Leste Credit Gestao de Recursos LTDA

5 “Fees and Compensation” is based on each of our clients’ net asset value, the Leste
Group is subject to a conflict of interest in valuing portfolio investments.

Cyber Security Risk

The Leste Group and its Service Providers are susceptible to operational and
information security and related risks of cyber security incidents. In general, cyber
incidents can result from deliberate attacks or unintentional events. Cyber security
attacks include, but are not limited to, gaining unauthorized access to digital systems
(e.g., through “hacking” or malicious software coding) for purposes of misappropriating
assets or sensitive information, corrupting data or causing operational disruption. Cyber-
attacks also may be carried out in a manner that does not require gaining unauthorized
access, such as causing denial-of-service attacks on websites (i.e., efforts to make

services unavailable to intended users). Cyber security incidents affecting the Leste
Group or Service Providers have the ability to cause disruptions and impact business
operations, potentially resulting in financial losses, including by interference with a
client's ability to calculate its net asset value; impediments to trading for a client's
portfolio; the inability of investors to transact business with the Leste Group; violations
of applicable privacy, data security or other laws; regulatory fines and penalties;
reputational damage; reimbursement or other compensation or remediation costs; legal
fees; or additional compliance costs. Similar adverse consequences could result from
cyber security incidents affecting issuers of securities in which a client invests,
counterparties with which a client engages in transactions, governmental and other
regulatory authorities, exchange and other financial market operators, banks, brokers,
dealers, insurance companies and other financial institutions and other parties. The
techniques used to obtain unauthorized access to data, disable or degrade service, or
sabotage systems change frequently and may be difficult to detect for long periods of
time. Hardware or software acquired from third parties may contain defects in design or
manufacture or other problems that could unexpectedly compromise information
security. Network connected services provided by third parties to the Leste Group may
be susceptible to compromise, leading to a breach of the Leste Group’s network. The
Leste Group’s systems or facilities may be susceptible to employee error or
malfeasance, government surveillance, or other security threats. On-line services
provided by the Leste Group to the investors may also be susceptible to compromise.
Breach of the Leste Group’s information systems may cause information relating to the
transactions of our clients and personally identifiable information of the investors to be
lost or improperly accessed, used or disclosed. While information risk management
systems and business continuity plans have been developed which are designed to
reduce the risks associated with cyber security, there are inherent limitations in any
cyber security risk management systems or business continuity plans, including the
possibility that certain risks have not been identified.

Governmental Interventions

Extreme volatility and illiquidity in markets has in the past led to, and may in the future
lead to, extensive governmental interventions in equity, credit and currency markets.
Generally, such interventions are intended to reduce volatility and precipitous drops in
value. In certain cases, governments have intervened on an “emergency” basis,
suddenly and substantially eliminating market participants’ ability to continue to

implement certain strategies or manage the risk of their outstanding positions. In
addition, these interventions have typically been unclear in scope and application,
resulting in uncertainty. It is impossible to predict when these restrictions will be
imposed, what the interim or permanent restrictions will be and/or the effect of such
restrictions on our clients’ strategies.

Potential Interest Rate Increases

The United States has experienced a decade-long period of historically low interest rate
levels. Recently, however, short-term and long-term interest rates have begun to rise.
The recovery of the U.S. economy, recent changes in U.S. government policy, including
the tapering of the U.S. Federal Reserve Board’s quantitative easing program, and
increases in the federal funds rate, increase the risk that interest rates will rise in the
future. Any future interest rate increases may result in periods of volatility and cause the
value of the fixed income securities held by our clients to decrease, which may result in
substantial withdrawals from our clients that, in turn, force our clients to liquidate such
securities at disadvantageous prices negatively impacting the performance of our
clients.

Litigation Risk

Some of the tactics that the Leste Group may use involve litigation. Our clients could be
a party to lawsuits either initiated by it, or by a company in which our clients invests,
other shareholders of such company, or U.S. federal, state and non-U.S. governmental
bodies. There can be no assurance that any such litigation, once begun, would be
resolved in favor of our clients.

Non-U.S. Investments

Certain clients may trade on exchanges or markets located outside the U.S., especially,
but not limited to, in Brazil, other Latin American markets and Europe. See for further
details also “Risks Related to Investments in Brazil” below.

Trading on such exchanges or markets is not regulated by the SEC and the CFTC and
may, therefore, be subject to more risks than trading on U.S. exchanges, such as the
risks of exchange controls, expropriation, burdensome taxation, moratoria and political

or diplomatic events. Risks in investments in non-U.S. securities may also include
reduced and less reliable information about issuers and markets, less stringent
...

Item 7 – Types of Clients

We currently provide investment advice primarily to clients who are private investment
funds. U.S. investors in such private investment funds generally must qualify as
“accredited investors” (as defined in Rule 501 under the U.S. Securities Act of 1933, as
amended (“Securities Act”)) and investors in U.S. funds generally must be “qualified
clients” (as defined in Rule 205-3 of the Advisers Act) or “qualified purchasers” (as
defined in the U.S. Investment Company Act of 1940, as amended (the “Company
Act”)). In addition, investors may be subject to other suitability requirements to the
extent provided in the applicable Leste Fund’s Memorandum. We may provide
investment advice to other types of clients in the future.

Some Leste Funds have a minimum investment amount set forth in the Memorandum
that is generally between US$10,000 and US$ 1,000,000 (or the equivalent in Brazilian
Reais), subject to each Leste Fund’s discretion to accept lesser amounts. We will
determine the minimum investment amount (and any other conditions for opening and
maintaining an account) for other clients, such as any separately managed accounts, on
a case-by-case basis.