risk. Clients and investors in a Private Fund can lose a substantial part of, or their entire investment. There can be no assurance any Client will be able to make and realize any particular investment or generate returns or that such returns will be commensurate with the risks of investing in the types of transactions described in a Client’s organizational documents and/or investment management agreement. The Firm has listed certain risks below; however, this list of risks is not exhaustive. Clients and investors are strongly encouraged to review the complete list of risks outlined in the offering and organizational documents for the Private Funds, or as set forth in the Client’s investment management agreement. Loss of Invested Capital. All investments are speculative. The value of interests will fluctuate based upon a multitude of factors, including the financial condition, results of operations and prospects of

the borrowers in respect of loan investments, governmental intervention, market conditions, and local, regional, national and global economic conditions. Therefore, investors can lose all or a portion of their capital invested in any account if the investment strategies are not successful. General Economic and Market Conditions. The success of each Client is affected by general economic, political and market conditions, including, among others, interest rates, availability and cost of credit, inflation rates, economic uncertainty, changes in laws, political uncertainty and social unrest, trade barriers, commodity prices, currency exchange rates and controls and national and international political circumstances (including wars, terrorist acts and security operations). These factors are ones that cannot be controlled and can affect the level and volatility of investment values, as well as the liquidity of investments. These factors also could affect the availability or cost of leverage, which can result in lower returns. Clients management of exposure to these conditions is not feasible because of costs and constraints associated with managing them, which can result in adverse consequences for the Client. Market disruptions in a single country could have an impact on a regional and even a global level. A depression, recession or slowdown in the global economy or one or more regional markets or a weakening of credit markets would have a pronounced impact on Blue Torch, Blue Torch Clients, and the portfolio investments (due to the presence of leverage in a particular portfolio investment’s capital structure). The change in market conditions could adversely affect the profitability and general business execution on Blue Torch’s portfolio investments and Clients. The market price of any publicly traded securities held by Clients will separately likely be impacted by a change in market conditions. Substantial Costs. Each Client is subject to fees (including, among other expenses, management fees), transactional and operating costs and expenses irrespective of its performance which, in the aggregate, can be substantial. If the investment income of a Client does not exceed these fees, costs and expenses, then the Client will not achieve its return objectives. Illiquid Assets. It is anticipated that a substantial portion of Client account positions will be or become relatively or entirely illiquid which can result in an inability to be traded after investment. In such cases, and in the event of extreme market volatility, Client accounts could be unable to liquidate positions promptly if the need should arise. Alternatively, it is possible a Client can only be able to sell such investments at substantial discounts to face value. In addition, Client account sales of some securities could depress the market value of such securities and thereby reduce Client account profitability or increase its losses. Finally, a Client’s receipt of distribution proceeds is dependent on how rapidly the Client account liquidates its underlying positions and in certain circumstances it can take a substantial period of time to liquidate. As a result, the illiquidity of the assets could mean that Client accounts are obligated to wait a significant time before receiving any distributions. Portfolio Concentration; Lack of Diversification. The Private Funds can be limited with respect to the amount of capital committed to any one investment, type of investment, industry or geography (subject to the terms of the offering documents for the Private Funds). While diversification is generally an objective of the Firm, there can be no assurance as to the degree of diversification, if any, that will be achieved across the Firm’s or its Client’s investments. Difficult market conditions or slowdowns affecting a particular asset class, geographic region or other category of investment could have a significant adverse impact on a Client if its investments are concentrated in that area, which can result in lower investment returns. This lack of diversification can create exposure to losses disproportionate to market declines for our Clients in general if there are disproportionately greater adverse price

movements in the particular investments. If a Client holds loans whose borrowers are concentrated in a particular industry or geographic region, a Client would therefore be more susceptible than a more widely diversified investment partnership to the negative consequences of a single corporate, economic, political or regulatory event affecting such industry or region. Accordingly, a lack of diversification could adversely affect a Client’s performance. Risks Associated with Anticipated Loan Transfers. Clients are permitted to transfer a portion of its loans to other Blue Torch Clients and unaffiliated parties. If a Client cannot make such transfer, including, as a result of an inability to value a loan properly or an inability to agree upon an assigned value with a potential transferee, such Client can be obligated to hold a larger piece of such loan than originally anticipated, thereby making a Client’s portfolio even more concentrated, even if significant costs have already been incurred in connection with the valuation and anticipated transfer of such loan investments. Risks Associated with Anticipated Loan Acquisitions. Certain Clients acquire certain loans originated by other Clients based on a valuation approved by an independent party. There is no guarantee that such value, even if independently approved, will represent the fair value of such loan. In addition, a Client is not obligated to purchase each of the loans originated by another Client and is empowered, in fact, to decline to do so based upon the specific facts and circumstances pertaining to the specific loan. Clients can decline opportunities that could be profitable for them while consenting to transfers of loans that prove less profitable. Market Disruptions; Governmental Intervention; Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). The global financial markets have in the past gone through pervasive and fundamental disruptions that have led to extensive and unprecedented governmental intervention. Such intervention has in certain cases been implemented on an “emergency” basis, suddenly and substantially eliminating market participants’ ability to continue to implement certain strategies or manage the risk of their outstanding positions. In addition, as one would expect given the complexities of the financial markets and the limited time frame within which governments have felt compelled to take action, these interventions have typically been unclear in scope and application, resulting in confusion and uncertainty which in itself has been materially detrimental to the efficient functioning of the markets as well as previously successful investment strategies. A Client can incur significant losses in the event of disrupted markets and other extraordinary events in which historical pricing relationships become materially distorted. The risk of loss from pricing distortions is compounded by the fact that in disrupted markets many positions become even more illiquid. The financing available to a Client from its banks, dealers and other counterparties is typically reduced in disrupted markets. Such a reduction creates the possibility of substantial losses to a Client. The “Volcker Rule” component of the Dodd-Frank Act materially restricts proprietary speculative trading by banks, “bank holding companies” and other regulated entities. As a result, there has been a significant influx of new portfolio managers into private investment funds that had previously invested on behalf of institutional proprietary accounts. Such influx can only increase the competition for the Client from other talented portfolio managers.

Monetary Policy and Governmental Intervention. As part of the response to the 2008 global financial crisis, the U.S. Federal Reserve (the “Federal Reserve”) and global central banks have, in addition to other governmental actions to stabilize markets and seek to encourage economic growth, acted to hold interest rates to historic lows. It cannot be predicted with certainty when, or how, these policies will change, but actions by the Federal Reserve and other central banks can have a significant effect on interest rates and on the U.S. economy generally, which in turn are likely to affect the performance of a Client’s investments or the ability of the Client to realize its investment objectives. Enhanced Scrutiny and Regulation of the Private Fund Industry. The advisory business of Blue Torch and its Clients are subject to extensive regulation, including periodic examinations, by governmental agencies and self-regulatory organizations or exchanges in the United States relating to, among other things, antitrust law, anti-money laundering laws, anti-bribery laws, laws relating to foreign officials, privacy laws with respect to client information and the regulatory oversight of the trading and other investment activities of alternative asset management funds and their investment advisers. Each of the regulatory bodies with jurisdiction over Blue Torch and its Clients has the regulatory powers dealing with many aspects of financial services, including the authority to grant, and in specific circumstances to cancel, permissions to carry on particular activities. Any failure to comply with these rules and regulations could expose Blue Torch and a Client to liability or other risks. The additional legislation, increasing global regulatory oversight of fundraising activities and changes in law relating to the alternative asset management industry have been particularly acute in the aftermath of the global financial crisis in 2008-2009. This additional scrutiny has included, among other things, increased registration, oversight and regulation of alternative asset management firms and disclosure with respect to these firms and the vehicles they sponsor or advise, which could impact the Firm, its Clients and its management activities. Such oversight and regulation potentially cause the Clients to incur additional expenses, can divert the attention of Blue Torch and its personnel and can result in sanctions or fines if a Client or the Firm is deemed to have violated any regulations. Regulation generally as well as regulation more specifically addressed to the alternative asset management industry, including tax laws and regulation, could increase the cost of acquiring, holding or divesting investments, the solvency or viability of borrowers and the cost of operating the Clients. There can be no assurance that Blue Torch or its Clients will avoid regulatory examination or enforcement actions. Even if an investigation or proceeding does not result in sanctions or fines being imposed against Blue Torch or its affiliates, Blue Torch, its affiliates, and its Clients can be subject to negative publicity in relation to such investigation or proceeding. Possible Ineffectiveness of Risk Reduction Techniques. The Firm employs various risk reduction strategies designed to minimize the risk of a Client’s positions. A substantial risk remains, nonetheless, that such strategies will not always be possible to implement or can be viewed as untenable to implement as a result of the costs and other burdens associated with such strategies, and when possible or chosen, will not always be effective in limiting losses. If the Firm analyses market conditions incorrectly or employs a risk reduction strategy that does not correlate well with a Client’s investments, such risk reduction techniques could increase rather than mitigate losses. These risk reduction techniques can also increase the volatility of a Client and/or result in a loss if the counterparty to the transaction does not perform as promised.

Leverage and Borrowing Risks. Based upon applicable Client documents, Clients are empowered to borrow funds and will do so when deemed appropriate by the Firm or an affiliate, including to enhance a Client’s returns. A Client can borrow funds from brokers, banks and other lenders to finance a Client’s investment operations, which borrowings are typically secured by assets of the Client. Leverage can be obtained, directly or indirectly through one or more SPVs or other structures, through one or more lines of credit or credit facilities (including, without limitation, subscription facilities) secured by assets of a Client, which can include, without limitation, through the issuance of CLOs, or through such other means, forms or structures as determined by the Firm from time to time, in its sole discretion. The activities and investments of such SPVs can be more restricted or limited than the activities of a Client as a whole due to documented limitations of the terms of such leverage and applicable regulatory restrictions. The use of such leverage can, in certain circumstances, maximize the losses to which a Client’s investment portfolio can be subject. Any event that adversely affects the value of an investment would be magnified to the extent that an asset or a Client is leveraged. The cumulative effect of the use of leverage by a Client in a market that moves adversely to a Client’s investments could result in a substantial loss to a Client, which would be greater than if a Client were not leveraged. Conversely, the use of leverage can exaggerate positive returns in a Client’s performance, even though such interim performance theoretically would not ultimately be realized by a Client. Leverage can be achieved through, among other methods, direct borrowing, purchases of securities on margin and the use of swaps. A Client’s access to capital through leverage and borrowing could be impaired by market forces and regulatory changes, including as a result of (i) the final credit risk retention rules U.S. Risk Retention Rules recently adopted pursuant to the Dodd-Frank Act, and (ii) the credit risk retention rules imposed by Articles 404-410 of Regulation (EU) No. 575/2013 of the European Parliament, Section 5 of the European Union Commission Delegated Regulation (EU) No. 231/2013 Articles 254 and 256 of European Union Commission Delegated Regulation (EU) No. 2015/35 (collectively, the “European Risk Retention Rules,” and together with the U.S. Retention Rules, the “Risk Retention Rules”), as described below. Regulatory Risks Associated with Leverage. Clients can implement CLOs in order to secure leverage. The Risk Retention Rules require a sponsor or a “majority-owned affiliate” thereof of a securitization transaction, such as a CLO, to retain at least 5% of the economic interest in the credit risk of the securitized assets (the “Retention Interests”). As asset manager or sponsor of the CLOs, Blue Torch or under the U.S. Risk Retention Rules, a “majority-owned affiliate” of a sponsor can hold Retention Interests. For purposes of satisfying obligations under the U.S. Risk Retention Rules, Blue Torch, as asset manager (a “CLO Manager”) of any CLO implemented by a Client, expects to retain, as sponsor, or to cause one of its “majority-owned affiliates” expects to retain, Retention Interests in each such CLO. There has been no explicit limited guidance regarding how entities are to be structured for this purpose, and therefore the regulatory environment in which any such CLOs would operate is highly uncertain. There can be no assurance that applicable governmental authorities will agree that any of the transactions, structures or arrangements entered into by Blue Torch, and the manner in which it expects to hold Retention Interests, will satisfy the U.S. Risk Retention Rules. If such transactions, structures or arrangements are determined not to comply with the U.S. Risk Retention Rules, Blue Torch and a Client could become subject to regulatory action. The impact of the U.S. Risk Retention Rules on the securitization market is also unclear at the present time and such rules have the potential to negatively impact the value of the CLOs and their underlying assets.

For purposes of satisfying the European Risk Retention Rules, Blue Torch, as a “CLO Manager” or one of its affiliates (which can also be a “majority owned affiliate” under the U.S. Risk Retention Rules) can qualify as an “originator” under Article 4(13)(b) of Regulation (EU) No. 575/2013 of the European Parliament and of the Council (as effective from time to time together with any amendments of any successor or replacement provisions included in any European Union directive or regulation) (“CRR”) with respect to underlying CLO portfolio assets as an “entity which purchases a third party’s exposures for its own account and then securitizes them.” In addition, a CLO Manager can establish and manage the underlying CLOs so as to qualify as a risk retaining entity under the derogation for multiple originators pursuant to Article 3(4)(a) of the Regulatory Technical Standards (Retainers of material net economic interest). In order to comply with the European Risk Retention Rules, a CLO Manager must assume the economic risk of the assets it is originating. Clients will also be exposed to this risk. In particular, in acting as originator to the underlying CLOs, a CLO Manager can acquire assets that subsequently become ineligible for sale to the underlying CLOs, either because the assets themselves experience credit events (such as defaults) that preclude their sale to the underlying CLOs, or because the underlying CLOs fail to launch successfully. In these cases, a CLO Manager can be required to sell or refinance the ineligible asset and/or acquire replacement assets at a loss, which could have a material adverse effect on a CLO Manager and therefore the Clients. Although the European Risk Retention Rules are currently in effect, those requirements are relatively new and are subject to interpretational uncertainties. Investors should be aware that at this time, save for the EBA Report described below, the European Banking Authority (the “EBA”) has not published any formal or binding guidance relating to the satisfaction of the European Risk Retention Rules by an originator similar to a CLO Manager. Furthermore, the EBA’s or any other applicable regulator’s views with regard to the credit risk requirements imposed by Articles 404-410 of Regulation (EU) No. 575/2013 of the European Parliament, Section 5 of the European Union Commission Delegated Regulation (EU) No. 231/2013 Articles 254 and 256 of European Union Commission Delegated Regulation (EU) No. 2015/35, and as subsequently replaced and consolidated by the Securitisation Regulation (EU) 2017/2402 could not be based exclusively on technical standards, guidance or other information known at this time. For example, in the report published by the EBA on December 22, 2014 (the “EBA Report”), the EBA highlighted that the definition of “originator” should be narrowed in order to avoid potential abuses, but at this time it is unclear what changes if any could be made following the EBA Report. There can be no assurances as to whether the transactions pursued by the Firm on behalf of the Clients will be affected, if at all, by a change in law or regulation or interpretations thereof relating to the Risk Retention Rules. Interpretations and supervisory expectations regarding the application of the European Risk Retention Rules, however, continue to develop in regulatory practice, even in the absence of frequent formal guidance. It is impossible to determine whether revisions or new interpretations, if any, of the Risk Retention Rules will ultimately have a material adverse effect on the business, financial condition or prospects of a CLO Manager and therefore the Clients. While Blue Torch will seek to comply with the Risk Retention Requirements, given that such Blue Torch will be navigating a new regulatory framework, there is no guarantee that its compliance efforts will be deemed sufficient by relevant regulators. Risk of Highly Leveraged Borrowers. The issuers of debt in which the Clients can invest are likely to be highly leveraged, which can create adverse consequences for these companies and to a Client.

Depending upon the financing agreements, such companies can be subject to restrictive financial and operating covenants and the leverage can impair these companies’ ability to finance their future operations and capital needs. As a result, these companies’ flexibility to respond to changing business and economic conditions and to take advantage of business opportunities could become correspondingly be limited. Further, a leveraged company’s income and net assets will tend to increase or decrease at a greater rate than if borrowed money were not used. A borrower’s leverage has the potential to adversely impact a Client in a number of ways, such as creating a greater possibility of default or bankruptcy of the borrower. It is also possible that the pledging of collateral (if any) to secure debt could be found to constitute a fraudulent conveyance or preferential transfer which would be nullified or subordinated to the rights of other creditors of the borrower under applicable law. Inflation Risk. Inflation and rapid fluctuations in inflation rates have had in the past, and can in the future have, negative effects on economies and financial markets. For example, if a borrower is unable to increase its revenue in times of higher inflation, its profitability can be adversely affected. Borrowers potentially have revenues linked to some extent to inflation, including, without limitation, by government regulations and contractual arrangement. As inflation rises, borrowers can earn more revenue but incur higher expenses. As inflation declines, borrowers could potentially not be able to reduce expenses commensurate with any resulting reduction in revenue. Furthermore, wages and prices of inputs increase during periods of inflation, which can negatively impact returns on investments. In an attempt to stabilize inflation, countries can impose wage and price controls or otherwise intervene in the economy. Governmental efforts to curb inflation often have negative effects on the level of economic activity. As such, inflation and rapid fluctuations in inflation rates can adversely affect the financial performance of borrowers and create a greater risk of default, bankruptcy or inability to repay remaining principal at maturity. There can be no assurance that continued and more wide-spread inflation will not become a serious problem in the future and have an adverse impact on the performance of the Fund and its Investments. Custodial Risk. Financial institutions, such as banks, are expected to have custody of the Clients investments to the extent required under applicable law. Investments held with custodians have the potential to not be clearly identified as being assets of a Client, causing the Client to be exposed to a credit risk with regard to such parties. The Firm on behalf of its Clients will attempt to limit its custody transactions to well capitalized and established banks in an effort to mitigate such risks, but the economic collapse in 2008 of the seemingly well capitalized and established Bear Stearns and Lehman Brothers demonstrates the limits on the effectiveness of this approach in avoiding counterparty losses. Banking System Instability. The Fund depends on the services of custodians, administrators, and other agents to carry out certain services for the Fund. The potential distress, impairment or failure of one or more banking institutions with whom Blue Torch transact could inhibit the ability of the Fund or its Investments to access depository accounts or lines of credit. In the event of such a failure of a banking institution where the Fund or its borrowers hold depository accounts, access to such accounts could be restricted and U.S. Federal Deposit Insurance Corporation (“FDIC”) protection potentially might not be available for balances in excess of amounts as determined by the FDIC.

While the Firm will seek to utilize financial service providers that it believes are creditworthy and capable of fulfilling their obligations to a particular Fund, the failure of a financial service provider could be caused by a variety of factors that are outside of the Fund’s control. These factors include negative market sentiment, a rapidly changing interest rate environment, a “run” on withdrawals, fraud, increase in defaulted loans, poor performance or accounting irregularities. With the collapse of Silicon Valley Bank (“SVB”) and Signature Bank (“Signature”), liquidity concerns with other banks resulted in fear of instability in the banking system. Ongoing uncertainty in the banking and financial systems could result in significant and widespread deterioration in market and economic conditions through a disruption in accessing capital and other financial services, which could adversely affect the performance of the Fund and its Investments. Auditor Risk. In auditing a Private Fund, an auditor potentially might not discover errors or miscalculations, including those arising from fraud. As a result, an auditor can issue an unqualified opinion or report despite the existence of such errors or miscalculations, either of which can have an adverse effect on an investor’s returns. Conversely, an error by an auditor could cause lenders and other counterparties to impose unnecessarily stringent requirements on the Private Fund, which could have an adverse effect on the Private Fund’s performance. Risk of Inability to Identify Sufficient Number of Investment Opportunities. There can be no assurance that the Firm will be able to find suitable opportunities consistent with its investment approach. Blue Torch theoretically could be unable to find a sufficient number of attractive opportunities to meet its investment objectives. Among other things, market conditions could limit the availability of investment opportunities. Such limitations can cause delays in deploying a Client’s capital and would negatively impact a Client’s returns. Credit Opportunities Generally. The Firm, on behalf of a Client, originates loans to, or purchase the assignment of or participations in loans made to, middle-market companies. Such investments can include (i) secured debt assets that can be senior or junior, and can be collateralized by a variety of assets, including secured loans (both asset-based and cash flow loans) for working capital, refinancing, acquisitions, bridge capital, restructuring, recapitalization, exit financings and debtor-in possession financing, (ii) first priority, senior secured debt assets, which can include loans offered at lesser borrower leverage levels and commensurately reduced target yields and (iii) investments in distressed companies or assets. The Firm can seek to make investments that provide acquisition financing to private equity funds and other companies seeking acquisition financing and will also lend to, or purchase secured and unsecured debt obligations of, companies that (a) are likely to become subject to U.S. bankruptcy proceedings, (b) are seeking to avoid restructuring, (c) are not distressed, but have lost the support of their financial lenders, (d) do not have sufficient capital to manage their operations, and/or (e) are seeking terms for their debt that are more flexible or appropriate for their current circumstances. The types of investments in this strategy include, but are not limited to, investments in loans, debt instruments issued in connection with acquisition financing and refinancing of existing company debt, publicly traded bonds, high yield bonds, bank debt, term loans (including as part of a single-tranche or multi-tranche financing, including unitranche financing), bridge loans, debtor-in possession and exit loans, mortgages and other fixed-income securities.

In addition, the Firm can make investments on behalf of a Client in debt of distressed companies, including debt with varying terms with respect to collateral, relative seniority or subordination, purchase price, convertibility, interest requirements and maturity (e.g., bonds, debentures and notes, trust certificates, commercial paper and trade claims) and equity and equity-related securities of distressed companies, including preferred stock, convertible preferred stock, common stock and warrants. The Firm can also make investments on behalf of a Client in non-performing loans (“NPLs”) and pools of NPLs that have varying terms with respect to collateral, relative seniority or subordination, purchase price, convertibility, interest requirements and maturity. NPLs and pools of NPLs can consist of a large and diverse spectrum of loans, including, but not limited to (i) small to medium enterprise and other corporate loans, (ii) real estate secured loans (including residential, commercial and multi-family loans), (iii) unsecured loans and (iv) consumer loans. Investments in Private Middle-Market Companies. Clients will often invest directly or indirectly in U.S. middle market companies through its loan issuances or loan investments it acquires. In addition to limited liquidity, investments in loans issued to, and debt instruments of, private middle-market companies can involve a significant number of additional risks. Generally, little public information exists about such companies, and a Client will rely on the ability of the Firm to obtain adequate information to evaluate the potential returns from investing in such loans or debt instruments. If a Client is unable to uncover all material information about such companies, it could potentially not make a fully-informed investment decision, and, as a result, lose money. Private middle-market companies typically have shorter operating histories, less predictable operating results, narrower product lines, and smaller market shares than larger businesses, which characteristics tend to render them more vulnerable to competitors’ actions and market conditions, as well as general economic downturns. Private middlemarket companies are also more likely to depend on the management talents and efforts of a small group of persons, the loss of which could have a material adverse impact. In addition, private middlemarket companies could be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence, and could require substantial additional capital to support their operations, finance expansion or maintain their competitive position and they could have a more difficult time acquiring additional capital than larger companies. As a consequence, certain loans invested in by a Client could be or become NPLs and borrowers could default with respect to such loans. Dependence on Private Equity Sponsors. Blue Torch depends upon a variety of relationships, including relationships with private equity sponsors. If such sponsors find new sources of debt capital that are more advantageous to them, or if Blue Torch suffers reputational harm such that sponsors do not want to work with Blue Torch, the Firm could have difficulty finding and sourcing new middle market debt investments. Private equity sponsors can experience financial distress, which could be related or unrelated to the portfolio companies in which a Client invests. Once in financial distress, such sponsors can be unable to provide the same level of managerial, operating or financial support to such portfolio companies, resulting in an increased risk of default or inability to repay remaining principal at maturity. A Client could have exposure to companies controlled by private equity sponsors in which the sponsors have completed one or more dividend recapitalizations, thereby allowing a sponsor to substantially reduce or eliminate their net investment in underlying portfolio companies. These investments can

present different investment characteristics than investments where a private equity sponsor retains a significant net contributed capital position in the company. These investments could experience a higher rate of default. Even when a default does not occur, a private equity sponsor can be less willing to provide ongoing financial support to a portfolio company after it has received one or more capital distributions on its investment. Syndication and/or Transfer of Debt Instruments. Clients, directly or through the use of one or more SPVs, could originate and/or purchase secured debt assets. Clients can also purchase secured debt assets (including, participation interests or other indirect economic interests) that have been originated by a Client or from other parties and/or trading on the secondary market. Clients could, in certain circumstances, originate or purchase such secured debt assets with the intent of syndicating and/or otherwise transferring a significant portion thereof. In such instances, a Client will bear the risk of any decline in value prior to such syndication and/or other transfer. In addition, a Client will also bear the risk of any inability to syndicate or otherwise transfer such secured debt assets or such amount thereof as originally intended, which could result in a Client owning a greater interest therein than anticipated. Distressed Borrowers. Clients can invest in loans and debt instruments of companies that are experiencing significant financial or business difficulties, including companies involved in bankruptcy or other reorganization and liquidation proceedings. Although such investments can result in significant returns to a Client, they involve a substantial degree of risk. Distressed borrowers are potentially less likely to meet their obligations in connection with such loans or debt instruments, and the inability to meet such obligations could result in certain loans of a Client becoming nonperforming. The level of legal and financial sophistication necessary for successful investment in the loans issued to, or the debt instruments of, companies experiencing significant business and financial difficulties is unusually high. There is no assurance that the Firm will correctly evaluate the value of the assets collateralizing the loans invested in by a Client or the prospects for a successful reorganization or similar action, if any, or the general performance of such loans. In addition, to the extent that a Client invests in loans or debt instruments with respect to companies that subsequently undergo bankruptcy or similar liquidation proceedings, such investments can be subject to additional risks. Many of the events within a bankruptcy case are adversarial and often beyond the control of creditors. Although creditors generally are afforded an opportunity to object to significant actions, there is the possibility that a bankruptcy court could approve actions that could be contrary to the interests of a Client. The duration of bankruptcy proceedings is often difficult to accurately predict, and such proceedings can be lengthy. The administrative costs in connection with bankruptcy proceedings are frequently high and will be paid out of the debtor’s estate (other than out of assets or proceeds thereof that are subject to valid and enforceable liens and other security interests) prior to any return to unsecured creditors and equity holders. In connection with a bankruptcy proceeding, the Firm, on behalf of a Client, can seek representation on creditors’ committees or other groups to ensure preservation or enhancement of a Client’s position as a creditor. If a Client is represented on a committee or group, it can be restricted or prohibited under applicable law from disposing of its investments in such company while it continues to be represented on such committee or group. In addition, a Client’s return on investment can be adversely affected by the passage of time during which the plan of reorganization of a bankrupt debtor is being negotiated, approved by the creditors and confirmed by the bankruptcy court. Reorganizations outside of bankruptcy are also subject to unpredictable and potentially lengthy delays.

Investment in Special Situations. Clients can also invest in the obligations of companies involved in (or the target of) acquisition attempts or tender offers or companies involved in work-outs, liquidations, spin-offs, reorganizations, bankruptcies and similar transactions. Investments in such companies are generally considered speculative. In any investment transaction involving any such type of business enterprise, there exists the risk the transaction in which such business enterprise is involved either will be unsuccessful, will take considerable time or will result in a distribution of cash or a new security the value of which will could be materially less than the purchase price paid by a Client for the security or other financial instrument in respect of which such distribution is received. Similarly, if such an anticipated transaction does not in fact occur, a Client will potentially lose all or a material portion of its investment. Credit/Default Risk. Credit risk refers to the likelihood that an obligor will default on the payment of principal, interest or other amounts owed on an instrument. Financial strength and solvency of an obligor are the primary factors influencing credit risk. In addition, lack or inadequacy of collateral or other assets expected to be the source of repayment or credit enhancement for a debt instrument can affect its credit risk. Credit risk can change over the life of an instrument and debt instruments that are rated by rating agencies are subject to downgrade at a later date. A Client’s investments are typically be secured by collateral. If securing first priority liens, collateral generally cannot be pledged, lent, re-hypothecated or otherwise re-used by the borrower. The value of this collateral can initially exceed the principal amount of such investments, but there can be no assurance that the liquidation of any such collateral would satisfy the borrower’s obligation in the event of non-payment, or that such collateral could be readily liquidated. In addition, in the event of bankruptcy of a borrower, a Client could experience delays or limitations with respect to their ability to realize the benefits of the collateral securing an investment. Under certain circumstances, collateral securing an investment can potentially be released without the consent of a Client. Moreover, a Client’s security interest (with respect to investments in secured debt) can be unperfected for a variety of reasons, including the failure to make required filings by lenders and, as a result, a Client theoretically might not have priority over other creditors as anticipated. First priority lien investments made by a Client can, in certain cases, provide a first priority lien over some, but not all, of the assets of the relevant borrower. Clients can also invest in second-lien debt, unsecured debt, marketable and non-marketable common and preferred equity securities and other unsecured investments that involve a higher degree of risk than senior first-lien secured debt investments. Furthermore, a Client’s right to payment and its security interest, if any, could be subordinated to the payment rights and security interests of senior lenders (with respect to some or all of the assets of a portfolio investment). Certain of these investments can have an interest-only payment schedule, with the principal amount remaining outstanding and at risk until the maturity of the investment. In such cases, the ability of the borrower to repay the principal of an investment can be dependent upon a liquidity event or the long-term success of the borrower, the occurrence of which is uncertain Interest Rate Risk. Interest rate risk refers to the risks associated with market changes in interest rates. Interest rate changes potentially affect the value of a debt instrument indirectly (especially in the case of fixed rate obligations) or directly (especially in the case of instruments whose rates are adjustable). In general, rising interest rates will negatively affect the price of a fixed rate debt instrument and falling interest rates will have a positive effect on the price of a fixed rate debt instrument.

Adjustable rate instruments also react to interest rate changes in a similar manner although generally to a lesser degree (depending, however, on the characteristics of the reset terms, including the index chosen, frequency of reset and reset caps or floors, among other factors). Interest rate sensitivity is generally more pronounced and less predictable in instruments with uncertain payment or prepayment schedules. Need for Follow-up Funding. A Client can be called upon to provide follow-up funding for or can have the opportunity to increase its exposure to a borrower. There can be no assurance that the Client will wish to make such follow-on investments or have available capital to do so, and the inability to make such follow-on investments can have a substantial negative impact on a portfolio company or other issuer in need of capital or diminish the Client’s ability to influence the portfolio company’s or other issuer’s future development. Investments in Companies in Regulated Industries. Clients (directly, or through an SPV, CLO or other subsidiary) can invest in companies that are subject to governmental and non-governmental regulation, including by federal and state regulators and various self-regulatory organizations. Companies participating in regulated activities can incur significant costs to comply with these laws and regulations. If a company in which a Client invests fails to comply with an applicable regulatory regime, it can be subject to fines, injunctions, operating restrictions or criminal prosecution, any of which could materially and adversely affect the value of a Client’s investment. Due Diligence; Reliance on Financial Projections Related to Investments. Blue Torch will conduct, and often uses third parties to conduct, due diligence on prospective investments. In conducting such due diligence, Blue Torch’s investment professionals can use publicly available information as well as information from their relationships with former and current management teams, consultants, competitors and investment bankers. Such level of due diligence might not, however, reveal all matters and issues, material or otherwise, relating to prospective investments. Blue Torch generally will make investment decisions and establish the capital structure of companies, and/or the terms of financing for a company, on the basis of financial projections, including projections specific for such companies. There can be no assurance that financial or economic models used to determine investment decisions will be correct, accurate or appropriately reflect subsequent developments or all the other factors that could cause actual results to differ from such models or projections. Projected operating results will often be based on management judgments. In all cases, projections are only estimates of future results that are based upon assumptions made at the time that the projections are developed. There can be no assurance that the projected results will be obtained, and actual results can vary significantly from the projections. General economic conditions, which are not predictable, can have a material adverse impact on the reliability of such projections. Moreover, a Client’s investments, particularly investments in loans or other forms of indebtedness, can be subject to early redemption features, refinancing options, pre-payment options or similar provisions which, in each case, could result in the issuer or borrower repaying the principal on an obligation held by that Client earlier than expected (which could result in a Client’s investment return from such investment being less than that anticipated by the Client when it made the investment). As a consequence, a Client’s ability to achieve its investment objective can be affected.

Loan Origination. Some Clients will seek to originate loans, including but not limited to, secured and unsecured notes, senior and second lien loans, mezzanine loans and other similar investments. Such Clients will retain all fees received in connection with originating or structuring the terms of any such investment. A Client can subsequently offer such investments for sale to another Client or third parties, which could include certain other investment funds or separately managed accounts by affiliates of the Firm or a Client. The decision by a Client to accept or reject the offer can be made by a third party independent of a Client, such as independent directors or an advisory or credit committee composed of individuals unaffiliated with a Client. In determining the target amount to allocate to such an investment, a Client can take into consideration the fact that it can sell, assign or offer participations in such investments to the parties described above. As a result of its investment activities, it is possible that a Client or the affiliated entities in which a Client invests could be deemed to be engaged in the origination of debt or debt-linked investments for purposes of the applicable regulatory or other laws in jurisdictions in which such activities take place. The laws regarding the origination of debt or debt-linked investments are frequently highly complex and can include licensing requirements. The licensing processes can be lengthy and can be expected to subject a Client or the affiliated entities in which it invests to increased regulatory oversight. In some instances, the process for obtaining a required license or exception certificate can require disclosure to regulators or to the public of information about a Client, its direct or indirect investors, its loans, its business activities, its management or controlling persons or other matters. Failure, even if unintentional, to comply fully with applicable laws can result in sanctions, fines, or limitations on the ability of a Client, the Firm or affiliates of the foregoing to do business in the relevant jurisdiction or to procure required licenses in other jurisdictions all of which could directly or indirectly have a material adverse effect on a Client. While a Client can make secured investments, losses could still occur as a result of default and recourse to the underlying collateral could not be sufficient to cover such losses. No guarantee exists with respect to the adequacy of a Client’s security in respect of a loan investment. Acquisition of Investments Held by Other Clients. Certain Clients will acquire from other Clients interests or participations in, or assignments of, loans or other investments, including loans or other investments that another Client has originated or purchased. The decision by a Client to consent to such transaction and approve the value at which such investment or interest is transferred often will be made by a person or committee that is independent of Blue Torch. However, there is no guarantee that such consent or approval will ensure that the loan or investment is transferred at the correct value or that such investment will prove successful or profitable for a Client. In addition, because certain Clients expect to rely on the other Clients for a substantial portion of its investments, a Client could be dependent on the ability of another Client to lend on advantageous terms and compete successfully against other lenders. In addition, the Clients who originate such loans will retain all fees received in connection with originating and structuring the terms of any such investment and agenting such investments, and such fees will not be received by all Clients. Further, certain agent fees allocated to Clients who are not able to originate loans or non-affiliated third parties could be retained by an affiliate of the Investment Manager. Ability to Lend on Advantageous Terms; Competition and Supply. Clients often originate loans and can also invest in loans originated by other parties (including, without limitation, debt that trades on the secondary market). Success in this area will depend in part on the ability of a Client to originate

and obtain loans on advantageous terms. In making loans, a Client will compete with a broad spectrum of lenders, some of which can be willing to lend money on terms more favorable to borrowers. Such competing lenders can include private investment funds, public funds, commercial and investment banks, commercial financing companies and other entities. Some competitors can have a lower cost of funds and/or access to funding sources that are not available to a Client. In addition, some competitors could have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than a Client. A Client can also choose not to compete for investment opportunities based on interest rates. Ultimately, increased competition for, or a diminution in the available supply of, qualifying borrowers is likely to result in lower yields on loans to such borrowers, which could reduce returns to the Clients. Fraud. Of paramount concern in lending is the possibility of material misrepresentation or omission on the part of the borrower. Such inaccuracy or incompleteness could adversely affect the valuation of the collateral underlying the loans or can adversely affect the ability of a Client to perfect or effectuate a lien on the collateral securing the loan. Clients will rely upon the accuracy and completeness of representations made by borrowers to the extent reasonable, but cannot guarantee such accuracy or completeness. Bank Loans and Participations. A Client’s investment program can include 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) socalled “lender liability” claims by the issuer of the obligations; (iii) environmental liabilities that could arise with respect to collateral securing the obligations; and (iv) limitations on the ability of a Client to directly enforce its rights with respect to participations. In analysing each bank loan or participation, the Firm compares the relative significance of the risks against the expected benefits. Successful claims by third parties arising from these and other risks are borne by the Client. Clients can experience significant delays in the settlement of certain loan and/or bank debt transactions, particularly in the case of investments that are or become distressed. Until such transactions are settled, a Client is subject to counterparty insolvency risk. Pursuant to certain insolvency laws, a counterparty could have the ability to reject or terminate an unsettled loan transaction. If a counterparty rejects an unsettled transaction, a Client can lose any increase in value with respect to such loan that accrued while the transaction was unsettled. Clients could also invest in loan participations where it will be subject to certain additional risks as a result of having no direct contractual relationship with the borrower of the underlying loan, such as the additional credit risk of the counterparty, the lack of voting rights and the lack of direct enforcement rights in connection with a loan default. In such circumstances, a Client generally would depend on the lender to enforce its rights and obligations under the loan arrangements in the event of a default by the borrower on the underlying loan and will generally have no voting rights with respect to the issuer, as such rights are typically retained by the lender. Such investments are subject to the credit risk of the lender (as well as the borrower) since they will depend upon the lender forwarding payments of principal and interest received on the underlying loan. There can be no assurance that the lender will not default on its obligations under such arrangements, resulting in substantial losses to a Client.

From time to time, the Firm can cause a Client to acquire certain assets through participation and subparticipation arrangements with unaffiliated third parties. Such arrangements could expose a Client to additional credit risk compared to acquiring the asset directly because, in addition to the underlying credit risk of the asset, a Client is exposed to the risk of the direct participant defaulting on its obligations to a Client under the participation or sub-participation arrangement. Prepayment Risk; Fluctuation in Receipt of Proceeds. The frequency at which prepayments (including voluntary prepayments by the obligors and liquidations due to default and foreclosures) occur on loans and other debt underlying certain of a Client’s investments will be affected by a variety of factors including, but not limited to, the prevailing level of interest rates as well as economic, demographic, tax, social, legal and other factors. In general, “premium” financial instruments (i.e., financial instruments whose market values exceed their principal or par amounts) are adversely affected by faster than anticipated prepayments, and “discount” financial instruments (i.e., financial instruments whose principal or par amounts exceed their market values) are adversely affected by slower than anticipated prepayments. Since a Client’s investments can include discount financial instruments when interest rates are high, and could include premium financial instruments when interest rates are low, such investments would be adversely affected by prepayments in any interest rate environment. As a result of these factors, Blue Torch expects to experience fluctuations in the timing and amount of proceeds a Client can receive in the form of interest and fee income and in connection with the realization of investments. As a result of these factors, the amounts of distributions to a Client or its investors could fluctuate substantially from one period to the next. Agency Provisions in Loan Documents. A Client’s investments can potentially include agented loans or loans subject to agency provisions. Agency provisions in the loan agreements governing the loans acquired by a Client could undermine enforcement actions against the collateral and expose a Client to losses on the loans. Under the underlying loan agreement with respect to agented loans, the loan originator or another financial institution can be designated as the administrative agent and/or collateral agent. Under these arrangements, the borrower grants a lien to such agent on behalf of the lenders and directs payments to such agent, which, in turn, will distribute payments to the lenders, including the Clients. The agent is responsible for administering and enforcing the loan and generally could take actions only in accordance with the instructions from lenders holding a specified percentage in commitments or principal amount of the loan. In the case of loans that are part of a capital structure that includes both senior and subordinated loans, the agent can take such action in accordance with the instructions of one or more senior lenders without consultation with, or any right to vote (except in certain limited circumstances) by, the subordinated lenders. The loans held by a Client could represent less than the amount sufficient to compel such actions or can represent subordinated debt which is precluded from acting and, under such circumstances, a Client would only be able to direct such actions if instructions from a Client were made in conjunction with other lenders that together comprise the requisite percentage of lenders then entitled to take or direct the agent to take action. Conversely, if the required percentage of lenders other than a Client desire to take or direct the agent to take certain actions, such actions can be taken even if a Client did not support such actions. Furthermore, if a loan held by a Client is subordinated to one or more senior loans made to the borrower, the ability of a Client to exercise such rights could be subordinated to the exercise of such rights by the senior lenders. However certain actions, such as amendments to the material payment terms of the loans, typically are not taken without consent of all lenders, including a Client. If the loan is a syndicated revolving loan

or delayed draw term loan, other lenders could fail to satisfy their full contractual funding commitments for such loan, which could create a breach of contract resulting in a lawsuit by the borrower against the lenders (including a Client even if it did not default) and adversely affect the fair market value of such loan. There is a risk that an agent could become subject to insolvency proceedings. Such an event could delay, and possibly impair, the ability of the lenders for such agented loan to take any enforcement action against the related borrower or the collateral securing a loan and can require the lenders to take action in the agent’s insolvency proceeding to realize on proceeds or payments made by borrowers that are in the possession or control of the agent. In addition, it is expected that agented loans will allow for the agent to resign. Agented loans can contain provisions for lenders to remove the agent. If an agent resigns or is removed, the lenders can be required to find, and the required percentage thereof agree to appoint, a successor agent that could be difficult to find or cost more than the predecessor agent. Cross-collateralization. Certain loans can be cross-collateralized. Cross-collateralization arrangements could be subject to legal challenge, which could result in the subordination of a Client’s interest in the collateral or the loan itself. Cross-collateralization arrangements involving more than one borrower could be challenged as fraudulent conveyances by creditors of the related borrower in an action brought outside a bankruptcy case or, if the borrower were to become a debtor in a bankruptcy case, by the borrower’s representative (or the borrower as debtor-in-possession). If a court were to conclude that the granting of the liens to cross-collateralize a loan was a voidable fraudulent conveyance, such court could (a) subordinate all or part of the pertinent loan to existing or future indebtedness of that borrower, (b) recover payments made under that loan or (c) take other actions detrimental to a Client, including, under certain circumstances, invalidating the loan or a Client’s interest in the collateral securing the cross-collateralized loan. Any of these actions could impair, delay or eliminate payments by the borrower of a loan that is cross-collateralized, which would adversely affect the returns expected by Clients and investors with respect to any such loan. Contingent Liabilities. From time to time a Client can incur contingent liabilities in connection with an investment or loan. For example, a Client could invest in a revolving credit facility that has not yet been fully drawn. If a borrower subsequently draws on the facility, a Client would be obligated to fund the amounts due. Clients could also enter into agreements pursuant to which they agree to assume responsibility for default risk prevented by a third party or, conversely, pursuant to which third parties offer default protection to a Client. 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 borrower or 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 could 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”). The Firm and the Clients do 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, a Client can be subject to claims from creditors of an obligor that debt obligations of such obligor held by such Client should be equitably subordinated. This concept of equitable subordination can vary depending on the jurisdiction. Recharacterization. Under Title 11 of the U.S. Code, a court is able to use its equitable powers to “recharacterize” the claim of a lender, i.e., notwithstanding the characterization by the lender and borrower of a loan advance as a “debt,” to find that the advance was in fact a contribution in exchange for equity. Typically, recharacterization occurs when an equity holder asserts a claim based on a loan made by the equity holder to the borrower at a time when the borrower was in such poor financial condition so that other lenders would not make such a loan. In effect, a court that recharacterizes a claim makes a determination that the original circumstance of the contribution warrants treating the holder’s advance not as debt but rather as equity. In determining whether recharacterization is warranted in any given circumstance, courts will look at, inter alia, the following factors: (i) the names given to the instruments (if any) evidencing the indebtedness; (ii) the presence or absence of a fixed maturity or scheduled payment; (iii) the presence or absence of a fixed rate of interest and interest payments; (iv) the source of repayments; (v) the adequacy or inadequacy of capital; (vi) the identity of interest between the creditor and the equity holders; (vii) the security (if any) for the advances; (viii) the borrower’s ability to obtain financing from outside lending institutions; (ix) the extent to which the advances were subordinated to the claims of outside creditors; (x) the extent to which the assets were used to acquire capital assets; and (xi) the presence or absence of a sinking fund to provide for repayment. These factors are reviewed under the circumstances of each case, and no one factor is controlling. A Client could be subject to claims from creditors of an obligor that debt obligations of such obligor held by a Client should be recharacterized. Risks Associated with Foreclosure. Certain loans made by Clients can be secured by real estate, other physical assets or other illiquid collateral. To the extent a Client needs to foreclose on such loans a Client could, directly or indirectly, own such real estate, other physical assets or other illiquid collateral and can be subject to the risks incident to the ownership and operation of such assets. In addition, a Client could, directly or indirectly, incur the burdens of ownership of real property, which include the paying of expenses and taxes, maintaining such property and any improvements thereon and ultimately disposing of such property. There is no assurance that there will be a ready market for resale of real estate or such other assets or that such collateral will be sufficient to satisfy such defaulted loan obligation. Non-Performing Nature of Loans. It is possible that certain of the loans purchased or originated by a Client could be considered to be non-performing and/or in default and the obligor and/or related parties enter bankruptcy or liquidation. These circumstances could involve workout negotiations, restructuring and the possibility of foreclosure. These processes can be lengthy and expensive. Many of the non-performing loans will be underwritten to “subprime,” “Alternative A-Paper” or “expanded” underwriting guidelines. These underwriting guidelines are different from and, in certain respects, less stringent than the other general underwriting standards employed by originators. For example, these loans could have been originated to borrowers that have poor credit or that provide limited or no documentation in connection with the underwriting of the loan. Such loans present increased risk standards of delinquency, foreclosure, bankruptcy and loss. An originator generally originates loans in

accordance with underwriting guidelines it has established and, in certain cases, based on exceptions to those guidelines. These guidelines could be neither exhaustive nor identify or appropriately assess the risk that the interest and principal payments due on a loan will be repaid when due, or at all, or whether the value of the property serving as collateral will be sufficient to otherwise provide for recovery of such amounts. To the extent exceptions were made to an originator’s underwriting guidelines in originating a NPL, those exceptions could increase the risk that principal resulting in interest amounts not being received or recovered. Compensating factors, if any, which could have been the premise for making an exception to the underwriting guidelines are not capable of being viewed as compensating for any additional risk. Investments in Secured Loans. The assets of the portfolio of a Client could include secured debt, which involve various degrees of risk of a loss of capital. The factors affecting an issuer’s secured leveraged loans, and its overall capital structure, are complex. Some secured loans do not necessarily have priority over all other debt of an issuer. For example, some secured loans can permit other secured obligations (such as overdrafts, swaps or other derivatives made available by members of the syndicate to the company), or involve secured loans only on specified assets of an issuer (e.g., excluding real estate). Issuers of secured loans can have two tranches of secured debt outstanding each with secured debt on separate collateral. Furthermore, the liens referred to herein generally only cover domestic assets and non-U.S. assets are not included (other than, for example, where a borrower pledges a portion of the stock of first-tier non-U.S. subsidiaries). In the event of Chapter 11 filing by an issuer, the Bankruptcy Reform Act of 1978, as amended (the “Bankruptcy Code”) authorizes the issuer to use a creditor’s collateral and to obtain additional credit by grant of a priority lien on its property, senior even to liens that were first in priority prior to the filing, as long as the issuer provides what the presiding bankruptcy judge considers to be “adequate protection” which could (but need not always) consist of the grant of replacement or additional liens or the making of cash payments to the affected secured creditor. The imposition of priority liens on a Client’s collateral would adversely affect the priority of the liens and claims held by a Client and could adversely affect a Client’s recovery on the affected loans. Any secured debt is secured only to the extent of its lien and only to the extent of underlying assets or incremental proceeds on already secured assets. Moreover, underlying assets are subject to credit, liquidity, and interest rate risk. Clients can originate or invest in secured debt issued by companies that have or could incur additional debt that is senior to the secured debt owned by a Client. In many instances, loans made by a Client can be part of a unitranche structure in which a single lien on behalf of all the lenders in the structure will be filed against the assets of the company if the lenders holding the different tranches of debt (including a Client) will contractually agree to their respective priorities in those assets. In the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of any such company, the owners of senior secured debt (i.e., the owners of first priority liens), including in a unitranche structure through the contractual agreements between the lenders, generally will be entitled to receive proceeds from any realization of the secured collateral until they have been reimbursed. At such time, the owners of junior secured debt (including, in certain circumstances, a Client) will be entitled to receive proceeds from the realization of the collateral securing such debt. There can be no assurances that the proceeds, if any, from the sale of such collateral would be sufficient to satisfy the loan obligations secured by subordinate debt instruments. To the extent a Client owns secured debt that is junior to other secured debt, such Client could lose the value of its entire investment in such secured junior debt.

Nature of Subordinated Debt Investments. Clients could make investments in debt instruments at different levels of an obligor’s capital structure, including subordinated debt instruments, which involve a high degree of risk with no certainty of any return of capital. Although subordinated debt obligations are senior to common stock and other equity securities in the capital structure, they can be subordinated to large amounts of senior debt and are often unsecured. The ability of the subordinated debt holders to influence a company’s affairs, especially during periods of financial distress or following an insolvency, is likely to be substantially less than that of senior creditors. For example, under the terms of subordination agreements, senior creditors are typically able to block the acceleration of the subordinated debt or other exercises by the subordinated creditors of their rights. Accordingly, a Client would not be able to take the steps necessary to protect its investments in a timely manner or at all. Unrated or Below Investment Grade Loans and Debt Instruments. There are no restrictions on the credit quality of loans and debt instruments that could be invested in by Clients. Certain of these investments could be unrated and whether or not rated, such debt instruments can have speculative characteristics. The market values of certain of these lower-rated and unrated loans and debt instruments tend to reflect individual corporate developments and changes in economic conditions to a greater extent than do high-rated debt instruments. As a result, the market prices of such loans and debt instruments can be subject to abrupt and erratic movements in price and liquidity. Borrowers that are the subject of such loans and that issue such debt instruments are often highly leveraged and potentially not have available to them more traditional methods of financing. Mezzanine Debt Securities. Mezzanine debt securities are generally unrated or below investment grade rated investments that have greater credit and liquidity risk than more highly rated debt obligations. Mezzanine debt securities are typically issued in traditional private placements or in connection with acquisitions and other business combinations and have no trading market. Moreover, mezzanine debt securities are generally unsecured and subordinate to other obligations of the obligor and are subject to many of the same risks as those associated with high yield debt securities. Adverse changes in the financial condition of the obligor of mezzanine debt securities or in general economic conditions (including, for example, a substantial period of rising interest rates or declining earnings) or both can impair the ability of the obligor to make payment of principal and interest. Issuers of mezzanine debt securities can be highly leveraged, and their relatively high debt to equity ratios create increased risks that their operations might not generate sufficient cash flow to service their debt obligations. Debtor-In-Possession (“DIP”) Loans. DIP loans involve a fundamental credit risk based on the debtor’s ability to make principal and interest payments and the inherent risks of the bankruptcy process. DIP loans are subject to a court approval process in which parties-in-interest can be heard but there can be no assurance that a Client would be successful in obtaining favorable results. If Blue Torch’s calculations as to the outcome or timing of a reorganization are inaccurate, a company that has filed for bankruptcy could encounter hindrances on its ability to make payments on a DIP loan on time or at all. In addition, DIP loans could be privately negotiated transactions that have individualized terms. These positions can be illiquid and difficult to value. DIP loans can be subject to price volatility due to various factors including, but not limited to, changes in interest rates, market perception of the creditworthiness of the debtor and general market liquidity.

Investing through Subsidiaries. A substantial portion of the investments made by Blue Torch on behalf of a Client could be made through subsidiaries. These subsidiaries can be created for leverage; liability management; compliance with the Risk Retention Rules; liability; capital diversification; available capital; tax and/or other reasons. Investments made indirectly through subsidiaries carry risks that direct investments do not carry. For example, indirect investments are structurally subordinate to direct investments in a bankruptcy or workout scenario. In addition, subsidiaries can have a duration, term or liquidity characteristics that differ from those of a Client, which could affect a Client’s ability to receive capital or income distributions or in-kind distributions. Blue Torch and its Clients are also dependent on the CLO market for future leverage of a Client’s portfolio of subsidiaries. If the CLO market were unavailable for an extended period of time, a Client could experience diminished returns if alternative forms of financing could not be identified. Nature of Bankruptcy Proceedings. There are a number of significant risks when investing in companies involved, or which have been involved, in bankruptcy proceedings, including the following: First, many events in a bankruptcy are the product of contested matters and adversary proceedings which are beyond the control of the creditors. Second, a bankruptcy filing can have adverse and permanent effects on a company. For instance, the company could lose its market position and key employees and otherwise become incapable of restoring itself as a viable entity. Further, if the proceeding is converted to a liquidation, the liquidation value of the company theoretically might not equal the liquidation value that was believed to exist at the time of the investment. Third, the duration of a bankruptcy proceeding is difficult to predict. A creditor’s return on investment can be impacted adversely by delays while the plan of reorganization is being negotiated, approved by the creditors and confirmed by the bankruptcy court, and until it ultimately becomes effective. Fourth, certain claims, such as claims for taxes, wages and certain trade claims, could have priority by law over the claims of certain creditors. Fifth, the administrative costs in connection with a bankruptcy proceeding are frequently high and will be paid out of the debtor’s estate prior to any return to creditors. Sixth, creditors can lose their ranking and priority in a variety of circumstances, including if they exercise “domination and control” over a debtor and other creditors can demonstrate that they have been harmed by such actions. Seventh, investors in the company could be subject to a court-imposed “cram down” in which they lose their seniority in the capital and security interest structure. Eighth, a Client can seek representation on creditors’ committees and as a member of a creditors’ committee it could owe certain obligations generally to all similarly situated creditors that the committee represents and can be exposed to liability to such other creditors who disagree with a Client’s actions. There can be no assurance that a Client would be successful in obtaining results most favorable to it in such proceedings, and a Client should consider the potential for incur significant legal fees and other expenses in attempting to do so. A Client could also be subject to various trading or confidentiality restrictions. In addition, a Client and some of the Firm’s other Clients can potentially hold conflicting positions in relation to investments in companies involved in bankruptcy proceedings. Investment in the debt of financially distressed companies domiciled outside the United States involves additional risks. Bankruptcy law and process generally differ substantially from that in the United States, 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.

Equity Securities. Clients can invest in equity and equity-related securities and could also at times acquire equity in connection with a secured debt investment, as a result of a reorganization or as a consequence of loan foreclosure or foreclosure on the collateral securing such loans. Equity securities in general fluctuate in value in response to many factors, including the activities, results of operations and financial condition of individual companies, the business market in which individual companies compete, industry market conditions, interest rates and general economic environments and movements in the equity markets in general. As a result, a Client can suffer losses if it invests in equity instruments of issuers whose performance diverges from the Firm’s expectations or if equity markets generally move in a single direction. Hedging Transactions. Hedging techniques involve one or more of the following risks: (i) imperfect correlation between the performance and value of the instrument and the value of a Client securities or other objective of the Firm; (ii) possible lack of a secondary market for closing out a position in such instrument; (iii) losses resulting from interest rate, spread or other market movements not anticipated by the Firm; (iv) the possible obligation to meet additional margin or other payment requirements, all of which could worsen the Client’s position; and (v) default or refusal to perform on the part of the counterparty with which a Client transacts. Furthermore, to the extent that any hedging strategy involves the use of over-the-counter (“OTC”) derivatives transactions, such a strategy would be affected by implementation of the various regulations adopted pursuant to the Dodd‑Frank Act. The Firm will not attempt to hedge all market or other risks inherent in a Client’s positions, and will hedge certain risks, if at all, only partially. Specifically, the Firm could choose not, or can determine that it is economically unattractive, to hedge certain risks — either in respect of particular positions or in respect of a Client’s overall portfolio. A Client’s portfolio composition will commonly result in various directional market risks remaining unhedged. The Firm could rely on diversification to control such risks to the extent that the Firm believes it is desirable to do so; however, a Client is not subject to formal diversification policies. The ability of a Client to hedge successfully will depend on the ability of the Firm to predict relevant market movements, which cannot be assured. The Firm is not required to hedge and there can be no assurance that hedging transactions will be available or, even if undertaken, will be effective. In addition, it is not possible to hedge fully or perfectly against currency fluctuations affecting the value of securities denominated in non-U.S. currencies because the value of those securities is likely to fluctuate as a result of independent factors not related to currency fluctuations. Moreover, it should be noted that the portfolio will always be exposed to certain risks that cannot be hedged, such as counterparty credit risk. Furthermore, by hedging a particular position, any potential gain from an increase in the value of such position could be limited. Collateralized Debt Obligations (“CDOs”). Clients can invest in CDOs and CLOs. The portfolio could consist of CLO equity, multi-sector CDO equity, trust preferred CDO equity and CLO mezzanine debt. CDOs are subject to credit, liquidity and interest rate risks. The CDO equity purchased by a Client will most likely be unrated or non-investment grade, which means that a greater possibility that adverse changes in the financial condition of an issuer or in general economic conditions or both can impair the ability of the related issuer or obligor to make payments of principal or interest. Such investments are speculative. In addition, as a holder of CDO equity, a Client will have limited

remedies available upon the default of the CDO. In the recent past, the market for CDOs has become highly illiquid resulting in severe declines of the prices of such instruments. Broad Investment Mandate. Clients have broad investment mandates. As proceeds from the sale of a Client’s initial investments are realized, the proceeds can be reinvested in investments of a kind other than those in which the Client initially invested. The Firm could opportunistically implement whatever strategies or discretionary approaches it believes from time to time to be best suited to prevailing market conditions. Over time, the strategies implemented on behalf of a Client can be expected to expand, evolve and change, perhaps materially. The Firm will not be required to implement any particular strategies and could discontinue employing any particular strategy on behalf of a Client. There can be no assurance that the various investment strategies which the Firm expects from time to time to develop and implement for a Client will be successful or that strategies that have been successful will continue to be profitable. Uncertain Exit Strategies; Duration of Investment Positions. The Firm typically does not know the maximum, or, often, even the expected, duration of any particular investment at the time of initiation. Due to the illiquid nature of some of the investments that Clients are expected to make, the Firm is unable to predict with confidence what, if any, exit strategy for a given investment will ultimately be available for a Client. Exit strategies that appear to be viable at certain times during the life cycle of an investment can be precluded by the time the investment is ready to be realized due to economic, legal, political or other factors. The larger the transaction in which a Client is participating, the more uncertain a Client’s exit strategy tends to become. The length of time for which a position is maintained could vary significantly, based on the Firm’s subjective judgment of the appropriate point at which to liquidate a position so as to augment gains or reduce losses. Many of a Client’s transactions involve acquiring related positions in a variety of different instruments or markets at or about the same time. Frequently, optimizing the probability of being able to exploit the pricing anomalies among these positions requires holding periods of significant length—sometimes many months to a year or more. Actual holding periods depend on numerous market factors which can both expedite and disrupt price convergences. There can be no assurance that a Client will be able to maintain any particular position, or group of related positions, for the duration required to realize the expected gains, or avoid losses, from such positions. Expedited Transactions. Investment analyses and decisions by the Firm could be undertaken on an expedited basis in order to make it possible for a Client to take advantage of short-lived investment opportunities. In such cases, the available information at the time of an investment decision can be limited, inaccurate and/or incomplete. Furthermore, the Firm is unlikely to have sufficient time to fully evaluate information which is available. There is a significantly increased risk of making poor investments when they are made on an expedited basis. Inability to Participate in Certain Investments. The Firm has numerous business relationships worldwide. As a result of these relationships, there can be situations in which the Firm would otherwise take a position in an issuer, or a position adverse to the management of an issuer, but could choose not to do so because of the potential adverse effects on such relationships, even if such position could prove advantageous for a Client.

Other Regulated Industries. Clients can make investments in companies in industries that present inherent risks or that are in industries that are heavily regulated. The Client’s investments are expected to include investments in companies operating in industries that are subject to greater amounts of regulation than other industries generally. These more highly regulated industries include financial services (including banking and mortgage servicing), insurance, transportation (e.g., aviation or shipping) and also businesses that serve primarily customers that are governmental entities, including the defense industry. Investments in companies that are subject to greater amounts of governmental regulation pose additional risks relative to investments in other companies generally. Changes in applicable laws or regulations, or in the interpretations of these laws and regulations, could result in increased compliance costs or the need for additional capital expenditures and/or regulatory capital requirements in the case of banks or similarly regulated entities. If a company fails to comply with these requirements, it could also be subject to civil or criminal liability and the imposition of fines. A company also could be materially and adversely affected as a result of statutory or regulatory changes or judicial or administrative interpretations of existing laws and regulations that impose more comprehensive or stringent requirements on such company. Governments have considerable discretion in implementing regulations that could impact a company’s business and governments could be influenced by political considerations and can make decisions that adversely affect a company’s business. Additionally, certain companies could have a unionized work force or employees who are covered by a collective bargaining agreement, which could subject any such company’s activities and labor relations matters to complex laws and regulations relating thereto. Moreover, a company’s operations and profitability could suffer if it experiences labor relations problems. Upon the expiration of any such company’s collective bargaining agreements, it could be unable to negotiate new collective bargaining agreements on terms favorable to it, and its business operations at one or more of its facilities would likely be interrupted as a result of labor disputes or difficulties and delays in the process of renegotiating its collective bargaining agreements. A work stoppage at one or more of any such company’s facilities could have a material adverse effect on its business, results of operations and financial condition. Additionally, any such problems could bring scrutiny and attention to a Client itself, which could adversely affect a Client’s ability to implement its investment objectives. Absence of Certain Regulatory Protection. The Private Funds will not be registered under the Investment Company Act. The Investment Company Act provides certain protections to investors in registered investment companies and imposes certain restrictions on registered investment companies (including, for example, limitations on the ability to incur leverage), none of which will apply to the Private Funds. Consequently, investors in the Private Funds will not be afforded these protections. Furthermore, neither the general partners of the Private Funds nor the Firm is registered as a brokerdealer or is a member of FINRA and, consequently, are not subject to the Exchange Act, the regulations thereunder or the rules of FINRA. Derivatives. Clients can use various derivative instruments. The use of derivative instruments involves a variety of material risks, including the extremely high degree of leverage sometimes embedded in such instruments. The derivatives markets are frequently characterized by limited liquidity, which can make it difficult as well as costly to close out open positions in order either to realize gains or to limit losses. It is possible the pricing relationships between derivatives and the instruments underlying such derivatives be uncorrelated with historical patterns, resulting in unexpected losses.

Use of derivatives and other techniques such as short sales for hedging purposes involves certain additional risks, including (i) dependence on the ability to predict movements in the price of the securities hedged; (ii) imperfect correlation between movements in the securities on which the derivative is based and movements in the assets of the underlying portfolio; and (iii) possible impediments to effective portfolio management or the ability to meet short-term obligations because of the percentage of a portfolio’s assets segregated to cover its obligations. In addition, by hedging a particular position, any potential gain from an increase in the value of such position can be limited. Swap Agreements. Clients can occasionally enter into various swap agreements (“Swaps”) as part of its investment program. A Swap is an individually negotiated, non-standardized agreement between two parties to exchange cash flows (and sometimes principal amounts) measured by different interest rates, commodity prices, exchange rates, indices or prices, with payments generally calculated by reference to a principal (“notional”) amount or quantity. Swaps and similar derivative contracts are not currently traded on exchanges; rather, banks and dealers act as principals in these markets. As a result, a Client is subject to the risk of the inability or refusal to perform with respect to such contracts on the part of the counterparties with which a Client transacts. Swaps are subject to various other types of risk, including market risk, liquidity risk, counterparty credit risk, legal risk and operations risk. In addition, Swaps can involve considerable economic leverage and could, in some cases, involve significant risk of loss. Depending on their structure, Swaps can increase or decrease exposure to the corporate credit market, equity securities, long-term or short-term interest rates, foreign currency values, corporate borrowing rates or other factors. Swaps can take many different forms and are known by a variety of names. Clients are not limited to any particular form of Swap if its use is consistent with a Client’s investment objectives and policies, and the Firm anticipates that Clients will invest in interest rate swaps, credit default swaps, total return swaps, variance swaps and other types of Swaps. Credit Default Swap Agreements. Clients can invest in credit default swaps. The typical credit default swap contract requires the seller to pay to the buyer, if a particular reference entity experiences specified credit events, the difference between the notional amount of the contract and the value of a portfolio of securities issued by the reference entity that the buyer delivers to the seller. In return, the buyer agrees to make periodic payments equal to a fixed percentage of the notional amount of the contract. Clients could also sell credit default swaps on a basket of reference entities as part of a synthetic collateralized debt obligation transaction. As a buyer of credit default swaps, Clients will be subject to certain risks in addition to those described elsewhere herein. In circumstances in which a Client does not own the debt securities that are deliverable under a credit default swap, a Client will be exposed to the risk that deliverable securities will not be available in the market, or will be available only at unfavorable prices, as would be the case in a so-called “short squeeze.” While the credit default swap market auction protocols reduce this risk, it is still possible that an auction will not be organized or will not be successful. In certain instances of issuer defaults or restructurings (for those credit default swaps for which restructuring is specified as a credit event), it has been unclear under the standard industry documentation for credit default swaps whether or not a “credit event” triggering the seller’s payment obligation had occurred. The creation of the ISDA Credit Derivatives Determination Committee (the “Determination Committee”) is intended to reduce this uncertainty and create uniformity across the market, although it is possible that the Determination Committee will not be able to reach a resolution or do so on a timely basis. In either

of these cases, a Client would not be able to realize the full value of the credit default swap upon a default by the reference entity. As a seller of credit default swaps, Clients will incur leveraged exposure to the credit of the reference entity and become subject to many of the same risks it would incur if it were holding debt securities issued by the reference entity. However, Clients will not have any legal recourse against the reference entity and will not benefit from any collateral securing the reference entity’s debt obligations. In addition, the credit default swap buyer will have broad discretion to select which of the reference entity’s debt obligations to deliver to a Client following a credit event and will likely choose the obligations with the lowest market value in order to maximize the payment obligations of a Client. Counterparty risk is always present in credit default swaps. The market for credit default swaps on distressed securities is not liquid (compared to the market for credit default swaps on investment grade corporate reference entities). If current interest rate spreads over SOFR (or over the applicable United States Treasury Benchmark) widen or the prevailing credit premiums on credit default swaps increase, the amount of a termination or assignment payment upon a termination or assignment of a transaction due from a Client to the credit default swap counterparty could increase by a substantial amount. In addition, the proper tax treatment of credit default swaps and other derivatives could not be clear. Limited Partners generally are required to treat any such derivatives for U.S. federal income tax purposes in the same manner as they are treated by a Client. The tax environment for derivatives is evolving and changes in the taxation of derivatives can adversely affect the value of derivatives held by a Client. Given the recent sharp increases in volume of credit derivatives trading in the market, settlement of such contracts can also be delayed beyond the time frame originally anticipated by counterparties. Such delays could adversely impact a Client’s ability to otherwise productively deploy any capital that is committed with respect to such contracts. Certain governmental entities have indicated that they intend to regulate the market in credit default swaps. It is difficult to predict the impact of any such regulation on a Client, but it can be adverse (including making a Client ineligible to be a “seller” of credit default swaps). Credit Default Swaps on Loans and LCDX Transactions. Clients can invest in all types of loan credit default swaps (“LCDS”) and all types of LCDX transactions, a tradable index comprising 100 equally-weighted underlying single-name loan-only credit default swaps. LCDS are similar to credit default swaps on bonds, except that the underlying protection is sold on syndicated secured loans of a reference entity rather than a broader category of bonds or loans. Buyers of protection pay a fixed coupon agreed at time of trade, and receive compensation on the principal if the entity named on the contract defaults on its secured debt. The compensation will be par minus recovery either via the protection seller paying par in return for gaining possession of the loan or via cash settlement. Loan credit default swaps could be on single names or on baskets of loans, both tranched and untranched. Clients can also invest in LCDX, which is the buying or selling of protection on 100 names that comprise the LCDX portfolio (i.e., the buying and selling of 100 single-name LCDS). Buying and selling the LCDX can be compared to buying and selling a loan portfolio. When the index is bought, the buyer is taking on the credit exposure to the loans, and is exposed to defaults similar to when a loan

portfolio is bought. If the index is sold, this exposure is passed on to someone else. The index has a fixed coupon, which is paid when the index is sold, or received if the index is bought. The credit events that generally trigger a payout from the buyer (protection seller) of the index are bankruptcy or failure to pay a scheduled payment on any debt (after a grace period), for any of the constituents of the index. Credit events can be settled by physical or cash settlement. Physical settlement entails delivering the loan and receiving par. The protection seller who took delivery of the loan holds the defaulted asset. Although this method is the traditional method of settlement, there are risks that the notional amounts of the outstanding loans is less than the LCDS outstanding and that the LCDX counterparty will be able to take receipt of the loans. Total Return Swaps. Clients from time to time can invest in total return swaps. As a buyer of total return swaps, a Client will be obligated to make certain periodic payments in exchange for the total return on a referenced asset, including coupons, interest and the gain or loss on such asset over the term of the swap. Clients could be required to maintain collateral with the total return swap counterparty. If a Client fails to fulfil its payment obligations or fails to post any required collateral under a total return swap, the total return swap counterparty could declare an event of default and, as a result, a Client can be required to pay swap breakage fees, suffer the loss of the amounts paid to the counterparty and forego the receipts from the counterparty of further total return swap payments. Over-the-Counter Derivatives Markets. The Dodd‑Frank Act, enacted in July 2010, includes provisions that comprehensively regulate the OTC derivatives markets for the first time. Under the Dodd-Frank Act, certain standardized OTC derivatives swaps are subject to mandatory central clearing, and some of those swaps must also be executed on regulated trading venues. OTC trades submitted for clearing will be subject to minimum initial and variation margin requirements set by the relevant clearinghouse, as well as possible SEC- or CFTC-mandated margin requirements. OTC derivatives dealers typically demand the unilateral ability to increase a Client’s collateral requirements for cleared OTC trades beyond any regulatory and clearinghouse minimums. The regulators also have broad discretion to impose margin requirements on non-cleared OTC derivatives and new requirements will apply to the holding of customer collateral by OTC derivatives dealers. These requirements would increase the amount of collateral the Client is required to provide and the costs associated with providing it. OTC derivative dealers also are required to post margin to the clearinghouses through which they clear their customers’ trades instead of using such margin in their operations, as was widely permitted before the Dodd‑Frank Act. This has and will continue to increase the OTC derivative dealers’ costs, and these increased costs are generally passed through to other market participants in the form of higher upfront and mark-to-market margin, less favorable trade pricing, and the imposition of new or increased fees, including clearing account maintenance fees. With respect to cleared OTC derivatives, a Client will not face a clearinghouse directly but rather through an OTC derivatives dealer that is registered with the CFTC or SEC to act as a clearing member. Clients can face the indirect risk of the failure of another clearing member customer to meet its obligations to its clearing member. Such scenario could arise due to a default by the clearing member on its obligations to the clearinghouse, triggered by a customer’s failure to meet its obligations to the clearing member.

The SEC and CFTC will also require a substantial portion of derivative transactions that are currently executed on a bi-lateral basis in the OTC markets to be executed through a regulated securities, futures, or swap exchange or execution facility. Certain CFTC-regulated derivatives trades became subject to these rules starting in 2014. It is not yet clear when the parallel SEC requirements will go into effect. Such requirements can make it more difficult and costly for investment funds, including the Clients, to enter into highly tailored or customized transactions. They can also render certain strategies in which a Client might otherwise engage impossible or so costly that they will no longer be economical to implement. If a Client decides to become a direct member of one or more of these exchanges or execution facilities, a Client would be subject to all of the rules of the exchange or execution facility, which would bring additional risks and liabilities, and potential additional regulatory requirements. OTC derivatives firms that meet the definition of a swap dealer must register with the CFTC, and firms that meet the separate definition of a security-based swap dealer must register with the SEC. Dealers are subject to new minimum capital and margin requirements, business conduct standards, disclosure requirements, reporting and recordkeeping requirements, transparency requirements, position limits, limitations on conflicts of interest, and other regulatory burdens. These requirements further increase the overall costs for OTC derivative dealers, which costs could be passed along to market participants as market changes continue to be implemented. The Dodd-Frank Act established a comprehensive OTC derivatives regulatory regime, though cross-border application and coordination with non-U.S. regulators continue to create compliance complexity for market participants. Convertible Securities, Rights and Warrants. Clients can invest in hybrid securities that could be exchanged for, converted into or exercised to acquire a predetermined number of shares of an issuer’s common stock at the option of the holder during a specified time period (such as convertible preferred stocks, convertible debentures, stock purchase rights, and warrants). Convertible securities generally pay interest or dividends and provide for participation in the appreciation of the underlying common stock but at a lower level of risk because the yield is higher and the security is senior to common stock. Convertible debt securities purchased by a Client that are acquired for their equity characteristics are not subject to minimum rating requirements. 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 credit standing of the issuer and other factors can also affect the investment value of a convertible security. 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 is increasingly influenced by its conversion value. Convertible securities can also include warrants, often publicly traded, that give a holder the right to purchase at any time during a specified period a predetermined number of shares of common stock at a fixed price but that do not pay a fixed dividend. Their value depends primarily on the relationship of the exercise price to the current and anticipated price of the underlying securities. Futures Trading. Clients could trade futures contracts, including stock index futures. Futures prices are highly volatile, with price movements being influenced by a multitude of factors such as changing

supply and demand relationships, government trade, fiscal, monetary and exchange control programs and policies, national and international political and economic events and speculative frenzy and the emotions of the marketplace. In addition, governments from time to time intervene in certain markets, particularly currency and interest-rate markets. The low margin deposits normally required in futures trading permit an extremely high degree of leverage; margin requirements for futures trading being in some cases as little as 2% of the face value of the contracts traded. Accordingly, a relatively small price movement in a futures contract can result in an immediate and substantial loss to the investor. There can be no assurance that a liquid market will exist at a time when a Client seeks to close out an option position, future or Swap. Most U.S. commodity exchanges limit fluctuations in futures contract prices during a single day by regulations referred to as “daily limits.” During a single trading day, no trades can be executed at prices beyond the daily limit. Once the price of a futures contract has increased or decreased to the limit point, positions can be neither taken nor liquidated. Futures prices have occasionally moved to the daily limit for several consecutive days with little or no trading. Similar occurrences could prevent a Client from promptly liquidating unfavorable positions and subject a Client to substantial losses. In addition, certain of these instruments are relatively new and are without a significant trading history. As a result, there is no assurance that an active secondary market will develop or continue to exist. Lack of a liquid market for any reason can prevent a Client from liquidating an unfavorable position and a Client would remain obligated to meet margin requirements until the position is closed. The CFTC and the U.S. commodities exchanges impose limits referred to as “speculative position limits” on the maximum net long or net short speculative positions that any person could hold or control in any particular futures or options contracts traded on U.S. commodities exchanges. For example, the CFTC currently imposes speculative position limits on a number of agricultural commodities (e.g., corn, oats, wheat, soybeans and cotton) and U.S. commodities exchanges currently impose speculative position limits on many other commodities. The Dodd‑Frank Act significantly expands the CFTC’s authority to impose position limits with respect to futures contracts and options on futures contracts, swaps that are economically equivalent to futures or options on futures, and swaps that are traded on a regulated exchange and certain swaps that perform a significant price discovery function. In response to this expansion of its authority, in 2012, the CFTC proposed a series of new speculative position limits with respect to futures and options on futures on so-called “exempt commodities” (which includes most energy and metals contracts) and with respect to agricultural commodities. Those proposed speculative position limits were vacated by a United States District Court, but the CFTC has again proposed a new set of speculative position rules which are not yet finalized (or effective). If the CFTC is successful in this second try, the counterparties with which a Client deals can further limit the size or duration of positions available to the Client. All accounts owned or managed by the Investment Adviser are likely to be combined for speculative position limit purposes. Clients could be required to liquidate positions it holds in order to comply with such limits, or be unable to fully implement trading instructions generated by its trading models, in order to comply with such limits. Any such liquidation or limited implementation could result in substantial costs to a Client.

Options Trading. When purchasing or selling an option, the risks associated with the transaction will vary depending on the type of option (i.e., put or call). When purchasing an option, it is necessary to calculate the extent to which the value of the underlying security must increase (in the case of a call) or decrease (in the case of a put) in order for a Client’s position to become profitable, taking into account the premium and all transaction costs. The purchaser of options could offset or exercise the options or allow the options to expire. The exercise of an option results either in a cash settlement or in the purchaser acquiring or delivering the underlying interest. If the option is on a future, the purchaser will acquire a futures position with associated liabilities for margin. If the purchased option expires worthless, a Client will suffer a total loss of the amount invested in the option that will consist of the option premium plus transaction costs. Selling (“writing” or “granting”) an option generally entails considerably greater risk than purchasing options. Although the premium received by the seller is fixed, the seller can sustain a loss well in excess of that amount. The seller will be liable for additional margin to maintain the position if the market moves unfavorably. The seller will also be exposed to the risk of the purchaser exercising the option, and, upon such exercise, the seller will be obligated to either settle the option in cash or to acquire or deliver the underlying interest, depending on the terms of the option. If the option is on a future, upon exercise by the purchaser of the option, the seller will acquire a position in a future with associated liabilities for margin. If the option is “covered” by the seller holding a corresponding position in the underlying interest or a future or another option, the risk can be reduced. If the option is not covered, the risk of loss can be unlimited. In the case of an option on a future, certain exchanges in some jurisdictions permit deferred payment of the option premium, exposing the purchaser to liability for margin payments not exceeding the amount of the premium. The purchaser is still subject to the risk of losing the premium and transaction costs. When the option is exercised or expires, the purchaser is responsible for any unpaid premium outstanding at that time. Forward Contracts. Clients can trade forward contracts in the inter-bank currency market. Certain forward contracts could be traded on exchanges; however, forward contracts that are not traded on an exchange are traded via banks and/or dealers who act as principals in these markets. As a result of the Dodd‑Frank Act, the CFTC now regulates non-deliverable forwards (including deliverable forwards where the parties do not take delivery). Changes in the forward markets could entail increased costs and result in burdensome reporting requirements. There is currently no limitation on the daily price movements of forward contracts. Principals in the forward markets have no obligation to continue to make markets in the forward contracts traded. The imposition of credit controls by governmental authorities or the implementation of regulations pursuant to the Dodd‑Frank Act might limit such forward trading to less than that which the Firm would otherwise recommend, to the possible detriment of the Client. Regulatory Developments Related to Commodities Trading. A Client’s commodities trading activities are likely to be impacted by regulatory developments related to such trading. For example, joint rulemaking by the CFTC and the Securities and Exchange Commission (the “SEC”) (required under the Dodd‑Frank Act) has broadened the definition of “commodities” positions to include certain types of swaps, including some foreign exchange trades, that were previously not regulated as commodities. The precise contours of the SEC and CFTC rules remain somewhat uncertain and can change in unpredictable ways over time. General partners of the private funds are exempt from

registration with the CFTC as a commodity pool operator (“CPO”) pursuant to CFTC Rule 4.13(a)(3) which imposes certain quantitative limits on the size of commodities positions (including positions in swaps regulated as commodities) that the Client could take. Continued reliance on CFTC Rule 4.13(a)(3) will cause a Client to forego certain investment opportunities that might otherwise be suitable investments for a Client. In order to avoid the trading limitations imposed by CFTC Rule 4.13(a)(3), the Firm could seek to rely on other exemptions from registration that do not impose such limitations, or it can elect to register as a CPO with the CFTC. However, even if the Firm does register as a CPO, it expects that it could nevertheless be able to avoid certain disclosure, recordkeeping and reporting requirements that would otherwise apply to it (in reliance on CFTC Rule 4.7). Risks of Coinvesting with Third Parties. Clients can coinvest with third parties through partnerships, joint ventures or other entities or otherwise. Such investments can involve risks in connection with such third party involvement and risks not present in direct investments, including the possibility that a third party co-venturer could have financial difficulties resulting in a negative impact on such investment, could have economic or business interests or goals that are inconsistent with those of the Fund or be in a position to take (or block) action in a manner contrary to the Fund’s investment objective. Furthermore, if such co-venturer or partner defaults on its funding obligations, it can be difficult for the Fund to make up the shortfall from other sources. A Client could be required to make additional contributions to replace such shortfall, thereby reducing the diversification of their investments. Any default by such co-venturer or partner could have an adverse effect on a Client, their assets and the interests of the Limited Partners. In addition, a Client could be liable for the actions of its co-venturers or partners. While Blue Torch will attempt to limit the liability of a Client through contractual arrangements and by reviewing the qualifications and previous experience of co-venturers or partners, it is not possible to undertake expansive private investigations with respect to prospective co-venturers or partners. Clients could enter into compensation arrangements with third parties relating to such investments, including incentive compensation arrangements. Though Blue Torch considers the effect of such compensation on the expected returns, such compensation arrangements will reduce the returns to participants in the investments and create potential conflicts of interest between such parties and the Clients. Valuation Risk. Many of the investments made by Clients are illiquid and thus have no readily ascertainable market prices. Blue Torch values these investments based on its estimate, or an independent third party’s estimate, of their fair value as of the date of determination, which often involves significant subjectivity. There is no single standard for determining fair value in good faith and in many cases fair value is best expressed as a range of fair values from which a single estimate can be derived. Blue Torch estimates the fair value of its investments based on third-party models, or models developed by it, which could include discounted cash flow analyses and other techniques and can be based, at least in part, on independently sourced market parameters. The material estimates and assumptions used in these models include the timing and expected amount of cash flows, the appropriateness of discount rates used, and, in some cases, the ability to execute, the timing of and the estimated proceeds from expected financings, some or all of which factors could be ascribed more or less weight in light of the particular circumstances. The actual results related to any particular investment often vary materially as a result of the inaccuracy of these estimates and assumptions. In addition, because many of the investments held by a Client are in industries or sectors which are unstable, in distress or undergoing some uncertainty, valuations of such investments can be subject to rapid and/or

significant changes caused by, among other matters, sudden company-specific or industry-wide developments. Because such valuations will be inherently uncertain, can fluctuate significantly over short periods of time and will be based on estimates and other material assumptions, Blue Torch’s determinations of fair value could differ materially from the values that would have been used if a readily available market for these investments existed and differ materially from the values that a Client ultimately realize on such investments. Risks Related to Multiple Clients. The Firm has explored and will continue to explore opportunities to invest capital for other clients. Blue Torch anticipates launching additional funds and managed accounts that could pursue similar strategies or have substantially overlapping objectives. Such activity can adversely affect a Client. These risks include, but are not limited to, loss of management attention and time due to multiple constraints, increased competition of capital allocations, and expansion of potential risks to Blue Torch as a whole outside those previously disclosed. As Blue Torch organizes and manages new clients, Blue Torch will face conflicts with respect to the allocation of investment opportunities among such clients. Investments by Affiliated Entities in the Same Borrower. A Client can invest in loans held by or issued to other Blue Torch Clients or issue or purchase loans to borrowers in which other Blue Torch Clients also have an economic interest, which economic interest could be in a different debt tier or a different part of the capital structure. In certain instances, Blue Torch Clients participating in a loan origination strategy and Blue Torch Clients participating in other credit strategies could be in different tranches of the same financing. Debt investments of a Client can also include one or more revolving credit facilities. Portfolio borrowers could also have senior revolving facilities provided by one or more third parties. Under such scenarios, a Client and other Blue Torch Clients can have opposing interests and actions taken on behalf of another Blue Torch fund could have an adverse effect on the interests of a Client. Risks of Reliance on the Founder. Blue Torch’s investment operations are led by Mr. Genda. The death, permanent disability or prolonged unavailability of the Mr. Genda could have an adverse effect on a Client. Risks Associated with Reliance on Blue Torch. The success of a Client’s investing can, to a large degree, be dependent upon the Blue Torch’s personnel, who could influence the investment decisions with respect to a Client’s investments. Competition in the financial services industry for experienced and capable employees, such as Blue Torch’s personnel, is intense. The loss of the services of any of such personnel could adversely affect the Client’s portfolio. Cybersecurity Breaches and Information Technology. Blue Torch is heavily reliant on its information technology infrastructure, processes and procedures, and it has devoted significant resources to ensuring it has competitive informational technology systems. Information technology changes rapidly, however, and Blue Torch could be viewed as not able to stay ahead of such advances. Moreover, as Blue Torch grows, it can find itself a target of cybersecurity breaches and attacks. Clients are subject to risks associated with a breach in their cybersecurity. Cybersecurity is a generic term used to describe the technology, processes and practices designed to protect networks, systems, computers,

programs and data from “hacking” by other computer users, other unauthorized access and the resulting damage and disruption of hardware and software systems, loss or corruption of data as well as misappropriation of confidential information. The computer systems, networks and devices used by Blue Torch and service providers to Blue Torch and its Clients to carry out routine business operations employ a variety of protections designed to prevent damage or interruption from computer viruses, network failures, computer and telecommunication failures, infiltration by unauthorized persons and security breaches. Despite the various protections utilized, these systems, networks, or devices potentially can be breached. Cybersecurity breaches can include unauthorized access to systems, networks, or devices; as well as infection from computer viruses or other malicious software code; and attacks that shut down, disable, slow, or otherwise disrupt operations, business processes, or website access or functionality. Clients and their investors could be negatively impacted as a result of a cybersecurity breach. If a cybersecurity breach occurs, Clients could incur substantial costs, including those associated with: forensic analysis of the origin and scope of the breach; increased and upgraded cybersecurity; investment losses from sabotaged systems; loss of data and other records; identity theft; unauthorized use of proprietary information; litigation; adverse investor reaction; the dissemination of confidential and proprietary information; and reputational damage. Cybersecurity breaches can cause disruptions and impact business operations, potentially resulting in financial losses to the Clients; interference with Blue Torch’s ability to calculate the value of an investment; present impediments to trading or transactions necessary to support an investment strategy; the inability of Blue Torch and other service providers to transact business; violations of applicable privacy and other laws; regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, or additional compliance costs; as well as the inadvertent release of confidential information. Blue Torch retains a cybersecurity consultant for the purposes of reviewing relevant policies and procedures, conduct training (to include phishing training of all personnel) as well as to assess and advise on risks affiliated with cybersecurity related matters. Conflicts of Interest. The general partner or managing member of a Private Fund and the Firm have certain conflicts of interest in their management of the Clients. These conflicts arise primarily from the involvement of the Firm and its affiliates in other activities that could conflict with those of the Clients and will also arise whenever the Firm or any of its affiliates is engaged to perform for compensation any services for a Client. A general partner or managing member of a Private Fund, the Firm, and the custodians of a Client can from time to time act as directors, investment advisors, administrators, or custodians or prime brokers in relation to or otherwise be involved with other companies established by parties other than the Clients which have similar objectives. In such event, should a conflict of interest arise, the general partner or managing member of a Private Fund will endeavor to ensure that it is resolved fairly. Distributions in Kind. Distributions are likely to be in cash or in securities, but Clients will use commercially reasonable efforts not to distribute securities other than marketable securities unless such distribution is in connection with the liquidation of a Client. Assets that are distributed in kind can be illiquid. Even for those assets for which a liquid market exists or develops, there is no guarantee that such market will be sustained. There can be no assurance that any investor would be able to realize an amount equal to the value attributed by the Firm to the distribution.

Investments Longer than Term. Although the Firm expects that a Client’s investments will be realized prior to the end of its applicable term, a Client can have to sell, distribute or otherwise dispose of its investments at a disadvantageous time in order to achieve such realization. As a result, a Client could sell, distribute or otherwise dispose of its investments for a price which is less than the price that could have been obtained if the investments were held for a longer period of time. There can be no assurance that the winding up of a Client and the final distribution of their assets will be able to be executed expeditiously. Material, Non-Public Information. Affiliates of the Firm, employees, or the general partner or managing member of a Private Fund can serve as directors of, or in a similar capacity with, investments held by the Client. Similarly, Blue Torch investment professionals could enter into non-disclosure agreements providing them access to confidential information. If material non-public information is obtained with respect to such issuers, a Client could be prohibited by law or otherwise restricted from purchasing or selling any securities, loans, or debt instruments of such issuers for a period of time, and such prohibitions can have an adverse effect on a Client. Broker-Dealer Regulatory Risks. Certain activities in which the Clients and its affiliates could participate, including loan origination activity, can subject them to the risk of being deemed to be engaged in the business of effecting securities transactions for others. This could mean that a Client or one or more of its affiliates is acting as an unregistered broker-dealer, a subject of heightened SEC focus in recent years. If a Client or one of its affiliates were deemed to be acting as an unregistered broker-dealer, it could be subject to regulatory censure and can be required to register with FINRA, which could have adverse effects on the Clients, including additional regulatory scrutiny and increased regulatory and operational costs. Risk of Litigation. In the ordinary course of its business, a Client could be subject to litigation from time to time. The outcome of litigation, which can materially adversely affect the value of a Client, is impossible to anticipate, and such proceedings can continue without resolution for long periods of time. Any litigation can consume substantial amounts of the Firm’s time and attention, and that time and the devotion of these resources to litigation could, at times, be disproportionate to the amounts at stake in the litigation. A Client also can enter into direction letters or similar agreements with third parties in connection with claims or litigation that could include indemnification and exculpation provisions in favor of such third parties. Force Majeure. Social, political, economic and other conditions and events (such as natural disasters, epidemics and pandemics, terrorism, conflicts and social unrest) will occur that have significant impacts on issuers, industries, governments and other systems, including the financial markets. As global systems, economies and financial markets are increasingly interconnected, events that once had only local impact are now more likely to have regional or even global effects. Events that occur in one country, region or financial market will, more frequently, adversely impact issuers in other countries, regions or markets. These impacts can be exacerbated by failures of governments and societies to adequately respond to an emerging event or threat. Clients will be negatively impacted if the value of their portfolio holdings decreases as a result of such events, if these events adversely impact the operations and effectiveness of the adviser or key service providers or if these events disrupt systems and processes necessary or beneficial to the management of accounts. For example, in late 2019 and early 2020, a novel coronavirus (SARS-CoV-2) and related respiratory

disease (COVID-19) emerged in China and spread rapidly across the world, including to the United States. This outbreak has led to disruptions in local, regional, national and global markets and economies affected thereby. With respect to the U.S., this outbreak has resulted in the following among other things: (i) government imposition of various forms of “stay at home” orders and the closing of “nonessential” businesses resulting in significant disruption to the businesses of many companies including both supply chains and demand, and in lay-offs of employees, which effects are hoped to be temporary but can be permanent for some of these businesses; (ii) increased indebtedness by businesses; (iii) increased requests by borrowers for amendments and waivers of their credit agreements to avoid default, increased defaults by such borrowers and/or increased difficulty in obtaining refinancing at the maturity dates of their loans; and (iv) rapidly evolving proposals and/or actions by state and federal governments to address problems being experienced by the markets and by businesses and the economy in general which could not adequately address these problems. An outbreak similar to the pandemic could have an adverse impact on the economy in general, which could have a material adverse impact on, among other things, the ability of certain companies to continue operations profitably. Global Conflicts. As economies and financial markets become increasingly interconnected, the likelihood increases that global conflicts in one country or region will adversely impact markets or issuers in other countries or regions. The impacts of these conflicts or events can be exacerbated by governments failing to respond adequately to a global conflict. Conflicts and sanctions and other local or regional developments can influence global supply and pricing issues. Although conflicts have occurred and could also occur, it is difficult to predict when similar conflicts affecting the U.S. or global markets will occur. Any such conflicts could have a significant impact on the operations, risk profile, and value of the Funds and their investments. On February 24, 2022, Russia launched an invasion of Ukraine that has resulted in an ongoing military conflict between the two countries (the “Russia-Ukraine Conflict”). The Russia-Ukraine Conflict has caused, and is currently expected to continue to cause, significant disruptions to the global financial system, international trade, and the transportation and energy sectors, among other disruptions. In addition, the Russia-Ukraine Conflict has displaced millions of people, causing an acute refugee crisis in Europe, and has increased the threat of nuclear accidents or attacks, cyberattacks and further regional or global conflicts (including a potential expansion of the Russia-Ukraine Conflict to other countries as well as other potential conflicts, including, but not limited to, conflicts in other geographic locations and between other state and non-state actors), among other potentially dire consequences. In response to Russia’s actions, multiple countries and governing bodies, including the United States and the EU, have put in place global sanctions and other severe restrictions or prohibitions on the activities of certain individuals and businesses connected to Russia and/or Belarus. Private companies have also implemented restrictions that severely limit, and in some cases, reverse or cancel, business transactions in or involving certain individuals and/or businesses connected to or associated with Russia and/or Belarus. Further, some private companies have moved to divest of Russia-based subsidiaries and assets. In addition, the impacts of the Russia-Ukraine Conflict on the supply chain and commodity prices are expected to be profound and can result in substantial inflation in one or more countries (or globally). However, the ultimate impact of the Russia-Ukraine Conflict and its effect on global economic and commercial activity and conditions, and on the operations, financial condition and performance of the Fund, its borrowers or any particular industry, business, currency or country and the duration and severity of those effects, is impossible to predict.

On October 7th, 2023, Hamas (an organization which governs Gaza, and which has been designated as a terrorist organization by the United States, the United Kingdom, the European Union, Australia and other nations), committed a terrorist attack within Israel. Israel responded by initiating a full-scale invasion of Gaza. The armed conflict has expanded and more actively involves the United States, Lebanon (and/or Hezbollah), Syria, Iran and/or other countries or terrorist organizations, and any further expansion of the conflict could exacerbate the risks described above. In response to the attacks, the United States has announced sanctions and other measures against Hamas-related persons. The aforementioned ongoing conflicts and the measures taken in response have had and could have a significant adverse impact on, and result in significant losses to, the Fund and its borrowers, which could result in a partial or total loss of investment for the Limited Partners. In particular, the Fund and/or its borrowers can suffer significant increases in operating costs, losses from cyberattacks, significant reductions in revenue and growth, increased foreign exchange risk and/or unexpected operational losses and liabilities. It could also limit the ability of the Fund to source, diligence and execute new investments and to manage, finance and exit investments in the future. Developing and further governmental actions (sanctions-related, military or otherwise) can cause additional disruption and constrain or alter existing financial, legal and regulatory frameworks and systems in ways that are adverse to the Fund or its borrowers, all of which could adversely affect the Limited Partners. Other global conflicts could arise in the future, and such conflicts could have material consequences on Blue Torch, the Clients and their investments. Epidemics/Pandemics. Certain countries have been susceptible to epidemics, which can be designated as pandemics by world or national health authorities. The outbreak of such epidemics or pandemics, together with any resulting restrictions on travel or quarantines imposed, has had and could continue to have a negative impact on the economy and business activity globally, and thereby can be expected to adversely affect the performance of the Funds’ investments. Artificial Intelligence and Automation. The SEC has indicated that the use of artificial intelligence (“AI”) programs, bots and applications, as well as AI Models (“AI Model(s)”) could have implications under securities laws including, but not limited to, the Advisers Act and the Securities Act, and the new Marketing Rule. These technological developments, present compliance considerations as to, inter alia, measures that are necessary to mitigate risk that must be carefully managed to ensure that the Adviser remains in compliance with applicable regulations and laws. Such risks include, but are not necessarily limited to, intellectual property protections, sufficiency of data security protections offered by an AI platform, confidentiality obligations, and privacy protections. Blue Torch does not use AI for any investment decisions. Blue Torch generally uses an in-house developed AI to assist with operational considerations in supporting investment team efforts but does not rely on AI for any loan administration or investment authorization by the Investment Adviser. CFIUS Risk. Certain investments are expected to be subject to the U.S. Committee on Foreign Investment in the United States (“CFIUS”). This is inclusive of where CFIUS-related laws and regulations deem non-U.S. persons under their control to be acquiring a U.S. business. In certain circumstances, CFIUS considerations have the potential to prevent a Client from maintaining or pursuing investments and could limit the universe of available buyers for an existing investment. Blue Torch seeks to comply with CFIUS considerations.

Corruption Risk. Corruption can result in significant economic losses due to fraud, theft and waste. Corruption has an impact on critical public institutions (courts, law enforcement, and public pension administration). All of which could undermine property rights, public confidence, and social stability. The U.S. Department of Justice and the SEC have devoted greater resources within recent years to enforcement of the U.S. Foreign Corrupt Practices Act (“FCPA”). While Blue Torch has developed and implemented policies and procedures designed to ensure compliance by us, our personnel and our Clients with the FCPA and UK Bribery Act, there is a chance that such policies and procedures could not be effective in all instances to prevent violations.

Blue Torch Finance receives agent fees for serving as administrative agent and collateral agent on certain investments where it acts in these capacities. Fees are first used to pay third party expenses relating to such services of the respective investment. Any remaining fee balance is allocated pro-rata among all Funds or Clients participating in the investment. Blue Torch Finance retains the pro-rata amount of such fees allocated to any a) non-affiliates of the Firm, and b) offshore clients or accounts which are not permitted to receive such fees due to tax reasons. Blue Torch employees can serve on the Board of Directors of companies Blue Torch has a business relationship with by virtue of its investment related activities. The Firm has policies and procedures in place to ensure that these relationships do not create material conflicts of interest. Each of Blue Torch and the general partners of the Private Funds are exempt from registration as a commodity pool operator and commodity trading adviser with the Commodity Futures Trading Commission (“CFTC”). Blue Torch and the general partners have claimed an exemption in respect of each Private Fund, as applicable, from registration as a commodity pool operator under applicable requirements of the CFTC.

Employees can transact in certain types of securities (generally, governmental securities, money market instruments, money market funds, open-end mutual funds, and unit investment trusts). In addition, employees can transact in exchangetraded funds replicating broad based indices. All Employees will be required to report their holdings on an annual basis and all transactions quarterly, which are then reviewed. Additionally, all Employees are directed to maintain business-related electronic communications via communications systems archived in compliance with Rule 204-2(a)(7). Employees are prohibited from using unauthorized channels for business related communications. A copy of the Firm’s Code of Ethics is available upon request. Personal Trading. Blue Torch employees are required to disclose all transactions for reportable securities. Any security types that require preclearance (i.e., stocks, bonds, broad-based ETFs, etc.) require a Compliance review prior to processing the trade. Personal holdings are required to be certified on an annual basis and all transactions are required to be certified on a quarterly basis. Outside Business Activities. Blue Torch employees have a responsibility to act in the best interest of Blue Torch Clients. As such, Blue Torch employees are not permitted to participate in outside activities without approval from Compliance. This approval grants Compliance the opportunity to assess the activity for any potential conflicts or risks to the Firm and to Clients. Political Contributions. Blue Torch and its employees are subject to the SEC’s Pay-to-Play Rule and its limitations on contributions to government officials. The Pay-to-Play Rule defines “contributions” broadly to include gifts, loans, the payment of debts, and the provision of any other item of value. As such, Blue Torch employees are required to receive pre-approval from Compliance prior to any contribution to any government official. Employee Relationship Conflicts of Interest. Conflicts of Interest can exist between various individuals and entities, including Blue Torch, its employees, and current or prospective Clients or Investors. Blue Torch’s employees are required to disclose all existing and potential conflicts of interest upon recognition of the applicable conflict. On a quarterly basis, employees are required to attest that there have not been any newly discovered Conflicts of Interest from the previous quarter. Compliance Certifications. Compliance requires employees to complete certain certifications on a routine basis. Upon hire, employees are required to complete certifications relating to personal trading holdings, managed accounts, conflicts of interest, and an annual set of questionnaires. These certifications are required to be completed annually. Additionally, a quarterly certification is required to

be completed on topics such as personal trading transactions, gifts and entertainment, and outside business activities. Investment Allocation and Aggregation Blue Torch and/or its affiliates can from time to time act as investment manager in relation to, or be otherwise involved with, other Clients, including other investment funds and client accounts, including those (such as open-end funds and single investor funds) that follow an investment program substantially similar to that of Clients. The investment objectives and programs of certain Clients could be similar to, or overlap with, the investment objectives and proposed investment programs of other Clients and, therefore, certain affiliates regularly compete for investment opportunities with each other (and potentially with Blue Torch). As a result, the allocation of investment opportunities gives rise to potential and actual conflicts of interest. In making allocation decisions with respect to limited investment opportunities that could reasonably be expected to fit the investment objectives of Clients or of Blue Torch itself, Blue Torch anticipates that it could consider one or more of the following factors that it deems relevant: the investment objectives of Clients; appropriateness of timing relative to initiating Client participation in an available investment opportunity, the source of the investment opportunity; any exclusive rights to investment opportunities that could have been granted to particular clients; the expected duration of the investment in light of Clients’ investment objectives and policies (including diversification policies); the amount of available capital; available financing of the clients; proximity of a Client to the end of its investment period and/or term; the size of the investment opportunity; regulatory and tax considerations; the degree of risk arising from an investment; the expected investment return relative to the client’s target return; relative liquidity needs of the clients; likelihood of current income; and such other factors as Blue Torch deems to be appropriate. These factors provide substantial discretion to Blue Torch in allocating investment opportunities. Further, two or more Clients can hold an investment for which there is extremely limited, or no, liquidity or that is subject to legal or other restrictions on transfer. In a situation where Blue Torch is limited in its ability to dispose of an investment, Blue Torch would consider the factors described above in allocating the sale of such an investment. If an investment opportunity is available in limited quantities, and subject to investment restrictions and fiduciary duties, Blue Torch can be viewed as having an incentive to allocate such investment opportunity to Blue Torch or its employees or to one particular Client rather than another Client. For example, such an incentive can arise if the economic interests of Blue Torch and its employees in certain of these Clients, when combined with their rights to Management Fees and/or Carried Interest or other fees, are significantly larger than their direct and indirect economic interests in other Clients. Such an instance can lead to fewer, and less attractive, investment opportunities being made available to Clients than would have been the case had Blue Torch and its employees been restricted from pursuing proprietary investments and/or investment programs on behalf of other Clients. In an attempt to resolve those conflicts in the context of allocating credit opportunities, Blue Torch has developed a set of allocation procedures which will take into account many of the above enumerated factors, as well as other considerations, in determining how investment opportunities will be allocated among various Blue Torch proprietary accounts, managed accounts and other affiliated and unaffiliated persons to whom such opportunities might be offered or with whom such opportunities could participate in the future.

All transactions among Blue Torch Clients on the one hand and other affiliates of Blue Torch on the other hand will be approved in a manner designed to comply with Section 206(3) of the Advisers Act. Where Clients, Blue Torch itself, or its employees hold the same investment, the differing investment objectives of such Clients, as well as other factors applicable to the specific situation, can result in a determination to dispose of, or retain, all or a portion of such investment on behalf of Clients (or on behalf of another Client, Blue Torch itself or its employees) at different times for different Clients. In addition, particularly with respect to illiquid or private investments, conflicts of interest can arise when disposing of a particular investment which would be beneficial for one Client while retaining such investment would be beneficial for another Client. Blue Torch could also invest in securities on behalf of one Client (or Blue Torch itself or its employees can purchase such securities) that could differ from investments made on behalf of another Client, even though the investment objectives of the Clients can be similar. Moreover, Clients, Blue Torch or Blue Torch’s employees could make investments or engage in other activities that express inconsistent views with respect to an investment, a particular security or relevant market conditions. In addition, Blue Torch expects to make other business decisions on behalf of certain Clients relating to investments independently of the manner in which it approaches a similar or even the same investment held by other Clients. Consequently, Blue Torch, on behalf of certain Clients, could choose not to hedge certain risks that other Clients hedge, or certain Clients can be exposed to risks of financing on an investment when other Clients are not. Further, in some instances, Blue Torch can choose to coordinate its Clients’ activities (such as timing dispositions in an orderly way in order to avoid affecting the value of an investment in an unduly volatile manner) with respect to investments held by more than one Client when it would theoretically be possible for Blue Torch to act unilaterally with respect to a particular Client’s holdings in such investment. Such coordination could have the effect of lowering returns for a particular Client with respect to an investment relative to what might have been achieved absent such coordination. If Clients invest in entities or assets in which other Clients hold an investment, the investment by such Clients could be viewed, especially in hindsight, to have been made on a non-arm’s-length basis and could have an effect (either positive or negative) on the market price of the initial investment. Clients, or Blue Torch itself, can hold interests in an entity that are of a different class or type than the class or type of interest held by another Client. For example, Clients could hold securities in an entity where another Client could hold equity or debt of such entity that are senior or junior which could mean that Clients will be entitled to different payment or other rights, or that in a workout or other distressed scenario the interests of certain Clients might be adverse to those of other Client(s) and certain Client(s) might recover all or part of their investment while others might not. Blue Torch Clients will not be required to take any action or refrain from taking any action to mitigate another Client’s losses in such a scenario, and Blue Torch will make decisions on how to resolve such situations in its sole discretion. Blue Torch will not enter into transactions in which it knowingly and deliberately favors itself or one Client over another; however, Blue Torch is given considerable discretion to make investments for other accounts and intends to do so to a significant extent.

Valuation Blue Torch will value investments in accordance with its valuation policies and procedures then in effect. The vast majority of each Client’s investments will be illiquid. Blue Torch will write up or write down the valuation of its investments if it determines, in accordance with its valuation procedures, that the realizable value of such investments differs from their current valuation. Such valuations include the use of independent valuations, in particular in the context of the sale of loans to affiliated Blue Torch funds and accounts. The fair value of such investments will be estimated, with such valuation referencing a variety of factors, including proprietary or industry-available valuation models, the borrower’s financial strength and stability and any specific rights or restrictions associated with such investment. The valuation policies and procedures of Blue Torch can be updated from time to time. Absent bad faith or manifest error, the valuation determinations made by Blue Torch (or its designee) will be binding on all Clients. Principal and Cross Transactions Blue Torch does not act as principal, either buying securities for itself or its affiliates from Clients or selling securities it or its affiliates own to Clients. However, if Blue Torch were to decide to engage in any such “principal transaction” in the future, it will comply with the requirements of Section 206(3) of the Advisers Act: (i) disclosing to the client in writing the material terms of the transaction; and (ii) obtaining the written consent of the Client for such transaction. Blue Torch will include in such disclosure: (1) its capacity as principal; (2) the cost to Blue Torch of the security, in the case of a sale to a Client, or the price of the security in a resale, in the case of a purchase from a Client; and (3) the best price at which the transaction could be effected by or for the client elsewhere if such price is more advantageous to the Client than the purchase or sale with Blue Torch. Blue Torch does not anticipate engaging in such transactions when Blue Torch could make a trading profit. Blue Torch can cause its Clients to engage in trades (“cross trades”) with one or more other Client accounts if it is determined that the transaction is in the interests of both Client accounts (and consistent with the investment program, risk management and other relevant considerations) and conducted on a fair and equitable basis. Cross trading can reduce the transaction costs for both the buying and selling accounts and could allow for other beneficial efficiencies to Clients. However, cross trading presents a potential conflict of interest and could be appropriate only if Blue Torch meets its fiduciary obligations to Clients on both sides of the transaction and where best execution requirements are met. Blue Torch would not charge any fees to effect a cross trade. Expenses incurred in a cross trade are allocated equitably between the transferee and the transferor by Blue Torch. Blue Torch can, but is not obligated to, obtain an independent review of the fairness of the transaction to both funds if the investment is private or obtain an independent price (i.e., a pricing service or broker quote) if the investment is public. Originated Loans From time to time, a Client can offer to another Blue Torch Client and other Blue Torch affiliates, participations in and/or assignments or sales of loans (or interests therein) that the Client has originated or purchased. In the event of such an offer to another Blue Torch Client, the price of the participation, assignment or sale will be established based on third-party valuations. Further, the decision by another Blue Torch Client to accept or reject the offer will be made by a party independent of Blue Torch, such as an independent third-party valuation firm or the independent directors or independent representative of such Blue Torch Client. In determining the target amount to allocate to a particular loan origination, the Client will take into consideration the fact that it anticipates selling, assigning or offering participations in such investment to third parties as described above. If the Client is not successful in

offering such participations, assignments or sales, the Client will be forced to hold such excess until such time as it can be disposed. This could result in the Client being “overweighted” with respect to a particular borrower. Co-investments Certain investments can generate the opportunity for certain persons or entities to co-invest in such investments alongside Clients. Blue Torch could make these opportunities available to certain current investors; however, it could also choose to offer some or all of any available co-investment opportunity to one or more other investors that Blue Torch deems, in its sole discretion, to be strategic to the investment or a particular Client. Such decisions will be made based on Blue Torch’s co-investment policy, which can change over time. As a result, current investors should not expect to be offered coinvestment opportunities. To the extent any co-investment opportunity is in fact offered to co-investors, such co-investors participating can be required to pay amounts to Blue Torch or its affiliates, including management fees, administration fees and other fees, carried interest or other incentive compensation, and operating expenses and other expense reimbursements associated with any co-investment vehicle through which they invest. Blue Torch and its affiliates could elect to reduce or waive any or all such fees, carried interest and other amounts for the benefit of one or more co-investors without offering such reduction or waiver to the other co-investors. A co-investor will not receive the benefit of any transaction fees received by Blue Torch or its affiliates in connection with a co-investment unless such co-investor is also paying management fees to Blue Torch or its affiliates in respect of such co-investment. In addition, a co-investor will not receive a share of any topping, break up or broken deal fees received in connection with an unconsummated co-investment unless such co-investor has agreed to pay its share of broken deal expenses associated with such unconsummated co-investment. In general, Clients will bear 100% of all out of pocket expenses (including, without limitation, legal and accounting costs and travel expenses) associated with any investment that is unconsummated, including any portion thereof that could or would have been allocated to potential co-investors had such investment been consummated. Blue Torch believes this approach to broken deal expenses is reasonable from the Clients’ perspective for the following reasons: (i) the amount of broken deal expenses associated with an investment is expected to be the same, or substantially similar, regardless of whether co-investors participate in such investment; (ii) in most cases, it is impracticable to charge broken deal expenses to co-investors since such expenses are often incurred prior to the date on which a co-investor is contractually committed to participate in such investment; and (iii) the participation of co-investors can often provide material benefits to Clients, including facilitating Blue Torch’s efforts to diversify Clients’ portfolio of investments and allowing Clients to participate in larger, and potentially attractive, investments with co-investors whose interests are more likely to be aligned with the interests of Clients than third party co-investors not selected by Blue Torch. Restrictions of Fund Trading Activities—Material Non-Public Information Employees of Blue Torch regularly acquire confidential information and Blue Torch can enter into confidentiality and/or “standstill agreements” when assessing investment opportunities. By reason of its various activities, Blue Torch and its employees could have access to material non-public information (“MNPI”) about an issuer. For example, an employee of Blue Torch can serve from time to time as a director, or in a similar capacity, or as an executive officer, with respect to, the securities of which could

be purchased or sold on behalf of Clients, which service can prohibit all Clients from engaging in transactions in certain issuers. Additionally, employees of Blue Torch can acquire MNPI in the ordinary course of their investment activities, which acquisition could result in restrictions on a Client’s ability to sell a portfolio investment at a time when it might otherwise have done so. Any of these activities could prevent a Client from buying or selling securities or other interests in an issuer, potentially for an extended period. Affiliated Loan Origination Vehicle Certain affiliates of Blue Torch engage in loan origination. Such parties will receive loan origination fees in connection with such activity. Certain members of the management team involved in managing Clients and selecting investments could also be entitled, under certain circumstances, to share in such origination fees. Investments in Managed Accounts and Affiliated Funds In order to take advantage of diversification and new investment strategies and concepts, the Firm, from time to time, can place a portion of a Client’s investable assets in accounts managed by or comanaged with other investment advisors, in which case the Client could be subject to its proportionate share of costs and expenses. The Firm can place a portion of a Client’s investable assets in other Blue Torch affiliated investment funds or accounts managed by it or by an affiliate, in which case the Client will also bear its proportionate share of costs and expenses. The amounts that could be invested into other managed accounts or in Blue Torch affiliated investment funds are not expected to be significant.

Investors in Private Funds can include entities affiliated with brokers or, possibly, brokerage firms themselves. The fact that any such investor has invested in a Private Fund managed by Blue Torch will not be taken into consideration in selecting brokers (including prime brokers).

Blue Torch does not take custody over Client accounts. However, a related person serves as the general partner or managing member of a Private Fund and because of this Blue Torch is deemed to have custody of the assets of the Private Funds because of the authority of such related person. Therefore, in accordance with the Custody Rule, the Firm will ensure that all Private Funds are audited at least annually by an independent public accountant in accordance with generally accepted accounting principles. The audited financial statements will be distributed to all investors within 120 days of its fiscal year-end.

A copy of the proxy voting policies and the proxy voting record relating to a Client can be obtained by contacting Blue Torch.