BRIDGING CREDIT FUND LP

Transcription

1 This offering memorandum (the offering memorandum ) constitutes an offering of these securities only in the provinces and territories of Canada and therein only by persons permitted to sell such securities and to those persons to whom they may be lawfully offered for sale. These securities do not trade on any exchange or market. The issuer is not a reporting issuer or SEDAR filer. No securities regulatory authority has assessed the merits of these securities or reviewed this offering memorandum. Any representation to the contrary is an offence. See Risk Factors. This offering memorandum is not, and under no circumstances is it to be construed as, a prospectus or advertisement or a public offering of these securities. No person is authorized to give any information or make any representation not contained in this offering memorandum in connection with the offering of these securities and, if given or made, any such information or representation may not be relied upon. OFFERING MEMORANDUM Private Placement Continuous Offering October 7, 2013 BRIDGING CREDIT FUND LP 77 King Street West, Suite 2925, P.O. Box 322, Toronto, Ontario, M5K 1K7 [email protected] Minimum Purchase: $100,000 Subscription Price: $100 Per Unit Initial Target Minimum Yield: 6.5% Per Annum 1 The Partnership: Bridging Credit Fund LP ( Bridging LP or the Partnership ), a limited partnership established under the laws of the Province of Ontario, proposes to issue transferable limited partnership units in three classes: Class A, Class F and Class I each issuable in series (together, the Units ). Units will be offered on a continuous basis at a subscription price of $100 per Unit on each Valuation Date (as defined herein). See The Partnership and Details of the Offering. Investment Objective: The Partnership s investment objective is to achieve superior risk-adjusted returns with minimal volatility and low correlation to most traditional asset classes. Investment Strategy: To achieve its investment objective, the Partnership intends to invest in an actively managed portfolio (the Portfolio ) comprised of (i) asset-based loans primarily to Canadian and U.S. based companies that have good quality collateral ( Asset-Based Investments ) and (ii) factored accounts receivable and inventory financing primarily to Canadian and U.S. based companies and financing of Canadian federal and provincial tax credits ( Factoring Investments ). The Portfolio will include only Asset-Based Investments that are fully collateralized based on liquidation values and/or potential cash flow events. The Portfolio strategy involves a fundamental analysis that identifies companies with strong management teams that are overlooked by the general financing community and targets diversification through asset type, investment size and industry. For Asset-Based Investments, the Portfolio strategy emphasizes liquidation values over reliance on future cash flows. Factoring Investments will be well diversified by industry, sector and size according to underwriting standards determined by Bridging Finance Inc. (the Manager ) on behalf of the Partnership. Each investment follows a rigorous documentation process that is managed by the independent credit function of the Manager. The Partnership may also make incidental investments in assets such as promissory notes, convertible debentures, warrants and other equity sweeteners issued in connection with the primary investments. Management of the Partnership: Bridging GP Inc. (the General Partner ) is the general partner of the Partnership and has coordinated the organization and registration of the Partnership and established the Investment Guidelines (defined herein) of the Partnership. The Partnership has retained the Manager to provide portfolio management, administrative and other services to the Partnership. The Manager will assist with the identification of prospective Canadian and U.S. companies and the 1 The initial Target Minimum Yield is applicable for the remainder of the 2013 fiscal year and the Target Minimum Yield may fluctuate from year to year, based on changes to the Prime Rate, as described under Fees and Expenses Payable by the Partnership Performance Fee and Fees and Expenses Payable by the Partnership Floating Target Minimum Yield.

2 negotiation of the terms of Asset-Based Investments and Factoring Investments and will monitor the Portfolio to ensure compliance with the Investment Guidelines. See The General Partner and the Manager. There is no market through which the Units may be sold and none is expected to develop. You will be restricted from selling your securities for an indefinite period. See Resale Restrictions. THESE SECURITIES ARE SPECULATIVE IN NATURE. The purchase of Units involves significant risks. There is no assurance of a return on a Subscriber s initial investment. There is no market through which the Units may be sold and purchasers may not be able to resell Units purchased by way of private placement pursuant to this Offering (defined herein). No market for the Units is expected to develop. An investment is appropriate only for investors who have the capacity to absorb a loss of some or all of their investment. Investors who are not willing to rely on the discretion of the General Partner, which has limited operating history and is expected only to have nominal assets, should not purchase Units. There is no guarantee that an investment in the Partnership will earn a specified rate of return or any return in the short or long term. The amount of quarterly distributions may fluctuate from quarter to quarter and there can be no assurance that the Partnership will pay any distributions in any particular quarter or quarters, and if they do occur there can be no assurance that such distributions will be sufficient to satisfy a Limited Partner s tax liability for the year arising from his or her status as a Limited Partner of the Partnership. If the Partnership s annual return is less than the amount necessary to fund the quarterly distributions, the Partnership may not pay the targeted distributions despite the Target Minimum Yield (defined herein) risk protection as described herein. Limited partners of the Partnership ( Limited Partners ) must rely on the discretion of the Manager for the management of the Portfolio. There can be no assurance that the Manager, on behalf of the Partnership, will be able to identify a sufficient number of investments to permit the Partnership to commit its Available Funds (defined herein). The business activities of Canadian and U.S. companies may be adversely affected by factors outside the control of those companies. Other risk factors associated with an investment in the Partnership include: Limited Partners could lose their limited liability in certain circumstances; and the General Partner has only nominal assets. Investors should consult their own professional advisors to assess the income tax, legal and other aspects of the investment. See Risk Factors. You have two business days to cancel your agreement to purchase these securities. If there is a misrepresentation in this offering memorandum, you have the right either to sue for damages or to cancel the agreement. See Right of Action for Damages or Rescission. The General Partner or its agent will have the right, in its sole and absolute discretion, to reject any offer to purchase, in whole or in part, for any reason and the right is reserved to close the offering books at any time without notice. The First Closing (defined herein) for the Partnership is expected to take place on or about September 30, Following the First Closing, additional Subscriptions (defined herein) will be accepted effective on the last Business Day (defined herein) of each calendar month and on such other dates as the Manager may in its sole discretion prescribe. Completed and executed Subscription Agreements and Power of Attorney Forms (defined herein), including all applicable account opening documentation, must be received not less than three (3) Business Days prior to the applicable Closing Date or such later date as the Manager determines. The Manager or other agents as appointed by the General Partner and FundSERV, as applicable, will hold subscription cheques and proceeds received from Subscribers prior to the First Closing until all closing conditions of the Offering have been satisfied, at which time the First Closing will take place. If any Closing, including the First Closing, does not occur, subscription cheques and proceeds relating to such Closing will be returned, without interest or deduction, to the investors. Subject to applicable securities legislation, distributions will be automatically reinvested in additional Units of the same Class of Units at the Net Asset Value of such Class of Units on the date of distribution, unless a Limited Partner elects, by written notice to the Manager, to receive such distributions in cash. The Partnership intends to make quarterly distributions on the Class A Units, the Class F Units and the Class I Units out of net income, net realized capital gains and, in certain cases, capital of the Partnership. See Distribution Policy. Units may be redeemed by Limited Partners at their Net Asset Value per Unit (as defined herein) on the last Business Day (as defined herein) of June or December of each year, provided that the request for redemption is submitted at least 120 days prior to such date. Units held for less than twelve months may be surrendered for redemption upon the same terms, subject to an early redemption penalty equal to 2% of the aggregate Net Asset Value per Unit of the Units being surrendered. The redemption penalty is payable to the Partnership. See Redemption of Units.

3 TABLE OF CONTENTS FORWARD LOOKING STATEMENTS... 1 ELIGIBILITY FOR INVESTMENT... 1 HOW TO PURCHASE UNITS... 1 GLOSSARY... 2 OFFERING SUMMARY... 5 USE OF PROCEEDS FOR THE OFFERING... 9 THE PARTNERSHIP... 9 FEES AND EXPENSES PAYABLE BY THE PARTNERSHIP THE GENERAL PARTNER AND THE MANAGER THE INVESTMENT SELECTION PROCESS CERTAIN INCOME TAX CONSIDERATIONS DETAILS OF THE OFFERING VALUATION OF INVESTMENTS DISTRIBUTION POLICY REDEMPTION OF UNITS SUMMARY OF THE PARTNERSHIP AGREEMENT RISK FACTORS CONFLICTS OF INTEREST PROMOTER EXPERTS ADMINISTRATOR ENGLISH LANGUAGE RESALE RESTRICTIONS RIGHTS OF ACTION FOR DAMAGES OR RESCISSION ALBERTA CERTIFICATE... 41

4 FORWARD LOOKING STATEMENTS Certain statements included in this offering memorandum constitute forward looking statements, including those identified by the expressions anticipate ; believe ; plan ; estimate ; expect ; may ; will ; intend ; and similar expressions to the extent they relate to the Partnership, the General Partner or the Manager. These forward looking statements are not historical facts but reflect the Partnership s, the General Partner s and/or the Manager s current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. These risks and uncertainties include, but are not limited to, changes in the global economy, general economic and business conditions, existing governmental regulations, supply and demand and other market factors, including those set out under Risk Factors. In light of the many risks and uncertainties surrounding the financing sector, the forwardlooking statements contained in this offering memorandum may not be realized. See Risk Factors. The forwardlooking statements contained herein are expressly qualified in their entirety by this cautionary statement. Forwardlooking statements are made as of the date hereof, or such other date specified in such statements, and none of the General Partner, on its own behalf and on behalf of the Partnership, the Manager or any other person assumes any obligation to update or revise such forward-looking statements to reflect new information, events or circumstances, except as required by law. ELIGIBILITY FOR INVESTMENT The Units do not constitute qualified investments for trusts governed by registered retirement savings plans, registered retirement income funds, deferred profit sharing plans, registered education savings plans, tax-free savings accounts or registered disability savings plans for purposes of the Tax Act. HOW TO PURCHASE UNITS The Units are being offered for sale on a private placement basis in reliance on the accredited investor and minimum amount investment exemptions from the prospectus requirements of applicable Canadian securities laws. As a result, resale of the Units will be restricted in the manner provided by applicable securities laws. See Resale Restrictions. The Manager has made arrangements to offer the Units through the investment fund order system FundSERV. Class A Units are available to all qualified investors. Class F Units are available only to (i) qualified investors who participate in fee-based programs through their registered dealer and whose registered dealer has signed a Class F agreement with the Manager, (ii) investors for whom the Manager does not incur distribution costs and (iii) other investors approved by the Manager in its sole discretion. A registered dealer s participation in the Class F program is subject to terms and conditions set by the Manager. Class F Units have no load. Instead of paying sales charges, investors pay an annual fee to their registered dealers for ongoing financial planning advice and other services. See Details of the Offering How to Purchase Units. Class I Units are available only to institutional investors approved by the Manager in its sole discretion. The minimum subscription by an investor is $100,000 for accredited investors (or such lesser amount, as determined by the General Partner in its sole discretion) and $150,000 for investors purchasing under the minimum amount investment exemption. Following the required initial minimum investment in the Partnership, Limited Partners may make additional investments in the Partnership of not less than $25,000 provided that, at the time of the subscription for additional Units, the Limited Partner is an accredited investor. Limited Partners who are not accredited investors, but previously invested in, and continue to hold Units having an aggregate initial acquisition cost or current Net Asset Value equal to $150,000, will also be permitted to make subsequent investments in the Partnership of not less than $25,000. See Details of the Offering. To acquire Units in the Partnership, an investor must deliver not less than three (3) Business Days prior to the Closing a duly completed and signed Subscription Agreement and Power of Attorney Form (defined herein), together with a cheque in the amount of the purchase price payable to Bridging Credit Fund LP. For Units purchased from a qualified dealer on the FundSERV network, an investor must deliver, not less than three (3) Business Days prior to the Closing, a duly completed and signed Subscription Agreement and Power of Attorney Form, together with payment by electronic or manual settlement. No certificates for Units will be issued to investors. Investors who purchase Units will receive only a customer confirmation from the registered dealer from or through whom the Units are purchased. 1

5 GLOSSARY When used in this offering memorandum (the offering memorandum ), the following terms have the following meanings ascribed thereto: Administrator means Commonwealth Fund Services Ltd., in its capacity as administrator of the Partnership, or its successor. Administration Agreement means the valuation and recordkeeping services agreement dated August 13, 2013, pursuant to which the Administrator was retained. affiliate means an affiliated entity within the meaning of Ontario Securities Commission Rule Asset-Based Investments means asset-based loans primarily to Canadian and U.S. based companies that have good quality collateral. Auditor means Ernst & Young LLP, Chartered Accountants, of Ernst & Young Tower, 222 Bay Street, P.O. Box 251, Toronto, Ontario, M5K 1J7. Available Funds means all funds available from the sale of Units of the Partnership. Business Day means any day except Saturday, Sunday or a statutory holiday in Toronto, Ontario or any other day on which the TSX is not open for trading. Capital Contribution means, with respect to each Limited Partner, as of a specified date, the aggregate amount of cash received by the Partnership from such Limited Partner pursuant to its Commitment up to and including such specified date. Class means a class of limited partnership units established by the Partnership Agreement, issuable in series. Class A Units means Class A limited partnership units of the Partnership. Class F Units means Class F limited partnership units of the Partnership. Class I Units means Class I limited partnership units of the Partnership. Closing means any closing of the sale of Units of the Partnership to investors pursuant to the Offering and includes the First Closing. Closing Date means the date a Closing takes place. Commitment means, with respect to each Limited Partner, the aggregate amount of cash agreed to be contributed as capital to the Partnership by such Limited Partner, to be calculated as the Subscription Price for the purchase of Class A Units, Class F Units or Class I Units, as applicable, as specified in the subscription agreement(s) between such Limited Partner and the General Partner. CRA means the Canada Revenue Agency. Determination Date has the meaning given to such term under Fees and Expenses Payable by the Partnership Performance Fee. Extraordinary Resolution means a resolution passed by 66 2 / 3% or more of the votes cast at a duly constituted meeting of the Limited Partners called for the purpose of considering such resolution, at which a quorum (as described in Section 15.7 of the Partnership Agreement) is present or, alternatively, a written resolution signed in one or more counterparts by (i) Limited Partners holding 66 2 / 3% of the Net Asset Value of the Partnership attributable to the Class A Units; (ii) Limited Partners holding 66 2 / 3% of the Net Asset Value of the Partnership attributable to the Class F Units; and (iii) Limited Partners holding 66 2 / 3% of the Net Asset Value of the Partnership attributable to the Class I Units. 2

6 Factoring Investments means factored accounts receivable and inventory financing primarily to Canadian and U.S. based companies and Canadian federal and provincial tax credit financing investments. First Closing means the first closing of the sale of Units of the Partnership to an investor pursuant to the Offering. General Partner means Bridging GP Inc., a wholly-owned subsidiary of the Manager, and its successors as provided in the Partnership Agreement. Hurdle Rate means the Target Minimum Yield plus 2% per annum, subject to a maximum of 10% per annum, determined on the first Business Day of each fiscal year and applicable for the entire fiscal year. Investment Guidelines means the investment policies and restrictions set forth in the Partnership Agreement as described herein. Limited Partners means holders of Units of the Partnership whose names and other prescribed information appear on the record of limited partners maintained by the Partnership pursuant to the Limited Partnerships Act (Ontario). Management Agreement means the management agreement dated October 7, 2013 among the Partnership, the General Partner and the Manager, as amended from time to time. Management Fee means the management fee, plus applicable taxes, payable by the Partnership to the Manager pursuant to the Management Agreement. Manager means BridgingFinance Inc. or its successors or such other affiliated entity as is acceptable to the Partnership. Master Series has the meaning given to such term under Summary of the Partnership Agreement Units. Net Asset Value and Net Asset Value per Unit have the meanings given to those terms under the heading Valuation of Investments Valuation Principles. NI means National Instrument Investment Fund Continuous Disclosure. Offering means the private placement of Units of the Partnership pursuant to this offering memorandum and the Partnership Agreement and the applicable Subscription Agreement and Power of Attorney Forms. Offering Expenses means expenses related to the Offering and each Closing, including the costs of creating and organizing the Partnership, the costs of printing and preparing this offering memorandum, legal and audit and accounting expenses of the Partnership, FundSERV setup costs, travel, distribution, courier, sales and marketing expenses and legal and other reasonable expenses incurred by the General Partner and Manager and other incidental expenses. Partnership means Bridging Credit Fund LP, a limited partnership formed under the law of the Provinces of Ontario. Partnership Agreement means the second amended and restated limited partnership agreement of Bridging Credit Fund LP dated October 7, 2013 between the General Partner, Natasha Sharpe, and Canada Inc. as initial limited partners, and each person who becomes a Limited Partner thereafter, as amended from time to time. Performance Fee means the performance fee, plus applicable taxes, payable by the Partnership to the Manager pursuant to the Management Agreement. Portfolio means an actively managed portfolio comprised of Asset-Based Investments and Factoring Investments. Prime Rate means the annual rate of interest equivalent to the prime business rate as set by the Bank of Canada from time to time, as published on the Bank of Canada website at Prior High NAV has the meaning given to such term under Fees and Expenses Payable by the Partnership Performance Fee. 3

7 Short-Term Securities means: (i) obligations issued or guaranteed by the Government of Canada or any province of Canada or any agency or instrumentality thereof with less than 12 months to maturity; (ii) term deposits, guaranteed investment certificates or banker s acceptances of or guaranteed by any Canadian chartered bank or any other financial institution, the short-term debt or deposits of which have been rated at least investment grade by Standard & Poor s rating service, a division of the McGraw Hill Companies, Inc., Moody s Investors Services, Inc. or DBRS Limited, or a money market mutual fund with similar constraints; and (iii) commercial paper rated at least investment grade by Standard & Poor s rating service, a division of the McGraw Hill Companies, Inc., Moody s Investors Services, Inc. or DBRS Limited, in each case maturing within 365 days after the date of acquisition, or for which the Manager believes that there will be a liquid market for the resale thereof within such 365 day period. Subscriber means a person or other entity that subscribes for Units under the Offering. Subscription Agreement and Power of Attorney Form means the subscription agreement and power of attorney form between each investor and the Partnership in the form provided by the Partnership in connection with this Offering. Subscription Price means the amount paid to the Partnership for the issue of a Unit of the Partnership. Target Minimum Yield means the Prime Rate plus 3.5% per annum, subject to a maximum of 8% per annum, determined on the first Business Day of each fiscal year and applicable for the entire fiscal year. Tax Act means the Income Tax Act (Canada), as amended from time to time, and includes the regulations thereunder. Total Return per Unit has the meaning given to such term under Fees and Expenses Payable by the Partnership Performance Fee. TSX means Toronto Stock Exchange. Units means Class A Units, Class F Units and Class I Units. Valuation Date means the last Business Day of each month and any other such day or days as determined by the Manager from time to time. 4

8 OFFERING SUMMARY The information set forth below should be read together with and is qualified by the more detailed information contained elsewhere in this offering memorandum (the offering memorandum ) and the information contained in the Partnership Agreement and the Subscription Agreement and Power of Attorney Forms. Certain capitalized terms used but not defined in this summary and in the body of this offering memorandum are defined under Glossary. Issuer: Securities Offered: Bridging Credit Fund LP ( Bridging LP or the Partnership ) Class A Limited Partnership Units Class F Limited Partnership Units Class I Limited Partnership Units Units of a Class will be issued in series, with a new series of a Class issued on each date that new Units are issued. The first series of each Class issued at the First Closing (or at subsequent Closing if no Units of a particular Class are issued at the First Closing) shall be designated by the Manager as the master series in respect of the applicable class (the Master Series ). At the end of each fiscal year of the Partnership, each series of Units of a Class may be re-designated and converted into the Master Series or a new series (after payment of any Management Fees and Performance Fees for that fiscal year of the Partnership). Such conversion will be effected at the relative Net Asset Value per Unit of the series of such Class being converted; provided, however, that no re-designation and conversion shall occur with respect to a series of a Class unless the Net Asset Value per Unit of that series of that Class at the end of such fiscal year is higher than the Prior High NAV and a Performance Fee is payable in respect of that series of such Class at the end of such fiscal year. FundSERV: Price Per Unit: Investor Eligibility: Minimum Initial Subscription: Payment Terms: The Manager has made arrangements to offer the Units through the investment fund order system, FundSERV. Units will be offered at a subscription price of $100 per Unit on each Valuation Date. To subscribe, the investor must qualify as an accredited investor as defined by the provincial securities regulatory authority in the province or territories in which the investor resides or must meet the minimum amount investment exemption from prospectus requirements of applicable Canadian securities laws. Each Subscriber is also required to provide a fully executed Subscription Agreement and Power of Attorney Form, which must be delivered in original form to the Manager. See Details of Offering. The minimum subscription by an investor is $100,000 for accredited investors (or such lesser amount, as determined by the General Partner in its sole discretion) and $150,000 for investors purchasing under the minimum amount investment exemption. Payable on or before Closing. Year End: December 31 General Partner: Manager: Administrator: Bridging GP Inc. (the General Partner ) has coordinated the organization and registration of the Partnership and has established the Investment Guidelines of the Partnership. The Partnership has retained Bridging Finance Inc. (the Manager ) to provide portfolio management, administrative and other services to the Partnership. The Manager will assist with the identification of prospective Canadian and U.S. companies and the negotiation of the terms of Asset-Based Investments and Factoring Investments and will monitor the Portfolio to ensure compliance with the Investment Guidelines. Commonwealth Fund Services Ltd. will act as the administrator of the Partnership. The Administrator is unrelated to the Manager. 5

9 Auditors: Investment Objective: Investment Strategy: Investment Guidelines and Restrictions: Use of Proceeds of the Offering: Distributions: Cash Distributions: Redemptions: The auditor of the Partnership is Ernst & Young LLP, Chartered Accountants. The auditor will provide its services to the Partnership. The auditor is unrelated to the Manager. The Partnership s investment objective is to achieve superior risk-adjusted returns with minimal volatility and low correlation to most traditional asset classes. See The Partnership - Investment Objective and Strategies. To achieve its investment objective, the Partnership intends to invest in an actively managed portfolio (the Portfolio ) comprised of (i) asset-based loans primarily to Canadian and U.S. based companies that have good quality collateral ( Asset-Based Investments ) and (ii) factored accounts receivable and inventory financing primarily to Canadian and U.S. based companies and Canadian federal and provincial tax credit financing investments ( Factoring Investments ). The Portfolio will include only Asset-Based Investments that are fully collateralized based on liquidation values and/or potential cash flow events. The Portfolio strategy involves a fundamental analysis that identifies companies with strong management teams that are overlooked by the general financing community and targets diversification through asset type, investment size and industry. For Asset-Based Investments, the Portfolio strategy emphasizes liquidation values over reliance on future cash flows. Factoring Investments will be well diversified by industry, sector and size according to underwriting standards determined by the Manager on behalf of the Partnership. Each investment follows a rigorous documentation process that is managed by the independent credit function of the Manager. The Partnership may also make incidental investments in assets such as promissory notes, convertible debentures, warrants and other equity sweeteners issued in connection with the primary investments. See The Partnership - Investment Objectives and Strategies. The Partnership has developed certain investment policies and restrictions (the Investment Guidelines ) that are described under The Partnership - Investment Guidelines. The Partnership is also subject to a number of general investment restrictions. See The Partnership General Investment Restrictions. This is a blind pool offering. The Partnership will use the net proceeds of the Offering (i) primarily to make Asset-Based Investments and Factoring Investments, and (ii) to fund the ongoing fees, expenses and debt of the Partnership, as described herein. Use of Proceeds for the Offering. Subject to applicable securities legislation, distributions will be automatically reinvested in additional Units of the same series of a Class at the Net Asset Value of such series of a Class of Units on the date of distribution, unless a Limited Partner elects, by written notice to the Manager, to receive such distributions in cash. The Partnership intends to make quarterly distributions on the Class A Units, the Class F Units and the Class I Units out of net income, net realized capital gains and, in certain cases, capital of the Partnership. See Distribution Policy. The Manager may, on behalf of the Partnership, sell investments in the Portfolio at any time if it is of the opinion that it is in the best interests of the Partnership to do so. The Partnership Agreement provides that it will not make distributions of net earnings, if any, unless otherwise determined appropriate by the General Partner, in its discretion. There can be no assurance that any such distributions will occur and if they do occur be sufficient to satisfy a Limited Partner s tax liability for the year arising from his or her status as a Limited Partner of the Partnership. Units may be redeemed by Limited Partners at their Net Asset Value per Unit on the last Business Day of June or December, provided that the request for redemption is submitted at least 120 days prior to such date. Units held for less than twelve months may be surrendered for redemption upon the same terms, subject to an early redemption penalty equal to 2% of the aggregate Net Asset Value per Unit of the Units being surrendered. The redemption penalty is payable to the Partnership. See Redemption of Units. 6

10 Allocations of Net Income or Loss: Dealer Fees: Management Fee: 99.99% of the net income of the Partnership and 99.99% of the net loss of the Partnership will be allocated pro rata among the Limited Partners in proportion to each Limited Partner s Capital Contribution, and 0.01% of the net income of the Partnership and 0.01% of the net loss of the Partnership will be allocated to the General Partner. The Manager will pay a monthly service commission to participating registered dealers, equal to 1/12th of 1.0% of the Net Asset Value of the Class A Units sold by such dealers then outstanding. Payments are calculated and paid monthly to registered dealers from the Manager s own funds. See Fees and Expenses Payable by the Partnership. In consideration for the Manager s services, the Partnership will pay to the Manager the Management Fees attributable to Class A Units, Class F Units and Class I Units as set forth in the following table: Class Class A Units Class F Units Class I Units Management Fee 2% per annum of the Net Asset Value of the Class A Units, plus any applicable taxes. 1% per annum of the Net Asset Value of the Class F Units, plus any applicable taxes. Management Fee determined by agreement between the Manager and Subscriber of Class I Units. Such Management Fees, if any, are calculated on each Valuation Date and are payable and payable monthly. Performance Fee: The Manager may also receive, for each fiscal year of the Partnership, a Performance Fee (as calculated below), calculated on a series-by-series basis, if, in respect of such fiscal year, the Total Return per Unit (as defined below) on the applicable Determination Date (as defined below) exceeds the Target Minimum Yield. The Performance Fee shall be calculated and accrued monthly and be paid annually. The Performance Fees shall be determined on the last Business Day of the applicable fiscal year (the Determination Date ). The Performance Fee may differ for each Class and series of Units. The aggregate Performance Fee payable to the Manager shall be the sum of the amounts calculated on a series-by-series basis. The Total Return per Unit is equal to the percentage appreciation of the Net Asset Value per Unit, without taking into account any accrued Performance Fee but including the amount of any distributions on a per Unit basis. If the Total Return per Unit in any particular fiscal year exceeds the Target Minimum Yield, any return between the Target Minimum Yield and the Hurdle Rate shall be payable to the Manager as a Performance Fee, plus applicable taxes. If the Total Return per Unit in any particular fiscal year exceeds the Hurdle Rate and the Net Asset Value per Unit on the applicable Determination Date exceeds the Prior High NAV, then 20% of the entire return above the Hurdle Rate shall also be payable to the Manager as a Performance Fee, plus applicable taxes. Hurdle Rate means the Target Minimum Yield plus 2% per annum, subject to a maximum of 10% per annum, determined on the first Business Day of each fiscal year and applicable for the entire fiscal year. Prime Rate means the annual rate of interest equivalent to the prime business rate as set by the Bank of Canada from time to time, as published on the Bank of Canada website at determined on the first Business Day of each fiscal year and applicable for the entire fiscal year. Target Minimum Yield means the Prime Rate plus 3.5% per annum, subject to a maximum of 8% per annum, determined on the first Business Day of each fiscal year and applicable for the entire fiscal year. The Prior High NAV per Unit of a series of a Class is the Net Asset Value per Unit of that series of that Class on the most recent Determination Date in respect of which a Performance Fee was paid or payable with respect to such Unit (or if no Performance Fee has yet become 7

11 payable with respect to such Unit, the Net Asset Value per Unit at which such Unit was issued). The initial Target Minimum Yield is 6.5% and will be applicable for the remainder of the 2013 fiscal year. The initial Hurdle Rate is 8.5% and will be applicable for the remainder of the 2013 fiscal year. The Target Minimum Yield is not a guaranteed rate of return on an investment in Units. The Manager may waive or reduce the amount of any Management Fee or Performance Fee to which it is otherwise entitled in its sole and absolute discretion. Floating Target Minimum Yield: Target Minimum Yield Risk Protection: Operating, Ongoing & Other Expenses: Certain Income Tax Considerations: Resale Restrictions: Risk Factors: The Target Minimum Yield of the Partnership is a floating target yield that is adjusted at the beginning of each fiscal year of the Partnership to reflect changes in the Prime Rate. The Target Minimum Yield is equal to the Prime Rate plus 3.5% per annum, subject to a maximum of 8% per annum, and is determined on the first Business Day of each fiscal year and applies for the entire fiscal year. If the Total Return per Unit of a series in any fiscal year is less than the Target Minimum Yield, then the applicable portion of the Management Fee, net of any dealer fees, will be waived by the Manager in respect of such series in order to increase the annual return to the Limited Partners holding Units of such series to not more than the Target Minimum Yield. The Partnership will pay all of the Partnership s administrative and operating expenses, which expenses will include expenses relating to portfolio transactions, taxes, legal, audit and valuation fees and Limited Partner reporting costs. See Fees and Expenses Payable by the Partnership. Income and capital gains realized by the Partnership will be allocated to Limited Partners. There can be no assurance that distributions of cash to Limited Partners by the Partnership will be sufficient to satisfy a Limited Partner s tax liability for the year arising from his or her status as a Limited Partner of the Partnership. A disposition of Units by Limited Partners may trigger capital gains (or capital losses). Upon the dissolution of the Partnership, each Limited Partner will acquire his, her or its pro rata portion of the net assets of the Partnership, in proportion to each Limited Partner s Capital Contribution. A dissolution may trigger capital gains (or capital losses) to Limited Partners; however, if certain requirements in the Tax Act are satisfied, such a distribution may occur on a tax-deferred basis. Each investor should seek independent advice as to the federal and provincial tax considerations of an investment in Units. See Certain Income Tax Considerations. The Units are being offered for sale on a private placement basis in reliance on exemptions from prospectus requirements of applicable Canadian securities laws. As a result, resale of the Units will be restricted in the manner provided by such securities laws. See Resale Restrictions. An investment in Units is speculative and investors should not invest in Units unless they can absorb the loss of some or all of their investment. Investors should consult with their own professional advisors to assess the legal, tax and other aspects of an investment prior to investing in Units. Investors should consider a number of factors in assessing the risks associated with investing in Units, including those generally associated with the investment strategies used by the Manager. See Risk Factors. 8

12 USE OF PROCEEDS FOR THE OFFERING The Partnership will use the net proceeds of the Offering (i) primarily to make Asset-Based Investments and Factoring Investments, and (ii) to fund the ongoing fees, expenses and debt of the Partnership, as described herein. The Manager or other agents as appointed by the General Partner and FundSERV, as applicable, will hold subscription cheques and proceeds received from Subscribers prior to the First Closing until all closing conditions of the Offering have been satisfied, at which time the First Closing will take place. If any Closing, including the First Closing, does not occur, subscription cheques and proceeds relating to such Closing will be returned, without interest or deduction, to the investors. The proceeds from the issue of the Units will be paid to the Partnership at Closing and deposited in the Partnership s bank account and managed on behalf of the Partnership by the Manager. Pending the investment of Available Funds, all such Available Funds will be invested in cash or Short-Term Securities. Interest earned by the Partnership from time to time on funds of the Partnership will accrue to the benefit of the Partnership. THE PARTNERSHIP The Partnership was formed pursuant to the provisions of the Limited Partnerships Act (Ontario) on August 8, The business of the Partnership is investing in a diversified portfolio of Asset-Based Investments and Factoring Investments. The General Partner was incorporated under the laws of the Province of Ontario on August 8, The registered office of the Partnership and the General Partner is 77 King Street West, Suite 2925, P.O. Box 322, Toronto, Ontario, M5K 1K7. The head office of the Partnership and the General Partner is 77 King Street West, Suite 2925, P.O. Box 322, Toronto, Ontario, M5K 1K7. The initial limited partners of the Partnership are Natasha Sharpe and Canada Inc. Investment Objective and Strategy The Partnership s investment objective is to achieve superior risk-adjusted returns with minimal volatility and low correlation to most traditional asset classes. To achieve its investment objective, the Partnership intends to invest in an actively managed portfolio (the Portfolio ) comprised of (i) asset-based loans primarily to Canadian and U.S. based companies that have good quality collateral ( Asset-Based Investments ) and (ii) factored accounts receivable and inventory financing primarily to Canadian and U.S. based companies and Canadian federal and provincial tax credit financing ( Factoring Investments ). The Portfolio will include only Asset-Based Investments that are fully collateralized based on liquidation values and/or potential cash flow events. For Asset-Based Investments, the Portfolio strategy emphasizes liquidation values over reliance on future cash flows. The Portfolio strategy involves a fundamental analysis that identifies good companies that are overlooked by the general financing community and targets diversification through asset type, investment size and industry. Factoring Investments will be well diversified by industry, sector and size according to underwriting standards determined by the Manager on behalf of the Partnership. Each investment follows a rigorous documentation process that is managed by the independent credit function of the Manager. The Partnership may also make incidental investments in assets such as promissory notes, convertible debentures, warrants and other equity sweeteners issued in connection with the primary investments. Investment Guidelines The Partnership will follow the Investment Guidelines for the Partnership set forth in the Partnership Agreement. The Investment Guidelines of the Partnership may be changed from time to time by the Manager to adapt to changing circumstances and the Limited Partners shall be provided not less than 60 days prior written notice of any material changes to the Investment Guidelines. For the purposes of the Investment Guidelines listed below, all amounts and percentage limitations will be determined on the date of the relevant investment, and any subsequent change in any applicable percentage resulting from changing Net Asset Values will not require the disposition of any investment from the Portfolio. The Partnership s Investment Guidelines provide, among other things, as follows: The Partnership will seek to achieve superior long-term performance through a strict and disciplined credit selection strategy with an emphasis on preserving capital and income generation. 9

13 The Partnership will principally provide asset-based financial services to Canadian and U.S. based companies. The product offering includes factoring and receivable financing, which entails financing or purchasing select accounts receivable, as well as asset-based lending, namely, financing secured by tangible assets such as inventory, equipment, buildings, and land. The Partnership will seek to identify companies that may require additional financing, which, traditional sources, namely, large financial institutions, are unable to provide. The Portfolio strategy involves a fundamental analysis that identifies companies with strong management teams and provides for diversification through asset type, investment size and industry. The Partnership will target Asset-Based Investments that have an identifiable catalyst that will enable the borrower to deleverage the loan within a reasonable period of time (typically between 6 months and 36 months). Such deleveraging may come from a variety of sources, including projected free cash flow, accelerating earnings, the possibility of equity issuance, improved operations, assets sales, mergers and acquisitions, refinancing or corporate restructuring. The Asset-Based Investments may have varying terms with respect to overcollateralization, seniority or subordination, purchase price, convertibility, interest terms, and maturity, but will consist primarily of nonparticipating positions, those being positions whereby the Partnership does not have any management influence by way of its investment. The industries in which the Partnership will make Asset-Based Investments and Factoring Investments include but are not limited to apparel, financial and professional services, construction, manufacturing, real estate, leasing, food processing, transportation, chemicals, electronics, oilfield services, telecommunications, textiles, furniture, sporting goods, film and television, and industrial products. From time to time, the Partnership may take the following types of collateral as security: common or preferred stock; warrants to purchase common stock or other equity interests; or real estate/property. However, this will not be a focus of the Partnership. The Partnership is not obligated to hedge against fluctuations in the value of its investments as a result of changes in market interest rates, currency changes, or other events, but intends to mitigate such risks through structuring and favourable asset based lending loan terms (including, but not limited to, interest rate floors, availability reserves, and assignment rights). The Manager will have the sole discretion whether to engage in hedging strategies and in what capacity. The Partnership may utilize a variety of financial instruments including, without limitation, derivatives, options, interest rate swaps, caps and floors, futures, and forward contracts, to seek to hedge against declines in the values of the investments of the Portfolio. In furtherance of the Partnership s investment objective, the Partnership may give guarantees and grant security in favour of third parties to secure the Partnership s obligations and the obligations of intermediary vehicles and it may grant any assistance to intermediary vehicles, including, without limitation, assistance in the management and the development of such companies and their portfolio, financial assistance, loans, advances, or guarantees. The Partnership may pledge, transfer, encumber, or otherwise create security over some or all of the Partnership s assets. Investments may be made by the Partnership through intermediary vehicles, including, without limitation, special purposed vehicles or joint ventures, general or limited partnerships, and limited liability companies. The Partnership may hold investments through joint ventures where the Partnership may seek to retain control over management, sale, and financing of the venture s assets or alternatively will have a viable mechanism for exiting the venture, within a reasonable period of time. Unless otherwise provided for in this offering memorandum, an investment into an intermediary vehicle should be treated as if it was a were direct investment made by the Partnership in the assets of the intermediary vehicle and is therefore not subject to the individual investment concentration investment restriction above. The Partnership will seek to reduce risk in the Portfolio by minimizing the concentration in the Partnership of any individual investment. The Partnership may from time to time impose limitations with respect to size, industry, and geography concentration of its Asset-Based Investments, as determined by the General Partner; however, there can be no assurance that such limitations will not be exceeded from time to time. 10

14 Any unallocated cash will be held by the Partnership until such time as the Partnership identifies attractive investment opportunities or requires additional funding for portfolio management purposes. Any reserve cash held by the Partnership will be used to manage cash flows, pay expenses, and facilitate redemption payments. Such reserve will be held in an interest-bearing account or invested in money market funds, other Short-Term Securities or U.S. Treasury bills. The Partnership may invest up to 10% of the Net Asset Value of the Partnership in assets such as promissory notes, convertible debentures, warrants and other equity sweeteners issued in connection with any Asset- Based Investments or Factoring Investments made by the Partnership. Notwithstanding the foregoing, at the Manager s discretion, the Partnership may invest the entirety of any monies awaiting investment, reinvestment or distribution in fixed income assets. General Investment Restrictions The Available Funds will be invested in accordance with the Partnership s investment objectives and the investment restrictions. The following investment restrictions may not be changed without the approval of the Limited Partners by Extraordinary Resolution: The Partnership shall not invest more than 30% of the Net Asset Value of the Partnership in any one investment. This investment restriction need not be complied with during the initial 12 month period following the date of the Partnership s first investment provided that the Manager endeavours to ensure at all times an appropriate level of diversification of risk within the Portfolio. The Partnership may borrow permanently (either directly or at the level of any intermediary vehicle) for investment purposes, to meet funding commitments in underlying investments, for working capital purposes, and to meet redemption requests of Limited Partners, and secure these borrowings with liens or other security interests in its assets (or the assets of any of its intermediary vehicles), provided that the Portfolio may not, at any point in time, incur a level of borrowing (including any short-term borrowings) in excess of 100% of the Net Asset Value of the Partnership. The Partnership may not use leverage to enhance performance returns. The risk exposure of the Partnership to a single counterparty in over-the-counter derivative transactions may not exceed 30% of the Net Asset Value of the Portfolio. The Partnership will not engage in derivative transactions other than for the purpose of reducing risk (i.e. not for enhancing returns of the Portfolio). Management Fee FEES AND EXPENSES PAYABLE BY THE PARTNERSHIP In consideration for the Manager s services, the Partnership will pay to the Manager the Management Fees attributable to Class A Units, Class F Units and Class I Units as set forth in the following table: Class Class A Units Class F Units Class I Units Management Fee 2% per annum of the Net Asset Value of the Class A Units 1% per annum of the Net Asset Value of the Class F Units Management Fee determined by agreement between the Manager and Subscriber of Class I Units. Such Management Fees, if any, are calculated on each Valuation Date and are payable and payable monthly. Performance Fee The Manager may also receive, for each fiscal year of the Partnership, a Performance Fee (as calculated below), calculated on a series-by-series basis, if, in respect of such fiscal year, the Total Return per Unit on the applicable Determination Date (as defined below) exceeds the Target Minimum Yield, without taking into account any accrued 11

15 Performance Fee but including the amount of any distributions on a per Unit basis. The Performance Fee shall be calculated and accrued monthly and be paid annually. The Performance Fees shall be determined on the last Business Day of the applicable fiscal year (the Determination Date ). The Performance Fee may differ for each Class and series of Units. The aggregate Performance Fee payable to the Manager shall be the sum of the amounts calculated on a series-by-series basis. The Total Return per Unit is equal to the percentage appreciation of the Net Asset Value per Unit, without taking into account any accrued Performance Fee but including the amount of any distributions on a per Unit basis. If the Total Return per Unit in any particular fiscal year exceeds the Target Minimum Yield, any return between the Target Minimum Yield and the Hurdle Rate shall be payable to the Manager as a Performance Fee, plus applicable taxes. If the Total Return per Unit in any particular fiscal year exceeds the Hurdle Rate and the Net Asset Value per Unit on the applicable Determination Date exceeds the Prior High NAV, then 20% of the entire return above the Hurdle Rate shall also be payable to the Manager as a Performance Fee, plus applicable taxes. For this purpose, Hurdle Rate means the Target Minimum Yield plus 2% per annum, subject to a maximum of 10% per annum, determined on the first Business Day of each fiscal year and applicable for the entire fiscal year; Prime Rate means the annual rate of interest equivalent to the prime business rate as set by the Bank of Canada from time to time, as published on the Bank of Canada website at determined on the first Business Day of each fiscal year and applicable for the entire fiscal year; and Target Minimum Yield means the Prime Rate plus 3.5% per annum, subject to a maximum of 8% per annum, determined on the first Business Day of each fiscal year and applicable for the entire fiscal year. The Prior High NAV per Unit of a series of a Class is the Net Asset Value per Unit of that series of that Class on the most recent Determination Date in respect of which a Performance Fee was paid or payable with respect to such Unit (or if no Performance Fee has yet become payable with respect to such Unit, the Net Asset Value per Unit at which such Unit was issued). The initial Target Minimum Yield is 6.5% and will be applicable for the remainder of the 2013 fiscal year. The initial Hurdle Rate is 8.5% and will be applicable for the remainder of the 2013 fiscal year. The Target Minimum Yield is not a guaranteed rate of return on an investment in Units. The Manager may waive or reduce the amount of any Management Fee or Performance Fee to which it is otherwise entitled in its sole and absolute discretion. Floating Target Minimum Yield The Target Minimum Yield of the Partnership is a floating target yield that is adjusted at the beginning of each fiscal year of the Partnership to reflect changes in the Prime Rate. The Target Minimum Yield is equal to the Prime Rate plus 3.5% per annum, subject to a maximum of 8% per annum, and is determined on the first Business Day of each fiscal year and applies for the entire fiscal year. Target Minimum Yield Risk Protection If the Total Return per Unit of a series in any fiscal year is less than the Target Minimum Yield, then the applicable portion of the Management Fee, net of any dealer fees, will be waived by the Manager in respect of such series in order to increase the annual return to the Limited Partners holding Units of such series to not more than the Target Minimum Yield. Offering Expenses The Offering Expenses of the Partnership will be payable by the Partnership. The expenses of the Offering, which include the costs of creating and organizing the Partnership, the costs of printing and preparing this offering memorandum, legal, audit and accounting expenses of the Partnership, FundSERV setup costs, travel, distribution, courier, sales and marketing expenses and other reasonable out-of-pocket expenses incurred by the General Partner and other incidental expenses. Ongoing and Other Expenses The Partnership will also pay for all expenses (inclusive of applicable taxes) incurred in connection with the operation and administration of the Partnership. It is expected that these expenses will include (a) mailing, printing 12

16 and other expenses associated with providing periodic reports to Limited Partners; (b) fees payable to the Manager for performing financial, record keeping, Limited Partner reporting and general operating and administrative services; (c) fees payable to the auditors, valuators, legal advisors and service providers (including bookkeeping charges, registrar and transfer agency costs) of the Partnership; (d) fees payable to a custodian; (e) taxes and ongoing regulatory filing fees; (f) any reasonable out-of-pocket expenses incurred by the General Partner or its agents in connection with their ongoing obligations to the Partnership, including expenses in respect of any independent qualified persons retained to review any of investments; (g) expenses relating to portfolio transactions; (h) insurance and safekeeping fees; and (i) expenses of any action, suit or other proceeding in respect of which or in relation to which the Manager or the General Partner are entitled to indemnity by the Partnership. Dealer Fees The Manager will pay a monthly service commission to participating registered dealers, equal to 1/12th of 1.0% of the Net Asset Value of the Class A Units sold by such dealers then outstanding. Payments are calculated and paid monthly to registered dealers from the Manager s own funds. The General Partner THE GENERAL PARTNER AND THE MANAGER The General Partner was incorporated on August 8, 2013 under the laws of the Province of Ontario. The principal business address of the General Partner is 77 King Street West, Suite 2925, P.O. Box 322, Toronto, Ontario, M5K 1K7 and its registered office address is 77 King Street West, Suite 2925, P.O. Box 322, Toronto, Ontario, M5K 1K7. The General Partner is the general partner of the Partnership and has coordinated the organization and registration of the Partnership and established the Investment Guidelines (defined herein) of the Partnership. The name, municipality of residence, position with the General Partner and principal occupation of each of the directors and officers of the General Partner are as follows: Name and Municipality of Residence Natasha Sharpe... Toronto, Ontario Jenny Virginia Coco... Toronto, Ontario Rock-Anthony Coco... Belle River, Ontario Position with the General Partner Director and President Director and Vice-President Director and Vice-President Principal Occupation President of the Manager Chief Executive Officer of Coco Paving Inc. President of Coco Paving Inc. For biographical information for the directors and officers of the General Partner, please see The Manager, below. The Manager The Manager was incorporated on January 8, 2013 under the laws of Canada. The principal business address of the Manager is 77 King Street West, Suite 2925, P.O. Box 322, Toronto, Ontario, M5K 1K7 and its registered office address is 949 Wilson Avenue, Toronto, Ontario, M3K 1G2. The Partnership has retained the Manager to provide portfolio management, administrative and other services to the Partnership. The Manager will assist with the identification of prospective Canadian and U.S. companies and the negotiation of the terms of Asset-Based Investments and Factoring Investments and will monitor the Portfolio to ensure compliance with the Investment Guidelines. The Manager is currently registered with the Ontario Securities Commission as a (restricted) portfolio manager and exempt market dealer under National Instrument Registration Requirements and Exemptions. The activities of the Manager under its (restricted) portfolio manager registration are limited to advising limited partnerships where the Manager or an affiliate of the Manager (as defined 13

17 in NI ) acts as general partner to those limited partnerships and where the objective of such limited partnerships are similar to those of the Partnership. The name, municipality of residence, position with the Manager and principal occupation of certain of the directors and officers of the Manager are as follows: Name and Municipality of Residence Position with the Manager Principal Occupation Natasha Sharpe... Toronto, Ontario Jenny Virginia Coco... Toronto, Ontario Rock-Anthony Coco... Belle River, Ontario David Sharpe... Toronto, Ontario Director and President Director Director Chief Operating Officer and Chief Compliance Officer President of the Manager Chief Executive Officer of Coco Paving Inc. President of Coco Paving Inc. Chief Operating Officer and Chief Compliance Officer of the Manager Kevin Skells... Toronto, Ontario Chief Financial Officer Director, Finance, Coco Group The following is biographical information for such directors and officers: Natasha Sharpe: Natasha is a Director and President of the Manager. Natasha was previously the Chief Credit Officer for Sun Life Financial where she was responsible for creating risk policy for the company s $110-billion global portfolio of managed assets. Prior to that, Natasha spent over 10 years at BMO Financial Group where she led various teams in risk assessment and corporate finance. In 2010, Natasha was named as one of Canada s Top 40 Under 40. Natasha is a director of public, private, and non-profit companies. She holds a PhD and a Masters of Business Administration from the University of Toronto. Jenny Virginia Coco: Jenny is a Director of the Manager. Jenny is the Chief Executive Officer of Coco Paving Inc., a division of the Coco Group. Jenny joined the Coco Group full time in 1987, having spent many summers learning the family business. Jenny oversees the daily management of the Canadian and U.S. Operations, and is largely responsible for the negotiation of acquisitions as well as overseeing Company expansions, including a concrete pipe manufacturing facility and an aggregate dock for the importing of materials, both of which have resulted in a vertical integration that has allowed Coco Paving to obtain a high degree of success in its heavy construction division. Under Ms. Coco s stewardship, Coco Group has successfully integrated five businesses and acquisitions over the last 12 years. She continues to be the liaison for private-public partnerships for the development of highway infrastructure in Ontario. Jenny has also taken an active role in the expansion of the residential and commercial divisions of the company. Jenny received a Masters of Business Administration (Finance) from the University of Windsor. Jenny has been a member of the Integrated Financial Planning Committee for the London Diocese, and has previously served on the Board of Directors of the University of Windsor and the Federal Business Development Bank of Canada. Rock-Anthony Coco: Rocky is a Director of the Manager. Rocky is President of Coco Paving Inc., a division of the Coco Group where he oversees all activities of the Heavy Construction Division from asphalt paving to underground site servicing and concrete paving. Under Rocky s management, Coco Paving Inc. has successfully tendered and completed all MTO projects since 2004 in South Western Ontario on Highway 402 and Highway 401, encompassing over 50 kilometres of highway infrastructure. Rocky is a civil engineering graduate from the University of Windsor in 1987, and gained his license to practice as a Professional Engineer in He has been a President of the Heavy Construction Association of Windsor. David Sharpe: David is Chief Operating Officer and Chief Compliance Officer of the Manager. David is responsible for the oversight of the firm s compliance system and ensuring there are proper operational controls in place for sustainable growth of the organization. Prior to joining BridgingFinance Inc., David was the President of an 14

18 investment management firm and led a TSX-listing in 2012 of 3 closed-end funds with a market capitalization of approximately $1.2 billion. David has close to two decades of financial services industry experience, in roles such as General Counsel, Chief Compliance Officer and Chief Risk Officer for leading financial organizations, and previously was the head of investigations for the Mutual Fund Dealers Association of Canada. David is a lawyer and has been a member of the Law Society of Upper Canada since David has an LLB from Queen s University, an LLM in Securities Law from Osgoode Hall Law School and a Masters of Business Administration from the Richard Ivey School of Business, University of Western Ontario. Kevin Skells: Kevin is Chief Financial Officer of the Manager. Kevin is responsible for providing strategic management of the accounting and finance functions of the Manager including corporate accounting, financial reporting, budgeting, and regulatory financial compliance. Kevin has public company reporting experience through his time at QHR Technologies (TSX-V: QHR) and has been vice-president and controller for a private company. Kevin began his career at a boutique accounting firm. Kevin received a Honours BA in Economics from Wilfrid Laurier University and earned his Chartered Professional Accountant, Chartered Accountant designation in Management Agreement Pursuant to the Management Agreement, the Manager will provide portfolio management, administrative and other services to the Partnership. The Manager will receive the Management Fee and the Performance Fee from the Partnership for the provision of such services and will be entitled to reimbursement for certain expenses incurred on behalf of the General Partner or the Partnership. The Manager may also provide the Partnership with office facilities, equipment and staff as required and the Partnership will reimburse the Manager for the cost thereof. Further, the Manager will retain all commitment fees and monitoring fees collected from borrowers. The Manager has no obligation to the Partnership other than to render services under the Management Agreement honestly and in good faith and in the best interests of the Partnership and to exercise the degree of care, diligence and skill a reasonably prudent person would exercise in comparable circumstances. The Management Agreement provides that the Manager will not be liable in any way to the Partnership if it has satisfied the duties and the standard of care, diligence and skill set forth above. The Partnership has agreed to indemnify the Manager for any losses as a result of the performance of its duties under the Management Agreement. However, the Manager will incur liability in cases of wilful misconduct, bad faith, negligence or disregard of its duties or standards of care, diligence and skill. The Management Agreement, unless terminated as described below, will continue until the termination of the Partnership. The Manager or the Partnership may terminate the Management Agreement if the other party (i) is in breach or default of the provisions of the Management Agreement and, if capable of being cured, such breach or default has not been cured within forty-five (45) days written notice of such breach or default, (ii) has been declared bankrupt or insolvent and has entered into liquidation or winding-up, whether compulsory or voluntary (and not merely a voluntary liquidation for the purposes of amalgamation or reorganization), or (iii) makes a general assignment for the benefit of creditors or otherwise acknowledges its insolvency. In the event that the Management Agreement is terminated as provided above, the General Partner shall determine, in its sole discretion, whether to appoint a successor manager to carry out the activities of the Manager or to carry out such activities itself in which case the General Partner will be entitled to a fee no greater than that payable to the Manager under the Management Agreement. THE INVESTMENT SELECTION PROCESS The industries in which the Partnership will make Asset-Based Investment and Factoring Investments include but are not limited to apparel, financial and professional services, construction, manufacturing, real estate, leasing, food processing, transportation, chemicals, electronics, oilfield services, telecommunications, textiles, furniture, sporting goods, film and television, and industrial products. The Manager will create a term sheet for each potential Asset-Based Investments and Factoring Investments and the Manager s internal investment team will review and approve the term sheet subject to successful due diligence on collateral and/or projected cash flows. For Asset-Based Investments, the Manager considers the following factors: 15

19 1. industry overview and competitors; 2. market analysis; 3. management team review; 4. financial analysis including projections and cash flows; 5. stress cases; 6. collateral analysis; 7. key risks and mitigants; and 8. exit strategy. Once an Asset-Based Investment is made, the Manager monitors the investment using key process control procedures that are auditable and replicable by third parties. Documentation prior to making a Factoring Investment includes the written analysis of the risk framework, the completion of a pre-proposal checklist, the completion of a credit approval request, and supplementary information. The key process control document supporting each investment is a comprehensive outline of each of the steps in the investment, monitoring and collateral tracking procedures. For Factoring Investments, the Manager considers the following factors: 1. factorable receivables (and/or government of Canada/provincial tax credits and/or appropriate inventory); 2. appropriate additional security, which can include corporate guarantees, personal guarantees, cross-collateralization with machinery, equipment and/or real estate. The Partnership is not relying primarily on this security for repayment but uses it for enhancement of the collateral position; 3. exit strategy; 4. viability of the business; 5. integrity of management; 6. service delivery of the business; 7. return on capital; and 8. capability to implement action plan. The Manager will report to the General Partner on the operation and performance of the Partnership on a semiannual basis, including with respect to compliance with the Investment Guidelines and material contracts as amended from time to time. CERTAIN INCOME TAX CONSIDERATIONS The following is, as of the date hereof, a summary of the principal Canadian federal income tax considerations with respect to the acquisition, ownership and disposition of Units to an investor who, for the purposes of the Income Tax Act (Canada) (the Tax Act ), is resident in Canada, deals at arm s length with the Partnership, is the initial investor in the Units, has not made a functional currency reporting election under the Tax Act, will hold Units as capital property and has invested for his or her own benefit and not as a trustee of a trust. The determination of whether the Units are capital property to a holder will depend, in part, on the holder s particular circumstances. Generally, Units will be considered to be capital property to a holder if acquired by him or her for investment purposes and not acquired or held in the course of carrying on a business of trading or dealing in securities or as part of an adventure in the nature of trade. This summary is based on the current provisions of the Tax Act, the regulations thereunder and the current published administrative practices and assessing policies of the Canada Revenue Agency (the CRA ) and also takes into account all specific proposals to amend the Tax Act and the regulations thereunder (the regulations ) publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the Proposals ). Except for the foregoing, this summary does not take into account or anticipate any changes in law, whether by legislative, regulatory, administrative or judicial action. Furthermore, this summary does not take into account provincial or foreign income tax legislation or considerations. There can be no assurance that any Proposals will be enacted in the form proposed, if at all. This summary is based on the assumption that the Partnership is not a tax shelter as that term is defined in the Tax Act and an investment in the Partnership is not a tax shelter investment for the purposes of the Tax Act. This 16

20 summary further assumes that at all times, all members of the Partnership are resident in Canada for the purpose of the Tax Act and that they will comply in all respects with the restrictions on investors pursuant to the Partnership Agreement. This summary assumes that not more than 50% of the Units are held by financial institutions. The income and other tax consequences of acquiring, holding or disposing of Units vary according to the status of the investor, the province or territory in which the investor resides or carries on business and, generally, the investor s own particular circumstances. The following description of income tax matters is, therefore, of a general nature only and is not intended to constitute advice to any particular investor. The income tax consequences described in this summary are based on the assumptions that an investor does not undertake or arrange any transaction relating to his or her Units, other than those referred to in this offering memorandum, and that none of the transactions relating to the investor s Units and referred to in this offering memorandum is undertaken or arranged primarily to obtain a tax benefit other than those specifically described herein. Each investor should seek independent advice regarding the tax consequences of investing in Units, based upon the investor s own particular circumstances. Computation of Income or Loss The Partnership is not itself a taxable entity. However, the Partnership is required to compute its income (or loss) in accordance with the provisions of the Tax Act as if it were a separate person resident in Canada. The fiscal year of the Partnership ends on December 31 in each calendar year. In computing the income or loss of the Partnership, deductions will be claimed in respect of all expenses of the Partnership in accordance with and to the extent permitted under the Tax Act. Each Limited Partner will generally be required to include, in computing his or her income or loss for tax purposes for a taxation year, his or her share of the income or loss (including taxable capital gains and allowable capital losses) allocated to such Limited Partner for each fiscal year of the Partnership for such year, whether or not he or she has received or will receive a distribution from the Partnership. Income and loss of the Partnership for tax purposes will be allocated to Limited Partners in accordance with the provisions of the Partnership Agreement. The Partnership is not required to make distributions to Limited Partners in any year, even when income will be allocated to Limited Partners for purposes of the Tax Act. As a result, Limited Partners may be required to pay tax on such income allocation even though the Limited Partner has not received a cash distribution. The Partnership will furnish to each Limited Partner such information as is required by the CRA to assist in declaring the Limited Partner s share of the Partnership s income or loss. However, the responsibility for filing any required tax returns and reporting his or her share of the income or loss of the Partnership falls solely upon each Limited Partner. In general, every member of a partnership must, in accordance with the regulations, file an information return in prescribed form which contains specified information for each taxation year of the partnership. The General Partner has agreed to file the necessary information return, which will be deemed to have been made by each member of the Partnership. In general, a Limited Partner s share of any income or loss of the Partnership from any source or from sources in a particular place will be treated as if it were income or loss of the Limited Partner from that source or from sources in that particular place and any provisions of the Tax Act applicable to that type of income or loss will apply to the Limited Partner. Subject to the at-risk rules discussed below, a Limited Partner s share of the losses, if any, of the Partnership for any fiscal year may be applied against his or her income from any other source to reduce net income for the relevant taxation year and, to the extent it exceeds other income for that year, carried back three years and forward twenty years against taxable income of such other years. A Limited Partner s share of the allowable capital losses of the Partnership may be applied only against taxable capital gains (discussed below) and may be carried back three years or forward indefinitely, subject to the rules in the Tax Act. The Tax Act provides that, notwithstanding the income or loss allocation provisions of the Partnership Agreement, any losses of the Partnership from a business or property allocated to a Limited Partner will be deductible by such Limited Partner in computing his or her income for a taxation year only to the extent that his or her share of the loss does not exceed his or her at-risk amount in respect of the Partnership at the end of the year. In general terms, the at-risk amount of a Limited Partner in respect of the Partnership at a particular time is (i) the adjusted cost base of his or her Units at that time plus (ii) if the particular time is at the end of the fiscal period of the Partnership, his or her share of the income of the Partnership for the fiscal year, less the aggregate of (iii) all amounts owing by the Limited Partner to the Partnership or to a person with whom the Partnership does not deal at arm s length and (iv) 17

21 subject to certain exceptions, any amount or benefit to which the Limited Partner is entitled to receive where the amount or benefit is intended to protect the Limited Partner from any loss he or she may sustain by virtue of being a member of the Partnership or holding or disposing of Units. A Limited Partner s share of any Partnership loss that is not deductible by the Limited Partner in the year because of the at-risk rules is considered to be the Limited Partner s limited partnership loss in respect of the Partnership for that year. Such limited partnership loss may be deducted by the Limited Partner in any subsequent taxation year against any income for that year to the extent that the Limited Partner s at-risk amount at the end of the Partnership s fiscal year ending in that year exceeds the Limited Partner s share of any loss of the Partnership for that fiscal year. Disposition and Redemption of Units Upon the redemption or other actual or deemed disposition of a Unit by a Limited Partner, a capital gain (or a capital loss) will generally be realized to the extent that the proceeds of disposition of the Unit net of any costs of disposition exceed (or are less than) the adjusted cost base to the Limited Partner of the Unit. The portion of capital gains included in computing income ( taxable capital gains ) and the portion of capital losses ( allowable capital losses ) deductible from taxable capital gains is one-half. The unused portion of an allowable capital loss may be carried back three years or forward indefinitely and may only be used against taxable capital gains, subject to detailed rules in the Tax Act. A Canadian-controlled private corporation (as defined in the Tax Act) may be subject to an additional refundable tax of 6 2 / 3% in respect of certain investment income including taxable capital gains. In general, the adjusted cost base of a Unit to a Limited Partner is the subscription price of the Unit plus the Limited Partner s share of any income of the Partnership (including the full amount of any capital gains) for any previously completed fiscal periods, less the Limited Partner s share of the losses of the Partnership (including the full amount of any capital losses) for any fiscal period ending before that time (except where any portion of such losses were included in his or her limited partnership loss in respect of the Partnership as such losses will reduce the adjusted cost base of his or her Units only to the extent they have been previously deducted) and any distributions made to the Limited Partner by the Partnership. The adjusted cost base of each Unit will be the average of the adjusted cost base of all identical Units held by a Limited Partner. If the adjusted cost base of a Limited Partner s Units becomes a negative amount such negative amount as at the end of a fiscal year of the Partnership will be deemed to be a capital gain realized by the Limited Partner and the adjusted cost base will subsequently be nil. A redemption of Units will be treated as a disposition for purposes of the Tax Act. Where Units are withdrawn by a Limited Partner during the course of the year or are acquired during the course of the year, the General Partner will adopt an allocation policy intended to allocate income and loss in such manner as to account for Units which are purchased or withdrawn throughout such fiscal year. To such end, any person who was a Limited Partner at any time during the fiscal year but who has withdrawn or transferred some or all of the Units before the last day of such fiscal year may have income or losses of the Partnership for such year allocated to him or her. A Limited Partner who is considering disposing of Units during a fiscal period of the Partnership should obtain specific tax advice. DETAILS OF THE OFFERING Units will be offered at a subscription price of $100 per Unit for the applicable Class of Units on each Valuation Date. It is expected that the First Closing will take place on or about October 31, One or more subsequent Closings may be held at the sole discretion of the General Partner. The minimum subscription by an investor is $100,000 for accredited investors (or such lesser amount, as determined by the General Partner in its sole discretion) and $150,000 for investors purchasing under the minimum amount investment exemption. Following the required initial minimum investment in the Partnership, Limited Partners may make additional investments in the Partnership of not less than $25,000 provided that, at the time of the subscription for additional Units, the Limited Partner is an accredited investor. Limited Partners who are not accredited investors, but previously invested in, and continue to hold, Units having an aggregate initial acquisition cost or current Net Asset Value equal to $150,000, will also be permitted to make subsequent investments in the Partnership of not less than $25,000. An investor whose offer to purchase is accepted by the General Partner will become a Limited Partner of the Partnership upon the entering of his or her name and other prescribed information in the record of Limited Partners on or as soon as possible after each Closing. 18

22 Class A Units are available to all qualified investors. Class F Units are available only to (i) qualified investors who participate in fee-based programs through their registered dealer and whose registered dealer has signed a Class F agreement with the Manager, (ii) investors for whom the Manager does not incur distribution costs and (iii) investors approved by the Manager in its sole discretion. A registered dealer s participation in the Class F program is subject to terms and conditions set by the Manager. Class F Units have no load. Instead of paying sales charges, investors pay an annual fee to their registered dealers for ongoing financial planning advice and other services. Class I Units are available only to institutional investors approved by the Manager in its sole discretion. Each registered dealer which participates in the Class F program is obligated to notify the Manager if any participating Class F investors are no longer enrolled in a fee-for-service or wrap account program (a nonparticipating investor ). If the Manager is notified that a non-participating investor no longer meets the eligibility criteria for Class F Units, it will sell or convert such investor s Class F Units in accordance with instructions from such investor s registered dealer. In the absence of instructions, the Manager is entitled, in its sole discretion, to sell, redeem or convert such Class F Units into Class A Units. There may be tax implications arising from any such transaction. See Certain Income Tax Considerations for more details. The General Partner or its agent, on behalf of the Partnership, reserves the right to accept or reject any offer to purchase in whole or in part. An investor whose offer to purchase has been accepted by the General Partner or its agent will become a Limited Partner of the Partnership upon the amendment of the record of limited partners of the Partnership maintained by the General Partner to include their name and other information prescribed by the Limited Partnerships Act (Ontario). The Manager will hold the Subscription Agreements and Power of Attorney forms and cheques payable to the Partnership prior to each Closing until the closing conditions of this Offering have been satisfied. If the Closing does not occur, subscription cheques and proceeds will be returned, without interest or deduction, to the investors. The General Partner is a wholly-owned subsidiary of the Manager and, as a result, the Partnership may be considered to be a connected issuer and related issuer of the Manager. The General Partner made the decision to create the Partnership and distribute its Units and determined the terms of the Offering. How to Purchase Units The Units are being offered for sale on a private placement basis in reliance on exemptions from the prospectus and registration requirements of applicable Canadian securities laws. As a result, resale of the Units will be restricted in the manner provided by such securities laws. See Resale Restrictions. To acquire Units, an investor must deliver not less than three (3) Business Days prior to Closing, a duly completed and signed Subscription Agreement and Power of Attorney Form, together with payment (either by cheque or settlement through the FundSERV system) payable to Bridging Credit Fund LP. Units will only be sold to individuals, corporations and trusts that are permitted to purchase them under applicable securities laws and who certify to the Manager in the Subscription Agreement and Power of Attorney Forms that such purchaser, or any ultimate purchaser for which such purchaser is acting as agent, (i) is an accredited investor, as that term is defined in National Instrument Prospectus and Registration Exemptions ( NI ), or (ii) is relying on the minimum amount investment exemption as provided for section 2.10 of NI Pending receipt and clearance of all payment cheques or settlement through FundSERV, a Subscriber will be entitled, on written request to be issued an instalment receipt evidencing beneficial ownership of the Units purchased, as well as the right to receive a certificate representing such Units upon clearance of payment of all instalments, if any. The General Partner reserves the right to allow a Limited Partner to make an instalment payment on an exceptional basis. Default by a Limited Partner in the payment of any instalment on the Units subscribed for by such Limited Partner may result in certain actions which may cause the loss of all tax benefits associated with the Units. Reference is made to Summary of the Partnership Agreement Units. Pursuant to the Subscription Agreement and Power of Attorney Forms, an investor, among other things: (a) irrevocably, directly or indirectly through an agent, authorizes and consents to the disclosure of certain information to, and the collection and use by, the General Partner and its service providers, 19

23 including such investor s full name, residential address or address for service, address, social insurance number or the corporation account number, as the case may be; (b) (c) (d) (e) (f) acknowledges that he, she or it is bound by the terms of the Partnership Agreement and liable for all obligations of a Limited Partner; makes representations and warranties set out in the Partnership Agreement, including the representations and warranties to the effect that he, she or it is not a non-resident of Canada for the purposes of the Tax Act, a non-canadian within the meaning of the Investment Canada Act or a partnership, and that he, she or it is not a tax shelter or an entity an interest in which is a tax shelter investment as that term is defined in the Tax Act and that he, she or it will maintain such status during such time as Units are held by him, her or it; is deemed to represent and warrant that the investor is not a financial institution as that term is defined in subsection 142.2(1) of the Tax Act unless such investor has provided written notice to the contrary to the General Partner prior to the date of acceptance of the investor s subscription for Units; irrevocably nominates, constitutes and appoints the General Partner as his, her or its true and lawful attorney with the full power and authority as set out in the Partnership Agreement; and covenants and agrees that all documents executed and other actions taken on behalf of the Limited Partners pursuant to the power of attorney set out in the Partnership Agreement will be binding upon such investor, and each investor agrees to ratify any of such documents or actions upon request by the General Partner. An investor who is not an individual may be obliged to provide the General Partner with a declaration that it is not a financial institution as that term is defined in subsection 142.2(1) of the Tax Act. Power of Attorney The Partnership Agreement contains a power of attorney coupled with an interest, the effect of which is to constitute it an irrevocable power of attorney. The scope of the power of attorney is generally limited to matters relating to an investment in Units of the Partnership. The power of attorney authorizes the General Partner on behalf of the Limited Partners of the Partnership, among other things, to execute the Partnership Agreement, any amendments to the Partnership Agreement, and all instruments necessary to reflect the dissolution of the Partnership and partition of assets distributed to partners on dissolution, as well as any elections, determinations or designations under the Tax Act or taxation legislation of any province or territory with respect to the affairs of the Partnership or a Limited Partner s interest in the Partnership, including elections under subsections 85(2) and 98(3) of the Tax Act and the corresponding provisions of applicable provincial legislation in respect of the dissolution of the Partnership. By subscribing for Units of the Partnership, each investor acknowledges and agrees that he, she or it has given such power of attorney and will ratify any and all actions taken by the General Partner pursuant to such power of attorney. The power of attorney shall survive any dissolution or termination of the Partnership. Valuation Principles VALUATION OF INVESTMENTS The Net Asset Value of the Partnership will be calculated after the close of business on the last Business Day of each month (a Valuation Date ). The Net Asset Value per Unit will be calculated on a Class-by-Class and series-by-series basis. The Net Asset Value per Unit of the Partnership is the amount obtained by dividing the Net Asset Value of the Partnership attributable to a particular Class or series of Units as of a particular date by the total number of that Class or series of Units of the Partnership outstanding on that date. The Net Asset Value will be calculated on such Valuation Date by the Manager by subtracting the aggregate amount of the Partnership s liabilities (determined by the Manager in accordance with normal business practices) from the aggregate of the Partnership s assets. The Partnership s assets will be valued in accordance with the following principles: (a) the value of any cash on hand or on deposit, bills and demand notes and accounts receivable, prepaid expenses, cash received (or declared to holders of record on a date before the date as of 20

24 which the Net Asset Value is being determined and to be received), and interest accrued and not yet received, shall be deemed to be the full amount thereof, provided that (i) the value of any security which is a debt obligation which, at the time of acquisition, had a remaining term to maturity of one year or less shall be the amount paid to acquire the obligation plus the amount of any interest accrued on such obligation since the time of acquisition (for the purposes of the foregoing, interest accrued will include amortization over the remaining term to maturity of any discount or premium from the face value of an obligation at the time of its acquisition), and (ii) if the Manager and the General Partner have determined that any such deposit, bill, demand note or account receivable is not worth the full amount thereof, the value thereof shall be deemed to be such value as the Manager and the General Partner determine to be the fair value thereof; (b) (c) (d) (e) (f) (g) (h) the value of any security which is listed on a stock exchange will be the closing sale price on such date or, if there is no closing sale price, the simple average of the closing bid and the closing ask prices on such date, all as reported by any report in common use or authorized by such stock exchange; the value of a restricted security listed on a stock exchange that was purchased at a premium will be the closing sale price of the same security which is not restricted; the value of securities quoted in foreign currencies will be converted to Canadian dollars at the exchange rate at noon on such date as announced by the Bank of Canada; the value of any security which is traded on an over-the-counter market will be the closing sale price on such date or, if there is no closing sale price, the simple average of the closing bid and the closing ask prices on such date, all as reported by the financial press or an independent reporting organization; except as otherwise expressly provided, assets for which no published market exists will be valued at fair market value which typically would be cost unless a different fair market value is determined by the General Partner and the Manager; tax deductions which accrue to holders of Units shall not be taken into account in making such determination; and the value of any security or property or other assets to which, in the opinion of the Manager and the General Partner, the above principles cannot be applied (whether because no price or yield equivalent quotations are available as above provided or for any other reason) shall be valued at cost or the fair value thereof determined in good faith in such manner as the Manager and the General Partner from time to time adopt. If an investment cannot be valued under the foregoing rules or if the foregoing rules are at any time considered by the Manager and the General Partner to be inappropriate under the circumstances, then notwithstanding such rules the Manager and the General Partner will make such valuation as they consider fair and reasonable and, if there is an industry practice, in a manner consistent with industry practice for valuing such investment. The Net Asset Value of the Partnership will be calculated as described in this section ( Transaction NAV ) for all other purposes, but will be calculated in accordance with Canadian GAAP for the purposes of its financial statements (see below) for the financial year commencing on January 1, The financial statements of the Partnership will include a reconciliation of the net asset value contained in the financial statements to the net asset value used for other purposes. The Net Asset Value determined in accordance with the principles set out above may differ from Net Asset Value determined under Canadian GAAP (the GAAP NAV ). The GAAP NAV will be used for financial statement reporting purposes and a reconciliation between GAAP NAV and Transaction NAV will be included. In accordance with the recent amendments to NI , the fair value of a portfolio security used to determine the daily price of the Partnership s securities will be based on the Partnership s valuation principles set out above under the heading Valuation of Investments, which would comply with requirements of the recent amendments to 21

25 NI , if such requirements were to apply to the Partnership, but differ in some respects from the requirements of Canadian GAAP. Canadian GAAP requires that the fair value of the financial instruments listed on a recognized public stock exchange be valued at their last bid price for securities at long position (ask price for securities at short position) instead of the close price or the last sale price of the security for the day as required by recent amendments to NI The performance of the Net Asset Value for the Master Series of each Class as at each Valuation Date will be updated on a monthly basis and available to the public on the Manager s website at bridgingfinance.ca. Information contained on the Partnership s website is not part of this offering memorandum and is not incorporated herein by reference. The Manager will provide, at least annually, a report to each Limited Partner detailing the performance of such Limited Partner s Units. Audit of Financial Statements The annual financial statements of the Partnership shall be audited by the Partnership s auditors in accordance with Canadian generally accepted auditing standards. The auditors will be asked to report on the fair presentation of the annual financial statements in accordance with Canadian GAAP. Such report will include an annual valuation audit of the Partnership s Portfolio. DISTRIBUTION POLICY Subject to applicable securities legislation, distributions will be automatically reinvested in additional Units of the same series of a Class at the Net Asset Value of such series of a Class of Units on the date of distribution, unless a Limited Partner elects, by written notice to the Manager, to receive such distributions in cash. The Partnership intends to make quarterly distributions of the Target Minimum Yield and additional distributions, from time to time, if available, up to a maximum of 8%, on the Class A Units, the Class F Units and the Class I Units out of net income, net realized capital gains and, in certain cases, capital of the Partnership. There is no assurance that the targeted quarterly distributions will be made. The amount of distributions may fluctuate from quarter to quarter and there can be no assurance that the Partnership will make any distribution in any particular quarter. Investors should not confuse these distributions with the Partnership s rate of return or yield. The Manager for the Partnership, in its sole discretion, may increase or decrease the fixed quarterly distributions on Class A Units, Class F Units and Class I Units with changes in the Net Asset Value of such Class. The quarterly distributions on the Class A Units, Class F Units and Class I Units are not guaranteed. Redemptions at the Option of the Limited Partner REDEMPTION OF UNITS An investment in Units is intended to be a long-term investment. However, Units may be redeemed by Limited Partners at their Net Asset Value per Unit on the last Business Day of June or December in each year, provided that the request for redemption is submitted at least 120 days prior to such date. Units held for less than twelve months may be surrendered for redemption upon the same terms, subject to an early redemption penalty equal to 2% of the aggregate Net Asset Value per Unit of the Units being surrendered. The redemption penalty is payable to the Partnership. Redemption proceeds will be paid to the withdrawing Limited Partner not later than the 30 th day following the applicable Valuation Date on which the Units were redeemed. Any written request for the redemption of Units shall be deemed to constitute the entire notice to the Partnership and, shall, unless the General Partner determines otherwise in its sole discretion, supersede all previous requests, communications, representations, understandings and agreements, written or verbal, between the Limited Partner and the Partnership with respect to the redemption of Units including, but not limited to, any prior notices of redemption. The General Partner reserves the right to hold back up to 20% of the aggregate redemption proceeds to provide an orderly disposition of assets. The term of such holdback will not exceed a reasonable time period, having regard to the applicable circumstances. 22

26 If on any redemption date the General Partner has received requests to redeem Units representing 10% or more of the Net Asset Value of the Partnership, the General Partner may, in its discretion, redeem a pro-rated amount of each such redemption requests over a period of up to 12 months beginning on the first Valuation Date which is at least 120 calendar days following receipt of the redemption notice. The redemption price for any such deferred redemptions shall be calculated as of the Valuation Date upon which such redemption actually occurs. The General Partner has the sole discretion to accept or reject redemption requests and intends to accept redemption requests in circumstances where it would not be prejudicial to the Partnership. Redemption at the Option of the Partnership The General Partner shall have the right to require a Limited Partner to redeem some or all of the Units owned by such Limited Partner on a Valuation Date at the Net Asset Value per Unit thereof, by notice in writing to the Limited Partner given at least 120 days before the date of redemption, which right may be exercised by the General Partner in its absolute discretion. At the option of the General Partner, payment of all or part of any redemption proceeds may be made in a pro rata portion of the Portfolio. Net Asset Value (and Net Asset Value per Unit) determined for the purposes of a redemption which takes place other than at year-end will reflect a reduction to take into account the General Partner s share of net profits based on the returns of the Partnership in the year to the date of the redemption. SUMMARY OF THE PARTNERSHIP AGREEMENT The following is a summary of the Partnership Agreement which is incorporated herein by reference. This summary is not intended to be complete and each investor may request a copy of the Partnership Agreement which forms part of this offering memorandum. The rights and obligations of the Limited Partners and the General Partner under the Partnership Agreement are governed by the laws of the Province of Ontario. Each investor will directly, or indirectly through the Manager, submit an offer to purchase to the General Partner. An investor whose offer to purchase Units has been accepted by the General Partner or its agent will become a Limited Partner upon the amendment of the record of limited partners maintained by the General Partner. At or as soon as possible after the First Closing, the interest of the initial limited partners will be redeemed by the Partnership in the amount of their aggregate capital contribution of $300. Units The interest of the Limited Partners in the Partnership is divided into an unlimited number of classes of Units, each issuable in series. Initially the Partnership will issue Class A Units, Class F Units and Class I Units. Each Unit of a particular class of the Partnership is equal to each other Unit of such Class and has the same rights and obligations attaching to it as each other Unit of such Class. Each Unit of a series is equal to each other Unit of the same series with respect to all matters. Each Limited Partner will be entitled to one vote for every $100 in Net Asset Value owned by such Limited Partner as determined at the close of business on the applicable record date for voting, and a fractional vote for each fractional portion of the Net Asset Value less than $100 owned on the record date. For each Unit of the Partnership purchased, a Limited Partner will be required to contribute the applicable Net Asset Value of the Unit to the capital of the Partnership. There are no restrictions as to the maximum number of Units that a Limited Partner is entitled to hold in the Partnership, subject to the approval of the General Partner. Units of a Class will be issued in series, with a new series of a Class issued on each date that new Units are issued. The first series of each Class issued at the First Closing (or at subsequent Closing if no Units of a particular Class are issued at the First Closing) shall be designated by the Manager as the master series in respect of the applicable class (the Master Series ). At the end of each fiscal year of the Partnership, each series of Units of a Class may be redesignated and converted into the Master Series or a new series (after payment of any Management Fees and Performance Fees for that fiscal year of the Partnership). Such conversion will be effected at the relative Net Asset Value per Unit of the series of such Class being converted; provided, however, that no re-designation and conversion shall occur with respect to a series of a Class unless the Net Asset Value per Unit of that series of that Class at the end 23

27 of such fiscal year is higher than the Prior High NAV and a Performance Fee is payable in respect of that series of such Class at the end of such fiscal year. The Partnership may issue fractional Units so that subscription funds may be fully invested. Fractional Units will be calculated to three decimal points (rounded down). Fractional Units carry the same rights and are subject to the same conditions as whole Units in the proportion which they bear to a whole Unit. In addition, if the General Partner becomes aware that holders of 40% or more of the Units then outstanding are, or may be, financial institutions or other similar entities or that such a situation is imminent, the General Partner may send notice to certain of these Limited Partners requiring them to sell their Units or a portion thereof within a specified period of not less than 15 days. If a Limited Partner fails to comply with any such request, the General Partner shall have the right to sell such Limited Partner s Units or to purchase the same on behalf of the Partnership at fair value as determined by an independent third party selected by the General Partner, whose determination will be final and binding and not subject to review or appeal. If a Limited Partner defaults in the payment of any instalment amount owing in respect of the Units subscribed for by such Limited Partner, the General Partner may (unless, in respect of payments other than the initial instalment paid at the time of subscription, the default is remedied within 15 calendar days after notice thereof), declare the Units to be irrevocably forfeited to the Partnership. Alternatively, the General Partner or its agents may sell, under such terms and in such manner as the General Partner may deem appropriate, the defaulting Limited Partner s Units on behalf of the Limited Partner. Alternatively, the General Partner may institute legal proceedings against the defaulting Limited Partner to recover any deficiency caused by any default. The General Partner may also withhold from the defaulting Limited Partner any distributions which are then, and from time to time thereafter, otherwise distributable to such Limited Partner until such time as the aggregate amount of such distributions withheld is equal to the amount of such unpaid amount owing by such Limited Partner, together with interest thereon, and shall, in such event, apply the withheld distribution against the unpaid amount owing by such Limited Partner, together with interest and, in such event, the defaulting Limited Partner will continue to hold the Units held by him, her or it, other than those Units sold by the General Partner in the exercise of its discretion, with any withheld distribution to be allocated to the defaulting Limited Partner in accordance with the provisions of the Partnership Agreement and to be retained by the Partnership for partnership purposes. All payments owing by the Limited Partner that are in default shall bear interest at the rate of 3% over the prime rate charged by the Partnership s principal bank from time to time. A charge of $50 will be payable to the General Partner by any Limited Partner for each post-dated cheque that is not honoured. An investor who purchases Units, among other things, (i) irrevocably authorizes certain information to be provided to the General Partner and its service providers for their collection and use, including such investor s full name, residential address or address for service, address, social insurance number or business number, as the case may be, and the name and registered representative number of the representative of the agents responsible for such subscription and covenants to provide such information to those agents, (ii) acknowledges that he, she or it is bound by the terms of the Partnership Agreement and is liable for all obligations of a Limited Partner, (iii) makes the representations and warranties, including without limitation, representations and warranties as to his, her or its residency, set out in the Partnership Agreement, (iv) irrevocably nominates, constitutes and appoints the General Partner as his, her or its true and lawful attorney with the full power and authority as set out in the Partnership Agreement, and (v) covenants and agrees that all documents executed and other actions taken on behalf of him, her or it pursuant to the power of attorney will be binding on him, her or it, and agrees to ratify any such documents or actions requested by the General Partner. The Partnership Agreement includes representations, warranties and covenants on the part of the investor that he, she or it is not a non-resident for the purposes of the Tax Act, a non- Canadian within the meaning of the Investment Canada Act or a partnership and that he, she or it will maintain such status during such time as the Units are held by him, her or it. In the Partnership Agreement, each investor is deemed to represent and warrant that the investor is not a financial institution as that term is defined in subsection 142.2(1) of the Tax Act unless such investor has provided written notice to the contrary to the General Partner prior to the date of acceptance of the investor s subscription for Units. The General Partner is not required to subscribe for any Units or otherwise contribute capital to the Partnership. Fees and Operating Expenses The Partnership shall pay to the Manager, the fees described under Fees and Expenses Payable by the Partnership. 24

28 The Partnership will reimburse the General Partner, or its agents or subcontractors, for all expenses (inclusive of applicable taxes) incurred in connection with the operation and administration of the Partnership in accordance with the Partnership Agreement. It is anticipated that these expenses will include (a) mailing, printing and other expenses associated with providing periodic reports to Limited Partners; (b) fees payable to the Manager for performing financial, record keeping, and Limited Partner reporting and general operating and administrative services; (c) fees payable to the auditors, valuators, legal advisors and service providers (including bookkeeping registrar and transfer agency costs) of the Partnership; (d) fees payable to a custodian; (e) taxes and ongoing regulatory filing fees; (g) any reasonable out-of-pocket expenses incurred by the General Partner or its agents in connection with their ongoing obligations to the Partnership, including expenses in respect of any independent qualified persons retained to review any investments; (g) expenses relating to portfolio transactions; (h) insurance and safekeeping fees (i) any expenses which may be incurred upon the termination of the Partnership; and (j) expenses of any action, suit or other proceeding in respect of which or in relation to which the Manager or the General Partner are entitled to indemnity by the Partnership. See also Fees and Expenses Payable by the Partnership. Net Income and Loss Commencing in January 2014, the Partnership will, as soon as practicable and in any event within 60 days of the end of the previous fiscal year, allocate pro rata among the Limited Partners of record of the Partnership in proportion to each Limited Partner s Capital Contribution on the last day of such fiscal year 99.99% of the Income and Loss (as each are defined in the Partnership Agreement) of the Partnership. On dissolution of the Partnership, Limited Partners are entitled to 99.99% of the assets of the Partnership and the General Partner is entitled to 0.01% of such assets after payment of all liabilities of the Partnership. The Partnership will make such filings in respect of such allocations as are required by the Tax Act. Limited Partners will be entitled to claim certain deductions from income for income tax purposes as described under Certain Income Tax Considerations. Cash Distributions The Manager may, on behalf of the Partnership, sell investments in the Portfolio at any time if it is of the opinion that it is in the best interests of the Partnership to do so. The Partnership Agreement provides that the Partnership will not make distributions of net earnings, if any, unless otherwise determined appropriate by the General Partner, in its discretion. There can be no assurance that any such distributions will occur or, if they do occur, be sufficient to satisfy a Limited Partner s tax liability for the year arising from his or her status as a Limited Partner. Functions and Powers of the General Partner The General Partner has exclusive authority to manage the operations and affairs of the Partnership, to make all decisions regarding the business of the Partnership and to bind the Partnership. The General Partner may, pursuant to the terms of the Partnership Agreement, delegate certain of its powers to third parties where, in the discretion of the General Partner, it would be in the best interests of the Partnership to do so. The General Partner is required to exercise its powers and discharge its duties honestly, in good faith and in the best interests of the Partnership and to exercise the degree of care, diligence and skill of a reasonably prudent and qualified manager. Among other restrictions imposed on the General Partner, it may not dissolve the Partnership nor wind up the Partnership s affairs except in accordance with the provisions of the Partnership Agreement. The General Partner has the power to make on behalf of the Partnership and each Limited Partner of the Partnership, in respect of such Limited Partner s interest in the Partnership, any and all elections, determinations or designations under the Tax Act or any other taxation or other legislation or laws of like import of Canada or of any province or jurisdiction. The General Partner will file, on behalf of the General Partner and the Limited Partners, any information return required to be filed in respect of the activities of the Partnership under the Tax Act or any other taxation or other legislation or laws of like import of Canada or of any province or jurisdiction. Accounting and Reporting The Partnership s fiscal year will be the calendar year. A copy of the audited financial statements will be made available by the General Partner to each Limited Partner within 140 days (or such shorter period as may be required under the Securities Act (Ontario)) following the end of each fiscal year. Each statement will be accompanied by a narrative report describing the affairs and operations of the Partnership. The General Partner may, in its sole discretion, seek exemptions relieving the Partnership from its quarterly reporting requirements under applicable securities laws and is authorized to do so under the Partnership Agreement. 25

29 In addition, the General Partner shall, by March 31 of each year, forward to each Limited Partner of record of the Partnership on December 31 of the preceding year such information as is necessary to enable the Limited Partner to complete his or her income tax reporting relating to his or her interest in the Partnership. The General Partner will ensure that the Partnership complies with all other reporting and administrative requirements. The General Partner shall keep adequate books and records reflecting the activities of the Partnership. A Limited Partner of the Partnership or his, her or its duly authorized representative shall have the right to examine the books and records of the Partnership during normal business hours at the offices of the General Partner. Notwithstanding the foregoing, a Limited Partner shall not have access to any information which, in the opinion of the General Partner, should be kept confidential in the interests of the Partnership. Limited Liability The Partnership was formed in order for Limited Partners to benefit from liability limited to the extent of their capital contributions to the Partnership together with their pro rata share of the undistributed income of the Partnership. Limited Partners may lose the protection of limited liability by taking part in the management or control of the business of the Partnership and may be liable to third parties as a result of false or misleading statements in the public filings made pursuant to the Limited Partnerships Act (Ontario) or equivalent filings under the legislation of other jurisdictions. Limited Partners may also lose the protection of limited liability if the Partnership operates, owns property, or incurs obligations, or otherwise carries on business, in a province or territory of Canada or other jurisdiction which does not recognize the limited liability conferred under the Limited Partnerships Act (Ontario). The General Partner will indemnify and hold harmless each Limited Partner from and against all losses, liabilities, expenses and damages suffered or incurred by the Limited Partner that result from such Limited Partner not having limited liability, except where the lack or loss of limited liability is caused by some act or omission of such Limited Partner or a change in any applicable legislation. However, the General Partner has only nominal assets. Consequently, it is unlikely that the General Partner will have sufficient assets to satisfy any claims pursuant to this indemnity. Except in the event of a loss of limited liability, no Limited Partner will be obligated to pay any additional assessment or make any further capital contribution on or with respect to the Units held or purchased by him or her; however, the Limited Partners and the General Partner may be bound to return to the Partnership such part of any amount distributed to them as may be necessary to restore the capital of the Partnership to its existing amount before such distribution if, as a result of such distribution, the capital of the Partnership is reduced and the Partnership is unable to pay its debts as they become due. See Risk Factors. Transfers of Units Only whole Units are transferable. A Limited Partner may transfer all or part of his or her Units by delivering to the Administrator, in its capacity as transfer agent for the Units, a form of transfer and power of attorney, substantially in the form annexed as Schedule A to the Partnership Agreement, duly completed and executed by the Limited Partner, as transferor, and the transferee. The transferee, by executing the transfer, agrees to be bound by the Partnership Agreement as a Limited Partner as if the transferee had personally executed the Partnership Agreement and to grant the power of attorney provided for in the Partnership Agreement. A transferee who executes the transfer will be required to represent and warrant that he, she or it is not a non-resident within the meaning of the Tax Act, is not a non-canadian within the meaning of the Investment Canada Act, is not a partnership and is not a tax shelter or an entity an interest in which is a tax shelter investment as that term is defined in the Tax Act and will be required to covenant to maintain such status during such time as the Units are held by him, her or it. The transferee will also be required to disclose whether the transferee is or is not a financial institution as that term is defined in subsection 142.2(1) of the Tax Act. If the transferee is a financial institution or the General Partner believes that it is, the General Partner may reject the transfer. The transferee will furthermore ratify and confirm the power of attorney given to the General Partner in the Partnership Agreement. If a Limited Partner ceases to be resident in Canada or becomes a financial institution for tax purposes and does not sell the Units held by such Limited Partner to a person who is qualified to hold such Units, the General Partner has the right pursuant to the Partnership Agreement either to purchase such Units for cancellation for and on behalf 26

30 of the Partnership or sell, on behalf of the Partnership, such Units to a person who is qualified to hold Units, in either case at their Net Asset Value as determined by the Portfolio Adviser and General Partner. The General Partner has the right to reject any transfer for any reason and will deny the transfer of Units to a nonresident for the purposes of the Tax Act. Thereafter, the General Partner reserves the right to repurchase any Units held by a non-resident appearing from time to time on the record of Limited Partners of the Partnership. Pursuant to the provisions of the Partnership Agreement, when the transferee has been registered as a Limited Partner of the Partnership under the Limited Partnerships Act (Ontario), the transferee of Units shall become a party to the Partnership Agreement and shall be subject to the obligations and entitled to the rights of a Limited Partner under the Partnership Agreement. A transferor of Units will remain liable to reimburse the Partnership for any amounts distributed to him or her by the Partnership which may be necessary to restore the capital of the Partnership to the amount existing immediately prior to such distribution, if the distribution resulted in a reduction of the capital of the Partnership and the incapacity of the Partnership to pay any debts as they became due. The Partnership Agreement provides that if the General Partner becomes aware that the beneficial owners of 40% or more of the Units of the Partnership then outstanding are, or may be, financial institutions (as defined in subsection 142.2(1) of the Tax Act) or that such a situation is imminent, among other rights set forth in the Partnership Agreement, the General Partner has the right to refuse to issue Units of the Partnership or register a transfer of Units of the Partnership to any person unless that person provides a declaration that it is not a financial institution. Meetings The Partnership will not be required to hold annual general meetings. However, meetings of the Limited Partners may be called at any time by the General Partner in respect of all Limited Partners, or, where the nature of the business to be transacted is only relevant to the Limited Partners holding Units of a particular Class, in respect of that Class. Meetings shall be called on receipt of a written request from Limited Partners holding, in aggregate, 50% or more of the Net Asset Value of the Partnership or, in respect of a matter relevant to Limited Partners holding Units of a particular Class, 50% or more of the Net Asset Value of the Partnership attributable to that Class. Each Limited Partner will be entitled to one vote for every $100 in Net Asset Value owned by such Limited Partner as determined at the close of business on the applicable record date for voting, and a fractional vote for each fractional portion of the Net Asset Value less than $100 owned on the record date. The General Partner is entitled to one vote in its capacity as General Partner. At any meeting of Limited Partners or of Limited Partners of a Class, two or more Limited Partners, or two or more Limited Partners of the particular Class, present in person or represented by proxy and holding not less than 50% of the Net Asset Value of the Partnership (in the case of a meeting of all Limited Partners) or 50% of the Net Asset Value of the Partnership attributable to the applicable Class (in the case of a meeting of a Class) will constitute a quorum at a meeting of the Limited Partners except a meeting called to consider an Extraordinary Resolution at which two or more Limited Partners of each Class present in person or represented by proxy and, in each case, holding not less than 66 2 / 3% of the Net Asset Value of the Partnership attributable to each Class will constitute a quorum. For greater certainty, no particular Class acting without the other Classes may pass an Extraordinary Resolution. If a quorum is not present at a meeting within 30 minutes after the time fixed for the meeting, the meeting, if convened pursuant to a written request of Limited Partners, shall be cancelled, but otherwise will be adjourned to such date as selected by the chair of the meeting. In the event that such meeting is adjourned for less than 30 days, the General Partner will not be required to give notice of the adjourned meeting to the Limited Partners other than by an announcement made at the initial meeting that is adjourned. The Limited Partners present at any adjourned meeting will constitute a quorum for purposes of considering any business that might have been dealt with at the original meeting. The General Partner (in respect of any Units which may be held by it from time to time), insiders of the Partnership (as such expression is defined in the Securities Act (Ontario)) and affiliates of the General Partner, and any director or officer of such persons, who hold Units will not be entitled to vote on any Extraordinary Resolution. Amendments The Partnership Agreement may only be amended with the consent of the Limited Partners given by Extraordinary Resolution. However, unless all of the Limited Partners consent thereto, no amendment can be made to the Partnership Agreement which would have the effect of reducing the interest in the Partnership of the Limited Partners, changing in any manner the allocation of income or loss for tax purposes, changing the liability of any Limited Partner, allowing any Limited Partner to participate in the control or management of the business of the Partnership, changing the right of a Limited Partner or the General Partner to vote at any meeting, or changing the Partnership from a limited partnership to a general partnership. In addition, no amendment can be made to the 27

31 Partnership Agreement which would have the effect of reducing the fees payable to the Manager or its share of the income or assets of the Partnership unless the General Partner, in its sole discretion, consents thereto. Notwithstanding the foregoing, the General Partner is entitled to make certain amendments to the Partnership Agreement without the consent of the Limited Partners for the purpose of adding any provisions which, in the opinion of the General Partner, based on the recommendation of counsel to the Partnership, are for the protection or benefit of the Limited Partners or the Partnership, for the purpose of curing an ambiguity or for the purpose of correcting or supplementing any provision which may be defective or inconsistent with another provision. Such amendments may be made only if they will not materially affect the interest of any Limited Partner. Removal of General Partner The General Partner may not be removed as general partner of the Partnership other than by an Extraordinary Resolution of the Limited Partners, and only if the General Partner is in breach or default of the provisions of the Partnership Agreement and, if capable of being cured, such breach has not been cured within 45 business days notice of such breach to the General Partner, or if the General Partner becomes bankrupt or insolvent. A quorum for a meeting called for the purposes of removing the General Partner as general partner of the Partnership shall consist of two or more Limited Partners present in person or represented by proxy and representing not less than 66 2 / 3% of the Net Asset Value of the Partnership. Power of Attorney The Partnership Agreement contains a power of attorney coupled with an interest, the effect of which is to constitute it an irrevocable power of attorney. The power of attorney authorizes the General Partner on behalf of the Limited Partners, among other things, to execute the Partnership Agreement, any amendments to the Partnership Agreement and all instruments necessary to reflect the Partnership Agreement and any amendments to the Partnership Agreement, as well as any elections, determinations or designations under the Tax Act or taxation legislation of any province or territory with respect to the affairs of the Partnership or a Limited Partner s interest in the Partnership, including elections under subsections 85(2) and 98(3) of the Tax Act and the corresponding provisions of applicable provincial legislation in respect of the dissolution of the Partnership. By purchasing Units of the Partnership, each investor acknowledges and agrees that he, she or it has given such power of attorney and will ratify any and all actions taken by the General Partner pursuant to such power of attorney. The power of attorney shall survive any dissolution or termination of the Partnership. By subscribing for Units of the Partnership, each investor acknowledges and agrees that he, she or it has given such power of attorney and will ratify any and all actions taken by the General Partner pursuant to such power of attorney. RISK FACTORS Investors who are not willing to rely on the discretion of the Manager, which has limited operating history and is expected only to have nominal assets, should not purchase Units. Investors should consult with their own professional advisors to assess the legal, tax and other aspects of an investment prior to investing in Units. There is no assurance of a positive return on a Limited Partner s original investment. Investors should consider the risk factors specified in this offering memorandum, including the following risk factors, before purchasing Units. Speculative Investments An investment in Units is speculative in nature and is appropriate only for investors who have the capacity to absorb a loss of some or all of their investment. There is no guarantee that an investment in the Partnership will earn a specified rate of return or any return in the short or long term. No Assurance in Achieving Investment Objective There is no assurance that the Partnership will be able to achieve its investment objective. If the Partnership is not able to generate sufficient net income or capital gains to pay the anticipated distribution on the Class A Units, Class F Units or Class I Units, the Partnership may not pay distributions on such Units. No Assurance in Achieving Target Minimum Yield The Target Minimum Yield is not a guaranteed rate of return on an investment in Units. 28

32 Marketability of Units and Resale Restrictions There is no market through which the Units may be sold and purchasers may not be able to resell Units purchased under this offering memorandum. No market for the Units is expected to develop. The Units are being sold on a private placement basis and any resale of the Units must be made in accordance with applicable securities laws which will vary depending on the relevant jurisdiction, and which may require resales to be made in accordance with exemptions from registration and prospectus requirements of applicable securities laws. Certificates evidencing the Units shall contain a legend to this effect. See Resale Restrictions. It is possible that Limited Partners may not be able to resell their Units other than by way of redemption of their Units at any Valuation Date, subject to an early redemption penalty for Units held for less than twelve months and subject to the limitations described under Redemption of Units. The Partnership may suspend redemption rights in certain circumstances, including redemptions in excess of 10% of the Net Asset Value. Limited Partners may not be able to liquidate their investment in a timely manner and the Units may not be readily accepted as collateral for a loan. This offering of Units is not qualified by way of prospectus, and consequently the resale of Units is subject to restrictions under applicable securities legislation. Possible Effect of Redemptions Substantial redemptions of Units of the Partnership could require the Partnership to liquidate securities positions more rapidly than otherwise desirable to raise the necessary cash to fund redemptions and to achieve a market position appropriately reflecting a smaller asset base. Such factors could adversely affect the value of the Units of the Partnership redeemed and of the Units of the Partnership that remain outstanding. Interest Rate Risk The Portfolio is primarily comprised of interest bearing investments. As a result, the Portfolio will be directly exposed to the risk that the future cash flows will fluctuate as a result of changes in interest rates. Prices of fixed income investments generally increase when interest rates decline or vice versa. If the investments included in the Portfolio are short-term in nature, such investments will generally not be exposed to a significant risk that the value of such investments will fluctuate in respect to changes in prevailing levels of market interest rates. Credit Risk The investments of the Partnership in Asset-Based Investments and Factoring Investments will expose the Partnership to the credit risk of the borrower or counterparty, as applicable, including the risk of default by the borrower or counterparty, as applicable, on the interest, principal and other payment amounts owing on the debt. Although the Manager will seek to moderate risk through the careful selection of investments within the parameters of the investment strategy, and such investments in the Portfolio will generally be secured by specific collateral, there can be no assurance the liquidation of such collateral would satisfy a borrower s obligation in the event of default or that such collateral could be readily liquidated under such circumstances. In the event of bankruptcy of a borrower, delays or limitations could be experienced with respect to the ability to realize the benefits of any collateral securing an Asset-Based Investment or Factoring Investments. Operating History and Financial Resources of the General Partner The Partnership and the General Partner are newly established with no previous operating history and will have, prior to the Closing of this Offering, limited assets. The General Partner will at all material times thereafter only have nominal assets. While the General Partner has agreed to indemnify the Limited Partners in certain circumstances, it is unlikely that the General Partner will have sufficient assets to satisfy any claims pursuant to such indemnity. Class Risk Each class of Units has its own fees and expenses which are tracked separately. If for any reason, the Partnership is unable to pay the expenses of one class of Units using that class proportionate share of the Partnership s assets, the Partnership will be required to pay those expenses out of the other classes proportionate share of the Partnership s assets. This could effectively lower the investment returns of the other class or classes of Units even though the value of the investments of the Partnership might have increased. 29

33 Change in Investment Objectives and Strategy The Manager may alter the Partnership s investment strategies without prior approval by Limited Partners to adapt to changing circumstances. Changes in Net Asset Values The purchase price per Unit paid by a Subscriber at a Closing subsequent to the First Closing may be less than or greater than the aggregate Net Asset Value per Unit at the time of purchase. The value of the Units may fluctuate due to variations in the value of investments held by the Partnership. Fluctuations in the market values of Portfolio investments may occur for a number of reasons beyond the control of the Partnership and the Manager, including fluctuations in market prices for commodities and foreign exchange rates and other risks described above under Sector Specific Risks. There can be no assurance that the Partnership will pay distributions to Limited Partners. The ability of the Partnership to pay distributions will depend upon numerous factors such as interest rates, the ability of borrowers to make payments and other factors which may not yet be known to the Partnership or the Manager or which may be beyond their control. Concentration Risk The Partnership intends to invest the Available Funds in companies to address short-term needs, including restructuring existing debt, providing working capital for growth, supporting inventory purchases and capital expenditures and acquisitions/buyouts. Concentrating its investment in this manner may result in the value of the Units fluctuating to a greater degree than portfolios with a more diversified investment focus. The size of the Offering will directly affect the degree of diversification of the Portfolio and may affect the scope of investment opportunities available to the Partnership. Liquidity of Underlying Investments The securities and debt instruments in which the Partnership intends to invest may be illiquid or thinly traded. There are no restrictions on the investment of the Partnership s assets in illiquid securities or debt instruments. Most of the securities and debt instruments in which the Partnership intends to invest are privately negotiated with third party borrowers and are not traded on any stock exchange or public market. It is possible that the Partnership may not be able to sell or repurchase significant portions of such positions without facing substantial adverse prices. If the Partnership is required to transact in such securities before its intended investment horizon, the performance of the Partnership could suffer. Indebtedness and Use of Leverage The Partnership may incur indebtedness secured by the assets of the Partnership. There can be no assurance that such a strategy will enhance returns, and such strategy may in fact reduce returns. The ability of the Partnership to incur indebtedness may increase losses in the event that securities purchased with the borrowed funds decline in value, or in the event that securities in respect of which uncovered short sales are made to increase in value. The Partnership may use financial leverage by borrowing funds against the assets of the Portfolio. The use of leverage increases the risk to the Partnership and subjects the Partnership to higher current expenses. Also, if the Portfolio value drops to the loan value or less, Limited Partners of the Partnership could sustain a total loss of their investment. The Partnership will not use leverage to enhance performance returns. Global Economic and Market Conditions In the event of a continued general economic downturn or a recession, there can be no assurance that the business, financial condition and results of operations of the businesses in which the Partnership invests would not be materially adversely affected. 30

34 The success of the Partnership s activities may be affected by general economic and market conditions, such as interest rates, availability of credit, inflation rates, economic uncertainty, changes in laws, and national and international political circumstances. These factors may affect the level and volatility of securities prices and the liquidity of the Partnership s investments. Unexpected volatility or illiquidity could impair the Partnership s profitability or result in losses. Currency Risk Investment in securities denominated in a currency other than Canadian dollars will be affected by changes in the value of the Canadian dollar in relation to the value of the currency in which the security is denominated. Thus, the value of securities within the Partnership s portfolio may be worth more or less depending on their susceptibility to foreign exchange rates. Government Regulation While current government regulations do not impede the Partnership s Asset-Based Investments and Factoring Investments, new regulations or amendments to current laws and regulations governing the operations of the Partnership or more stringent enforcement of such laws and regulations could have a substantial adverse impact on the financial results of the Portfolio and the Partnership. Tax-Related The possibility exists that a Limited Partner will receive allocations of income without receiving cash distributions from the Partnership in the year sufficient to satisfy the Limited Partner s tax liability for the year arising from his, her or its status as a Limited Partner of the Partnership. Reliance on the Manager Limited Partners must rely on the discretion of the Manager in determining (in accordance with the Partnership s Investment Guidelines) the composition of the Portfolio, and in determining the timing of the disposition of investments owned by the Partnership. Limited Partners are not entitled to participate in the management or control of the Partnership or its operations. Limited Partners do not have any input into the Partnership s trading activities. The success or failure of the Partnership will ultimately depend on the indirect investment of the assets of the Partnership by the Manager with whom the Limited Partners will not have any direct dealings. Dependence of the Manager on Key Personnel The Manager will depend, to a great extent, on the services of a limited number of individuals in the administration of the Partnership s activities. The loss of one or more of such individuals for any reason could impair the ability of the Manager to perform its investment management activities on behalf of the Partnership. Lack of Separate Counsel Counsel for the Partnership in connection with this Offering is also counsel to the General Partner and the Manager. Prospective investors, as a group, have not been represented by separate counsel and counsel for the Partnership, the General Partner and the Manager do not purport to have acted for investors or to have conducted any investigation or review on their behalf. Conflict of Interest of the Manager The Manager may in the future act as manager, portfolio manager and/or investment fund advisor for a number of funds and limited partnerships that engage or may engage in the same business activities or pursue the same investment opportunities as the Partnership. Certain conflicts may arise from time to time in the management of such funds or limited partnerships and in assessing suitable investment opportunities. Directors of the General Partner and the Manager may from time to time be associated with other companies or entities which may give rise to conflicts of interest. 31

35 Liability of Limited Partners Limited Partners may lose their limited liability in certain circumstances, including by taking part in the control or management of the business of the Partnership. The principles of law in the various jurisdictions of Canada recognizing the limited liability of the limited partners of limited partnerships subsisting under the laws of one province but carrying on business in another province or territory have not been authoritatively established. If limited liability is lost, there is a risk that Limited Partners may be liable beyond their contribution of capital and share of undistributed net income of the Partnership in the event of judgment on a claim in an amount exceeding the sum of the net assets of the General Partner and the net assets of the Partnership. While the General Partner has agreed to indemnify the Limited Partners in certain circumstances, the General Partner has only nominal assets, and it is unlikely that the General Partner will have sufficient assets to satisfy any claims pursuant to such indemnity. Limited Partners remain liable to the Partnership for the return of any amount distributed to them as may be necessary to restore the capital of the Partnership to the amount existing before such distribution if, as a result of any such distribution, the capital of the Partnership is reduced and the Partnership is unable to pay its debts as they become due. Loans There is no assurance that an investor will receive sufficient distributions from the Partnership to pay interest on, or to repay the principal amount of, any loan taken to finance the acquisition of Units. Each investor is responsible for ensuring that all principal and interest owed by the investor in respect of any such loan is paid in full when due. The failure to pay amounts when due under any particular loan may result in legal action being taken against the applicable investor by the lender to enforce payment thereof and the loss of any collateral pledged to the lender by such investor, including the Units. The General Partner and the Manager CONFLICTS OF INTEREST The Manager is entitled to receive the Management Fee and the Performance Fee from the Partnership. See Fees and Expenses Payable by the Partnership. In addition, the General Partner holds an undivided 0.01% interest in the Partnership. Certain of the directors and officers of the General Partner and the Manager may also be or become directors or officers of the companies in which the Partnership invests. Certain of the directors and officers of the General Partner and the Manager (and their respective affiliates) may own shares in the companies in which the Partnership invests. Directors of the General Partner and the Manager may from time to time be associated with other companies or entities which may give rise to conflicts of interest. In accordance with the Canada Business Corporations Act, directors who have a material interest in any person who is a party to a material contract or proposed material contract with the General Partner and the Manager are required, subject to certain exceptions, to disclose that interest and abstain from voting on any resolution to approve that contract. In addition, the directors of the General Partner are required to act honestly and in good faith with a view to the best interests of the General Partner. The General Partner and the Manager and their respective affiliates may engage in the promotion, management or investment management of any other fund or partnership in which the Partnership invests and may receive fees from such companies. Investment Opportunities The General Partner, the Manager and their respective affiliates are not in any way limited or affected in their ability to carry on other business ventures for their own account and for the account of others and currently engage and may in the future engage in the same business activities or pursue the same investment opportunities as the Partnership. Conflicts of interest may arise from time to time in allocating investment opportunities, timing investment decisions and exercising rights in respect of and otherwise dealing with such securities. There is no obligation on the General Partner, the Manager or their respective officers, directors and affiliates to present any particular investment opportunity to the Partnership and such persons may recommend to others such investment opportunity. The General Partner and the Manager may from time to time disclose to such affiliates information regarding potential investment opportunities for the Partnership. Where conflicts of interest arise with respect to investment 32

36 opportunities, the Manager will address such conflicts of interest with regard to the investment objectives of each of the parties involved and will act in accordance with the duty of care owed to each of them. PROMOTER The General Partner may be considered a promoter of the Partnership by reason of its initiative in forming and establishing the Partnership and taking the steps necessary for the distribution of the Units. The promoter will not receive any benefits, directly or indirectly, from the issuance of Units offered hereunder other than amounts paid to the Manager, one of its affiliates, as described under Fees and Expenses Payable by the Partnership. EXPERTS The auditors of the Partnership are Ernst & Young LLP, Chartered Accountants. Ernst & Young LLP has advised that they are independent with respect to the Partnership within the meaning of the Rules of Professional Conduct of the Institute of the Chartered Accountants of Ontario. Stikeman Elliott LLP ( Stikeman ) has acted as counsel to the Partnership, the General Partner and the Manager in connection with the establishment of the Partnership and the Offering of Units of the Partnership pursuant to this offering memorandum. Stikeman does not represent investors in Units of the Partnership and no independent or separate legal counsel has been retained by the Partnership, the General Partner or the Manager to represent investors in Units of the Partnership. Stikeman s representation of the Partnership, the General Partner and the Manager is limited to the specific matters on which it was consulted by them and does not take into account the interests of investors in Units of the Partnership. This offering memorandum was prepared based on information furnished by the General Partner and the Manager and Stikeman has not independently verified such information. In addition, Stikeman assumes no obligation to monitor compliance by the Partnership, the General Partner or the Manager with the investment policies and restrictions, the valuation procedures or other guidelines set forth in this offering memorandum nor does Stikeman monitor ongoing compliance with applicable laws. ADMINISTRATOR The administrator of the Partnership (the Administrator ) is Commonwealth Fund Services Ltd. The Administrator was retained to provide certain administrative services to the Partnership pursuant to the terms of an administration agreement (the Administration Agreement ). The Administrator is a majority-owned subsidiary of Caledon Trust Company and has its principal place of business at Suite 3402, 130 Adelaide Street West, Toronto, Ontario, M5H 3P5. Pursuant to the Administration Agreement, the Administrator is responsible for computing the Net Asset Value of the Partnership and of each Class and series, maintaining the books and records of the Partnership, providing Limited Partners recordkeeping and administration services, establishing and maintaining accounts on behalf of the Partnership with financial institutions, effecting the registration or transfer of Units, administering the procedure for the issue, transfer, allotment, redemption and purchase of Units in accordance with the Partnership Agreement and this offering memorandum, entering on the register of Limited Partners all issues, allotments, transfers, conversions, redemptions and/or purchases of Units, preparing all necessary tax filings for Limited Partners and any other matters necessary for the administration of the Partnership. The Administrator may delegate certain functions under the Administration Agreement to affiliated companies. Under the Administration Agreement, the Partnership pays the Administrator an administration fee. The Partnership is also responsible for out-of-pocket expenses (such as copying and mailing of reports) incurred by the Administrator on behalf of the Partnership. The Administrator has agreed to exercise the care, diligence and skill that a prudent service provider would exercise in comparable circumstances. The Administrator shall not be liable for any act or omission in the course of, or connected to, rendering its services, except to the extent that such liability directly arises out of the negligence, wilful misconduct or lack of good faith of the Administrator. In no event will the Administrator s liability under the Administration Agreement exceed the aggregate amount of fees received by the Administrator from the Partnership in the preceding six (6) months. The Administrator shall not be responsible for any loss or diminution in the value of the Partnership s assets. The Partnership has agreed to indemnify and save harmless the Administrator, and its affiliates, subsidiaries and agents, and their directors, officers, and employees from and against all legal fees, judgments and amounts paid in settlement, actually and reasonably incurred by any of them in connection with the services provided under the 33

37 Administration Agreement except to the extent incurred as a result of the negligence, wilful misconduct or lack of good faith on the part of the Administrator. The Administration Agreement shall continue and remain in full force and effect for a period of two (2) years from August 13, 2013 and thereafter renews automatically for successive one (1) year periods in perpetuity, unless such agreement is terminated by either party giving the other at least three (3) months written notice prior to the end of the period in force. The Administration Agreement may be terminated by either party giving the other party at least three months written notice. The Administration Agreement may also be terminated immediately by either party under certain circumstances, including bankruptcy or insolvency of the other party. ENGLISH LANGUAGE Upon receipt of this document, each Canadian investor hereby confirms that it has expressly requested that all documents evidencing or relating in any way to the sale of the securities described herein (including for greater certainty any purchase confirmation or any notice) be drawn up in the English language only. Par la réception de ce document, chaque investisseur canadien confirme par les présentes qu il a expressément exigé que tous les documents faisant foi ou se rapportant de quelque manière que ce soit à la vente des valeurs mobilières décrites aux présentes (incluant, pour plus de certitude, toute confirmation d achat ou tout avis) soient rédigés en anglais seulement. RESALE RESTRICTIONS The distribution of Units is being made only on a private placement basis and is exempt from the requirement that the Partnership prepare and file a prospectus with the relevant Canadian securities regulatory authorities. Accordingly, any resale of the Units must be made in accordance with applicable securities laws which will vary depending on the relevant jurisdiction and which may require that resales be made in accordance with exemptions from the registration and prospectus requirements of applicable securities laws. Certificates evidencing the Units will bear a legend describing such resale restrictions. In addition, Limited Partners selling Units of the Partnership may have reporting and other obligations. Purchasers are advised to seek legal advice prior to any resale of the Units. RIGHTS OF ACTION FOR DAMAGES OR RESCISSION If you purchase these Units you will have certain rights, some of which are described below. a) Two Day Cancellation Right You can cancel your agreement to purchase these securities. To do so, you must send a notice to us by midnight on the 2 nd business day after you sign the agreement to buy securities. b) Statutory Rights of Action in the Event of a Misrepresentation Securities legislation in certain of the Canadian provinces provides purchasers of securities pursuant to an offering memorandum (such as this offering memorandum) with a remedy for damages or rescission, or both, in addition to any other rights they may have at law, where the offering memorandum and any amendment to it contains a Misrepresentation. Where used herein, Misrepresentation means an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make any statement not misleading in light of the circumstances in which it was made. These remedies, or notice with respect to these remedies, must be exercised or delivered, as the case may be, by the purchaser within the time limits prescribed by applicable securities legislation. Ontario Section of the Securities Act (Ontario) provides that every purchaser of securities pursuant to an offering memorandum (such as this offering memorandum) shall have a statutory right of action for damages or rescission against the issuer and any selling security holder in the event that the offering memorandum contains a Misrepresentation. A purchaser who purchases securities offered by the offering memorandum during the period of distribution has, without regard to whether the purchaser relied upon the Misrepresentation, a right of action for damages or, alternatively, while still the owner of the securities, for rescission against the issuer and any selling security holder provided that: 34

38 (a) (b) (c) (d) if the purchaser exercises its right of rescission, it shall cease to have a right of action for damages as against the issuer and the selling security holders, if any; the issuer and the selling security holders, if any, will not be liable if they prove that the purchaser purchased the securities with knowledge of the Misrepresentation; the issuer and the selling security holders, if any, will not be liable for all or any portion of damages that it proves do not represent the depreciation in value of the securities as a result of the Misrepresentation relied upon; and in no case shall the amount recoverable exceed the price at which the securities were offered. Section 138 of the Securities Act (Ontario) provides that no action shall be commenced to enforce these rights more than: (a) (b) in the case of an action for rescission, 180 days after the date of the transaction that gave rise to the cause of action; or in the case of an action for damages, the earlier of: (i) (ii) 180 days after the date that the purchaser first had knowledge of the facts giving rise to the cause of action; or three years after the date of the transaction that gave rise to the cause of action. This offering memorandum is being delivered in reliance on the exemption from the prospectus requirements contained under section 2.3 of NI (the accredited investor exemption ). The rights referred to in section of the Securities Act (Ontario) do not apply in respect of an offering memorandum (such as this offering memorandum) delivered to a prospective purchaser in connection with a distribution made in reliance on the accredited investor exemption if the prospective purchaser is: (a) a Canadian financial institution or a Schedule III bank (each as defined in NI ); (b) (c) the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada); or a subsidiary of any person referred to in paragraphs (a) and (b), if the person owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary. Saskatchewan Section 138 of The Securities Act, 1988 (Saskatchewan), as amended (the Saskatchewan Act ) provides that where an offering memorandum (such as this offering memorandum) or any amendment to it is sent or delivered to a purchaser and it contains a misrepresentation (as defined in the Saskatchewan Act), a purchaser who purchases a security covered by the offering memorandum or any amendment to it is deemed to have relied upon that misrepresentation, if it was a misrepresentation at the time of purchase, and has a right of action for rescission against the issuer or a selling security holder on whose behalf the distribution is made or has a right of action for damages against: (a) (b) (c) the issuer or a selling security holder on whose behalf the distribution is made; every promoter and director of the issuer or the selling security holder, as the case may be, at the time the offering memorandum or any amendment to it was sent or delivered; every person or company whose consent has been filed respecting the offering, but only with respect to reports, opinions or statements that have been made by them; 35

39 (d) (e) every person who or company that, in addition to the persons or companies mentioned in (a) to (c) above, signed the offering memorandum or the amendment to the offering memorandum; and every person who or company that sells securities on behalf of the issuer or selling security holder under the offering memorandum or amendment to the offering memorandum. Such rights of rescission and damages are subject to certain limitations including the following: (a) (b) (c) (d) (e) if the purchaser elects to exercise its right of rescission against the issuer or selling security holder, it shall have no right of action for damages against that party; in an action for damages, a defendant will not be liable for all or any portion of the damages that he, she or it proves do not represent the depreciation in value of the securities resulting from the misrepresentation relied on; no person or company, other than the issuer or a selling security holder, will be liable for any part of the offering memorandum or any amendment to it not purporting to be made on the authority of an expert and not purporting to be a copy of, or an extract from, a report, opinion or statement of an expert, unless the person or company failed to conduct a reasonable investigation sufficient to provide reasonable grounds for a belief that there had been no misrepresentation or believed that there had been a misrepresentation; in no case shall the amount recoverable exceed the price at which the securities were offered; and no person or company is liable in an action for rescission or damages if that person or company proves that the purchaser purchased the securities with knowledge of the misrepresentation. In addition, no person or company, other than the issuer or selling security holder, will be liable if the person or company proves that: (a) (b) the offering memorandum or any amendment to it was sent or delivered without the person s or company s knowledge or consent and that, on becoming aware of it being sent or delivered, that person or company gave reasonable general notice that it was so sent or delivered; or with respect to any part of the offering memorandum or any amendment to it purporting to be made on the authority of an expert, or purporting to be a copy of, or an extract from, a report, an opinion or a statement of an expert, that person or company had no reasonable grounds to believe and did not believe that there had been a misrepresentation, the part of the offering memorandum or any amendment to it did not fairly represent the report, opinion or statement of the expert, or was not a fair copy of, or an extract from, the report, opinion or statement of the expert. Not all defences upon which the Partnership or others may rely are described herein. Please refer to the full text of the Saskatchewan Act for a complete listing. Similar rights of action for damages and rescission are provided in section of the Saskatchewan Act in respect of a misrepresentation in advertising and sales literature disseminated in connection with an offering of securities. Section of the Saskatchewan Act also provides that where an individual makes a verbal statement to a prospective purchaser that contains a misrepresentation relating to the security purchased and the verbal statement is made either before or contemporaneously with the purchase of the security, the purchaser is deemed to have relied on the misrepresentation, if it was a misrepresentation at the time of purchase, and has a right of action for damages against the individual who made the verbal statement. Section 141(1) of the Saskatchewan Act provides a purchaser with the right to void the purchase agreement and to recover all money and other consideration paid by the purchaser for the securities if the securities are sold in contravention of the Saskatchewan Act, the regulations to the Saskatchewan Act or a decision of the Saskatchewan Financial Services Commission. 36

40 Section 141(2) of the Saskatchewan Act also provides a right of action for rescission or damages to a purchaser of securities to whom an offering memorandum or any amendment to it was not sent or delivered prior to or at the same time as the purchaser enters into an agreement to purchase the securities, as required by Section 80.1 of the Saskatchewan Act. The rights of action for damages or rescission under the Saskatchewan Act are in addition to and do not derogate from any other right which a purchaser may have at law. Section 147 of the Saskatchewan Act provides that no action shall be commenced to enforce any of the foregoing rights more than: (a) (b) in the case of an action for rescission, 180 days after the date of the transaction that gave rise to the cause of action; or in the case of any other action, other than an action for rescission, the earlier of: (i) (ii) one year after the plaintiff first had knowledge of the facts giving rise to the cause of action; or six years after the date of the transaction that gave rise to the cause of action. The Saskatchewan Act also provides a purchaser who has received an amended offering memorandum delivered in accordance with subsection 80.1(3) of the Saskatchewan Act has a right to withdraw from the agreement to purchase the securities by delivering a notice to the person who or company that is selling the securities, indicating the purchaser s intention not to be bound by the purchase agreement, provided such notice is delivered by the purchaser within two business days of receiving the amended offering memorandum. New Brunswick Section 150 of the Securities Act (New Brunswick) provides that where an offering memorandum (such as this offering memorandum) contains a Misrepresentation, a purchaser who purchases securities shall be deemed to have relied on the Misrepresentation if it was a Misrepresentation at the time of purchase and: (a) (b) the purchaser has a right of action for damages against the issuer and any selling security holder(s) on whose behalf the distribution is made, or where the purchaser purchased the securities from a person referred to in paragraph (a), the purchaser may elect to exercise a right of rescission against the person, in which case the purchaser shall have no right of action for damages against the person. This statutory right of action is available to New Brunswick purchasers whether or not such purchaser relied on the Misrepresentation. However, there are various defences available to the issuer and the selling security holder(s). In particular, no person will be liable for a Misrepresentation if such person proves that the purchaser purchased the securities with knowledge of the Misrepresentation when the purchaser purchased the securities. Moreover, in an action for damages, the amount recoverable will not exceed the price at which the securities were offered under the offering memorandum and any defendant will not be liable for all or any part of the damages that the defendant proves do not represent the depreciation in value of the security as a result of the misrepresentation. If the purchaser intends to rely on the rights described in (a) or (b) above, such purchaser must do so within strict time limitations. The purchaser must commence an action to cancel the agreement within 180 days after the date of the transaction that gave rise to the cause of action. The purchaser must commence its action for damages within the earlier of: (a) (b) one year after the purchaser first had knowledge of the facts giving rise to the cause of action; or six years after the date of the transaction that gave rise to the cause of action. 37

41 Nova Scotia The right of action for damages or rescission described herein is conferred by section 138 of the Securities Act (Nova Scotia). Section 138 of the Securities Act (Nova Scotia) provides, in relevant part, that in the event that an offering memorandum (such as this offering memorandum), together with any amendment thereto, or any advertising or sales literature (as defined in the Securities Act (Nova Scotia)) contains a Misrepresentation, the purchaser will be deemed to have relied upon such Misrepresentation if it was a Misrepresentation at the time of purchase and has, subject to certain limitations and defences, a statutory right of action for damages against the issuer and, subject to certain additional defences, every director of the issuer at the date of the offering memorandum and every person who signed the offering memorandum or, alternatively, while still the owner of the securities purchased by the purchaser, may elect instead to exercise a statutory right of rescission against the issuer, in which case the purchaser shall have no right of action for damages against the issuer, directors of the issuer or persons who have signed the offering memorandum, provided that, among other limitations: (a) (b) (c) (d) no action shall be commenced to enforce the right of action for rescission or damages by a purchaser resident in Nova Scotia later than 120 days after the date on which the initial payment was made for the securities; no person will be liable if it proves that the purchaser purchased the securities with knowledge of the Misrepresentation; in the case of an action for damages, no person will be liable for all or any portion of the damages that it proves do not represent the depreciation in value of the securities as a result of the Misrepresentation relied upon; and in no case will the amount recoverable in any action exceed the price at which the securities were offered to the purchaser. In addition, a person or company, other than the issuer, will not be liable if that person or company proves that: (a) (b) (c) the offering memorandum or amendment to the offering memorandum was sent or delivered to the purchaser without the person s or company s knowledge or consent and that, on becoming aware of its delivery, the person or company gave reasonable general notice that it was delivered without the person s or company s knowledge or consent; after delivery of the offering memorandum or amendment to the offering memorandum and before the purchase of the securities by the purchaser, on becoming aware of any Misrepresentation in the offering memorandum or amendment to the offering memorandum the person or company withdrew the person s or company s consent to the offering memorandum or amendment to the offering memorandum, and gave reasonable general notice of the withdrawal and the reason for it; or with respect to any part of the offering memorandum or amendment to the offering memorandum purporting (i) to be made on the authority of an expert, or (ii) to be a copy of, or an extract from, a report, an opinion or a statement of an expert, the person or company had no reasonable grounds to believe and did not believe that (A) there had been a Misrepresentation, or (B) the relevant part of the offering memorandum or amendment to offering memorandum did not fairly represent the report, opinion or statement of the expert, or was not a fair copy of, or an extract from, the report, opinion or statement of the expert. Furthermore, no person or company, other than the issuer, will be liable with respect to any part of the offering memorandum or amendment to the offering memorandum not purporting (a) to be made on the authority of an expert or (b) to be a copy of, or an extract from, a report, opinion or statement of an expert, unless the person or company (i) failed to conduct a reasonable investigation to provide reasonable grounds for a belief that there had been no Misrepresentation or (ii) believed that there had been a Misrepresentation. If a Misrepresentation is contained in a record incorporated by reference into, or deemed incorporated by reference into, the offering memorandum or amendment to the offering memorandum, the Misrepresentation is deemed to be contained in the offering memorandum or an amendment to the offering memorandum. 38

42 Alberta Section 204 of the Securities Act (Alberta) provides that if an offering memorandum contains a Misrepresentation, a purchaser who purchases a security offered by the offering memorandum is deemed to have relied on the representation, if it was a Misrepresentation at the time of the purchase, and has a right of action (a) for damages against (i) the issuer, (ii) every director of the issuer at the date of the offering memorandum, and (iii) every person or company who signed the offering memorandum, and (b) for rescission against the issuer, provided that: (a) (b) (c) (d) (e) if the purchaser elects to exercise its right of rescission, it shall cease to have a right of action for damages against the person or company referred to above; no person or company referred to above will be liable if it proves that the purchaser had knowledge of the Misrepresentation; no person or company (other than the issuer) referred to above will be liable if it proves that the offering memorandum was sent to the purchaser without the person s or company s knowledge or consent and that, on becoming aware of its being sent, the person or company promptly gave reasonable notice to the issuer that it was sent without the knowledge and consent of the person or company; no person or company (other than the issuer) referred to above will be liable if it proves that the person or company, on becoming aware of the Misrepresentation in the offering memorandum, withdrew the person s or company s consent to the offering memorandum and gave reasonable notice to the issuer of the withdrawal and the reason for it; no person or company (other than the issuer) referred to above will be liable if, with respect to any part of the offering memorandum purporting to be made on the authority of an expert or purporting to be a copy of, or an extract from, a report, opinion or statement of an expert, the person or company proves that the person or company did not have any reasonable grounds to believe and did not believe that: (i) (ii) there had been a Misrepresentation; or the relevant part of the offering memorandum (A) (B) did not fairly represent the report, opinion or statement of the expert, or was not a fair copy of, or an extract from, the report, opinion or statement of the expert; (f) the person or company (other than the issuer) will not be liable if with respect to any part of the offering memorandum not purporting to be made on the authority of an expert and not purporting to be a copy of, or an extract from, a report, opinion or statement of an expert, unless the person or company (i) (ii) did not conduct an investigation sufficient to provide reasonable grounds for a belief that there had been no Misrepresentation, or believed there had been a Misrepresentation; (g) (h) in no case shall the amount recoverable exceed the price at which the securities were offered under the offering memorandum; the defendant will not be liable for all or any part of the damages that the defendant proves do not represent the depreciation in value of the security as a result of the Misrepresentation; 39

43 Section 211 of the Securities Act (Alberta) provides that no action may be commenced to enforce these rights more than: (a) (b) in the case of an action for rescission, 180 days from the day of the transaction that gave rise to the cause of action, or in the case of any action, other than an action for rescission, the earlier of (i) (ii) 180 days from the day that the plaintiff first had knowledge of the facts giving rise to the cause of action, or 3 years from the day of the transaction that gave rise to the cause of action. The foregoing summary is subject to the express provisions of the applicable securities laws and the rules, regulations and other instruments thereunder, and reference is made to the complete text of such provisions. Such provisions may contain limitations and statutory defences on which the Partnership and others may rely. The rights of action for damages or rescission discussed above are in addition to, and without derogation from, any other right or remedy which purchasers may have at law. Manitoba, Newfoundland and Labrador, Prince Edward Island, Yukon, Nunavut and the Northwest Territories In Manitoba, the Securities Act (Manitoba), in Newfoundland and Labrador, the Securities Act (Newfoundland and Labrador), in Prince Edward Island, the Securities Act (PEI), in Yukon, the Securities Act (Yukon), in Nunavut, the Securities Act (Nunavut) and in the Northwest Territories, the Securities Act (Northwest Territories) provides a statutory right of action for damages or rescission to purchasers resident in Manitoba, Newfoundland, PEI, Yukon, Nunavut and Northwest Territories respectively, in circumstances where this offering memorandum or an amendment hereto contains a misrepresentation, which rights are similar, but not identical, to the rights available to Ontario purchasers. c) Contractual Rights of Action in the Event of a Misrepresentation British Columbia and Québec Notwithstanding that the Securities Act (British Columbia) and the Securities Act (Québec) do not provide, or require the Partnership to provide, to purchasers resident in these jurisdictions any rights of action in circumstances where this offering memorandum or an amendment hereto contains a misrepresentation, the Partnership hereby grants to such purchasers contractual rights of action that are equivalent to the statutory rights of action set forth above with respect to purchasers resident in Ontario. 40

44 Date: October 7, 2013 ALBERTA CERTIFICATE TO: Each Applicable Alberta Purchaser of Limited Partnership Units (the Units ) issued by Bridging Credit Fund LP (the Partnership ) The foregoing contains no untrue statement of a material fact and does not omit to state a material fact that is required to be stated or omit to state a material fact that is necessary to be stated in order for the statement not to be misleading. This Certificate is provided solely to those purchasers purchasing Units of the Partnership pursuant to the exemptions contained in section 2.10 of National Instrument Prospectus and Registration Exemptions and section of the Rules to the Securities Act (Alberta). BRIDGING GP INC., as general partner of BRIDGING CREDIT FUND LP (signed) Natasha Sharpe Natasha Sharpe President and Director (acting as Chief Executive Officer) (signed) Rock-Anthony Coco Rock-Anthony Coco Director (signed) Kevin Skells Kevin Skells (acting as Chief Financial Officer) (signed) Jenny Virginia Coco Jenny Virginia Coco Director 41