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title: TREZ CAPITAL - TERMS OF ENGAGEMENT
description: TERMS OF ENGAGEMENT
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# TREZ CAPITAL - TERMS OF ENGAGEMENT

## TERMS OF ENGAGEMENT

The following terms set out the relationship between Trez Capital Fund  
Management Limited Partnership (“Trez”) and the applicant(s) named above  
(the “Client”) and are intended to disclose any information that would be  
important to you with respect to your investment account.  
CONFIDENTIALITY  
Any information that the Client provides to Trez will be kept confidential by Trez.  
Trez will only disclose information to comply with any regulatory or legal  
requirements.  
The New Account Application to help us understand your personal situation  
and your financial investment goals. We must gather relevant information about  
assets, liabilities and other details about your income tax and estate tax  
situation. Before we accept any investment from you, we are obligated to  
take reasonable steps to determine whether that investment is suitable for  
you.  
We consider your information 'confidential' and we confirm that it will be used  
solely in connection with your proposed investment in one of the Trez funds  
or in a direct mortgage investment offered by Trez (the “Investment”) and no  
information will be disclosed to any third-party without your prior written  
consent.  
PRODUCTS – INVESTMENT ALLOCATION POLICY  
You are free to invest in any financial products as per your choice. Trez offers  
several funds, some of which may only be purchased through securities dealers.  
Trez receives fees from each of the funds, as set out in the relevant Offering  
Memorandum or Prospectus, or for direct mortgage investments, in the  
relevant mortgage participation and servicing agreement.  
Each trade should be allocated fairly to each fund managed by Trez or its  
affiliates, to the extent they wish to participate, applying the following policy:  
1\. Each fund which could participate in a mortgage investment must be  
identified.  
2\. Mortgage investments must be allocated fairly.  
3\. Fees and expenses must be allocated fairly.  
If the availability of any particular mortgage investment is limited, and that  
mortgage investment is appropriate for the investment objective of more than  
one fund, that mortgage investment will be allocated on an equitable basis.  
Not all mortgage investments may be appropriate for all funds. Certain funds are  
designed to have different risk tolerances, and have different investment policies.  
Reasonable allocation of the same mortgage investment amongst funds may be  
determined by an evaluation of the cash position of each fund, the effect or risk  
and liquidity, and the general composition of the funds.

As a result, allocation of mortgage investments to Trez managed funds is a multi-  
step process, as follows:

1\. All funds will be considered in accordance with each fund’s investment  
criteria and investment funds that do not meet the investment parameters of a  
particular mortgage investment will be excluded from consideration as a recipient  
portion of that investment. For example:  
a. if the loan is part of a joint venture where investors are to participate in  
ownership of real property, certain funds cannot invest;  
b. Trez will not place certain funds into an investment in an unregistered  
mortgage;  
c. certain funds have restrictions on the percentage a particular mortgage  
can represent of the fund’s mortgage portfolio.

2\. All funds that are identified as qualified recipients of a particular mortgage  
investment will be allocated a portion of the investment based on available cash  
at that time.  
3\. In the event that more than one fund is identified as a qualified recipient with  
available cash, Trez will take all the necessary steps to ensure that mortgage  
investments are fairly and proportionately allocated amongst the qualified funds.  
To ensure fairness:  
a. Trez will look back at recent investment allocations, to ensure that  
funds which were unable to participate in past investments will participate  
in current investments;  
b. consideration will be given to sharing mortgage investments  
proportionally having regard to the optimization of asset and geographic  
diversification of mortgage assets;  
c. administrative efficiencies will be taken into account, so that, for example,  
a small loan will only be shared by a small number of funds.

On loan pay downs, Trez will attempt to pay down the investment of each  
account proportionately. However, Trez may choose to repay syndicated  
investors or internal companies first and have investment funds remain  
invested in the loan, as this keeps the investment funds invested. If Trez  
determines there is a higher risk to remaining in an investment, other  
considerations may apply.  
In order to assist Trez to determine the suitability of an Investment for you,  
we ask that each Client answer the questions provided above in the section  
titled “Investor & Risk Profile.”  
RISK FACTORS  
There are certain types of risk that a Client should consider when making an  
investment in Trez such as liquidity and marketability. An investment in a Trez  
product involves a number of risk factors and is suitable only for investors who  
are aware of the risks inherent in mortgage investments and who have the  
ability and willingness to accept the risk of loss of their invested capital and  
who have no immediate need for liquidity. There is no assurance of any return  
on an investor’s investment.  
Prospective investors should consult with their own independent professional  
legal, tax, investment and financial advisors before making an Investment in order  
to determine the appropriateness of the Investment in relation to their  
financial and investment objectives and in relation to the tax consequences of any  
such Investment.  
Prospective investors should consider the following risks before making an  
Investment. Any or all of these risks, or other as yet unidentified risks, may  
have a material adverse effect on the return to investors, and include the  
following:  
No Market – There is no market through which an Investment may be sold, and  
Trez does not expect that any market will develop in the future. Accordingly,  
an Investment should only be considered by investors who do not require  
liquidity. Investments are subject to onerous resale restrictions under  
applicable securities legislation.  
Borrowed Money – Trez does not recommend using borrowed money to  
finance the purchase of securities as the use of borrowed money involves  
greater risk than using cash resources only. If you borrow money to purchase  
securities, your responsibility to repay the loan and pay interest as required by  
its terms remains the same even if the value of the securities purchased  
declines.

Retraction Liquidity – Investments may be retractable, meaning that Investors  
have the right to require Trez to redeem them, upon appropriate advance notice  
from the investor to Trez. However, different Investments have different  
restrictions on retraction, and the right of retraction may be suspended under the  
circumstances.  
Absence of Management Rights – Investments do not carry voting rights, and  
consequently an investor’s Investment does not carry with it any right to take part  
in the control or management of a fund’s business.  
STATEMENTS  
Trez provides quarterly statements to all clients via mail unless arrangements  
have been made to provide the statement electronically. The quarterly statement  
includes number of units held, value per unit ($/ unit), total value ($) of units held,  
confirmation of any transactions and other information relevant to an investor.  
Should a client require an additional statement or updated statement he or she  
may contact Trez to have one mailed out.  
A trade confirmation will be sent to clients after a transaction has occurred, as  
applicable by law. If you do not object, in writing, to the accuracy of a trade  
confirmation within 10 days of the date of receipt, Trez will consider the trade  
confirmation to be accurate.  
Clients will receive an annual investment performance report. This report will  
include the annualized total percentage return for each account held directly with  
Trez. This report will show the annualized returns since inception and the one,  
three, five, and ten-year annualized return(s) of your account(s), where applicable.  
CUSTODY  
Trez's duty of care with respect to the property in your account shall be  
exercised with the same degree of care that it exercises in the custody of its own  
property or similar nature.

Computershare Trust Company of Canada acts as trustee for certain mortgage  
investment entities, which are Trusts, pursuant to the terms and conditions set out  
in the respective declaration of trust. Computershare Trust Company of Canada  
is also the custodian of the assets of various mortgages investment entities  
pursuant to custodial agreements. Computershare Trust Company of Canada  
acts as custodian for mortgages secured by real property in Canada. The  
custodian is the company which holds your assets and their involvement provides  
clients with an extra layer of protection. For mortgages secured by real property  
in the United States various related party bare trustees of Trez Capital Limited  
Partnership (“TCLP”) act as custodian. Your assets are registered in your name  
and Trez is not authorized to transfer assets into or out of your account nor does  
it have access to your assets.  
Assets held by a custodian may potentially be at risk of loss: (i) if the custodian  
becomes bankrupt or insolvent; (ii) if there is a breakdown in the custodian’s  
information technology systems; or (iii) due to fraud, willful or reckless misconduct,  
negligence or error of the custodian or its personnel. Trez completes due diligence  
with respect to each custodian’s reputation, financial stability, relevant internal  
controls, and ability to deliver custodial services. Trez believes that each  
custodians’ internal system of controls is sufficient to manage risks of loss to our  
clients in accordance with prudent business practices.  
DISPUTE RESOLUTION  
We value our good relationships with clients. However, we accept that, from time  
to time, difficulties and misunderstandings may arise. If you are dissatisfied with  
the service you receive from us, you should take the matter up, in the first instance,  
with your dealing representative. If the matter is not resolved to your satisfaction,  
your comments should be referred to our Chief Compliance Officer. If you remain  
unsatisfied with our response, you can forward a copy of our response and your  
original complaint to the Ombudsman for Banking Services and Investments  
(OBSI). OBSI is an independent dispute-resolution service that investigates  
unresolved disputes at no charge to you. An alternative to the legal system, it may  
recommend compensation up to $350,000. OBSI can be reached at 1-888-451-  
4519 or www.obsi.ca, and must be contacted within 180 days of receiving a final  
response from our Chief Compliance Officer.

CONNECTED ISSUER  
Trez, when acting as an exempt market dealer in selling securities of an  
investment entity formed by Trez, may also be the Manager of that investment  
entity or an affiliate of the Manager of that investment entity, and  
consequently, the investment entity may be considered a “connected  
issuer” of Trez, within the meaning of applicable securities legislation.  
CONFLICTS OF INTEREST  
During our normal business activities, Trez has the responsibility to deal fairly,  
honestly, act in good faith, and act in the best interest of our clients. Trez  
recognizes that there is potential for conflicts of interest to arise between the  
interests of our clients and the interests of the firm.  
Trez will manage potential conflicts of interest in the best interest of the clients.  
Trez will take reasonable steps to identify existing and reasonably foreseeable  
material conflicts of interest and address them in the best interest of the clients.  
Trez will disclose any material conflicts of interest to the client in a timely manner  
upon their identification so the client may factor it into their decision-making  
process. Depending on the circumstance, and in cases where material conflicts  
of interest cannot be addressed in the best interest of the clients, it will be  
avoided.  
DISCLOSURE STATEMENT FOR CONFLICTS OF INTEREST  
Under certain circumstances, Trez may deal with you in transactions where the  
issuer of the securities is a related issuer and connected issuer. As these  
transactions may create conflicting interests between Trez and yourself, we are  
informing you of the relevant relationships and connections relating to the  
transactions.

An entity is considered a “related issuer” if the entity is an influential security  
holder of Trez, Trez is an influential security holder of the entity, or both Trez  
and the entity are related issuers of the same entity. A “connected issuer” is a  
party that distributes securities and has a relationship with Trez that may lead a  
reasonable prospective purchaser of the securities to question if we and the  
issuer are independent of each other concerning the distribution of such  
securities.  
As is common in the investment industry, Trez has relationships with both related  
issuers and connected issuers. Certain principals of Trez will be the principals of  
the general partners of the entities in which the Trust invests. The issuers will be  
managed by Trez who acts as the Investment Fund Manager for the issuer. The  
Trust is a connected issuer and a related issuer of Trez.  
When investment companies have multiple related businesses, compensation  
received from a related party could influence investment recommendations. Trez  
is in a similar situation as it could recommend investments in a related party. To  
manage this conflict of interest, Trez and the dealing representative are required  
to only recommend an investment when it is in the best interest of the client to do  
so, based on the know-your-client information that has been provided.  
Additionally, at the time of the account opening or recommendation, we will  
disclose (e.g., offering memorandum) the fact that the issuer is a related issuer  
and connected issuer to Trez.  
TRUSTED CONTACT PERSON ("TCP") AND TEMPORARY HOLD  
Trez is require to ask you for the name and contact information of a person that  
you trust, has the ability to communicate and engage in potentially difficult  
conversations about your personal situation and preferably is not involved with  
making decisions with respect to your account at account opening and on a  
periodic basis.  
If applicable in your particular circumstances, we may, in our sole discretion,  
contact your TCP or your legal representative on file with us, if we notice signs  
of financial exploitation or if you exhibit signs of diminished mental capacity  
for decisions involving financial matters relating to your account(s). Trez may  
also contact your TCP to confirm your contact information if we are unsuccessful  
in contacting you after repeated attempts, particularly if failure to contact you is  
unusual. We may ask the TCP to confirm the name and contact information of a  
legal representative (e.g. attorney under a power of attorney or a legal guardian).  
You can change your TCP by contacting your dealing representative.

You have agreed to (i) notify the TCP that you have identified them as your trusted  
contact person, and advise us if they decline to serve as your TCP; and (ii) release  
us from all claims that relate to any decision we make regarding whether or not to  
contact the TCP, in your personal circumstances, and any information that we may  
share with the TCP.  
If you want to replace your TCP and appoint a new one, please contact your  
dealing representative and they will provide you with the appropriate form to allow  
you to identify your new TCP. By designating a new TCP, you will revoke all prior  
designations. We will rely on the most recent TCP appointment in our files.  
You are not obligated to designate a TCP. If you do not wish to designate a TCP,  
please indicate this in the appropriate checkbox in the TCP section. In  
making your decision, please consider that the purpose of the TCP is to allow us  
to release confidential information to someone you have selected if we have  
concerns about your welfare. Without your permission, if a situation arises in  
which Trez has concerns about your welfare, we will not have the option of trying  
to resolve these concerns by communicating them to the TCP. In the worst case  
scenario, this could lead to a situation in which Trez is obligated to stop or refuse  
transactions in, or place a hold on, your account while we take the steps necessary  
to meet and address our concerns.

If Trez has a reasonable belief that you are being financially exploited or that  
you are experiencing diminished mental capacity which may affect your ability  
to make decisions involving financial matters relating to your account(s), Trez  
may place a temporary hold on your account or a particular transaction,  
in appropriate circumstance permitted by law and will provide you with a  
verbal or written notice explaining the temporary hold, in addition to contacting  
your TCP, if any, as above. Trez will review the facts behind placing the  
temporary hold on a regular basis to determine whether the temporary hold  
should continue.

 

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