Risk Factors 1 (continued) CONFIDENTIAL FOR DISCUSSION PURPOSES ONLY Limited Rights of Issuer to Sell Assets The Issuer is structured to comply with the exclusion from registration as an "investment company under the Investment Company Act provide by Rule 3a-7 thereunder ("Rule 3a.7"). As a result of restrictive contractual provisions contained in the Senior Note documents intended to maintain the Issuer's compliance with Rule 3a-7. the Issuer will, in certain instances, be precluded from purchases and sale of its assets that may. if permitted, have resulted in higher returns on the Preferred Shares. Dependence on Portfolio Advisor Preferred Shares holders will have no opportunity to control the day-to-day operations of the Issuer. Investors in the Preferred Shares must rely entirely on the Portfolio Advisor and its personnel to evaluate, purchase and oversee the Issuer's assets and to generally administer affairs of the Issuer. Incentive Advisory Fees The Portfolio Advisors right to receive the incentive advisory fee may create an incentive to make more speculative investments on behalf of the Issuer than would otherwise be made in the absence of such fee as the payment of such fee will be dependent to a large extent on the yield earned on the Issuer's assets. Significant Restrictions on the Portfolio Advisor The transaction agreements place significant restrictions on the Portfolio Advisor's ability to advise the Issuer to buy and sell assets. As a result of such restrictions, the Issuer may be unable to buy or sell assets or to take other actions which the Portfolio Advisor may consider to be in the interest of the Issuer and the holders of the Preferred Shares. Reliance on the Originator and Other Third-Party Originators The Issuer expects to acquire assets originated by the Originator from time to time and with respect to assets acquired from the Originator, the Issuer will be dependent upon the Originator's origination credit policies and proc