40/86 Advisors Inc

Item 5 - Fees and Compensation

        As discussed above, 40|86 provides portfolio management services primarily to
Insurance Company Clients and serves as sub-adviser or support services provider to
CreekSource with respect to the CLO Issuers. 40|86 also provides investment advisory services
to limited non-affiliated separate account clients. CreekSource serves as collateral manager to the
CLO Issuers. In accordance with the instruction to Item 5A of Part 2A of Form ADV, detail on the
fees paid by the Advisers’ clients is not included because such clients are qualified purchasers.

        In connection with CreekSource’s services as collateral manager for each CLO Issuer,
CreekSource receives quarterly collateral management fees from each CLO Issuer to the extent
that funds are available for such purpose in accordance with the specified priority of payments.
Collateral management fees are due and payable quarterly, in arrears, based on the amount of
collateral managed for each CLO Issuer measured as of the beginning of the relevant quarter.
CreekSource may receive, in addition to a collateral management fee, an incentive fee that is
payable only after the CLO Issuer’s most subordinated noteholders have received a specified
internal rate of return on their notes and to the extent that funds are available for such purpose
in accordance with the priority of payments prescribed by the indenture to which such CLO
Issuer is a party. Such incentive fee is generally equal to a percentage of the interest and principal
proceeds available after certain higher-priority payments have been made in accordance with the
priority of payments or “waterfall” that is prescribed by the related CLO Issuer’s governing
indenture. If an account is terminated during a quarter, the fee payable for the terminated account
will be computed on a pro rata basis for the period during which the account was active. Fee
arrangements with respect to each CLO Issuer are described in detail in each CLO Issuer’s
offering circular and are prescribed by the indenture and collateral management agreement
related to such CLO Issuer.

        As compensation for 40|86’s services as sub-adviser or support services provider to
CreekSource in connection with the management of each CLO Issuer, 40|86 may receive from
CreekSource all of the collateral management fees payable by each CLO Issuer to CreekSource. A
similar arrangement may or may not be implemented for future CLO issuers, since fee
arrangements between CreekSource and 40|86 related to the support provided by 40|86 to
CreekSource with respect to each CLO issuer will be agreed upon by CreekSource and 40|86 from
time to time.

        Generally, Insurance Company Clients and separate account clients pay 40|86 a quarterly
management fee based on the current market value of assets under management. Unless
otherwise negotiated, the 40|86 advisory fees are billed to Insurance Company Clients and
separate account clients and payable quarterly, in advance, based on the valuation of the account
at the end of the prior quarter. If an account is terminated during a quarter, the fee payable for

the terminated account will be computed on a pro rata basis for the period during which the
account was active, and the client will receive a refund for any overpayment.

        Fees may vary based on services rendered. The Advisers may negotiate reduced fees for
certain classes of clients, such as charitable institutions. The Advisers do not currently have any
such reduced fee arrangements in place.

       The Advisers’ fees are exclusive of dealer mark-ups/mark-downs, custodial fees,
transaction fees and other related costs and expenses. These charges and fees are typically
imposed by the dealer or custodian through which the client account transactions are executed.
The Advisers do not share in any portion of these dealer mark-ups/mark-downs, fees and costs.
Please refer to “Item 12 - Brokerage Practices” for a description of the factors the Advisers
consider in selecting or recommending dealers for client transactions and determining the
reasonableness of their compensation.

Item 7 - Types of Clients

         40|86 serves as an investment adviser principally to Insurance Company Clients that are
affiliated with 40|86 through CNO. 40|86 also provides investment advisory services to limited
unaffiliated insurance company separate account clients. CreekSource serves as collateral
manager to Bean Creek, Clear Creek and Dunes Creek, each of which is the issuer of a CLO, with
40|86 serving as sub-adviser or support services provider to CreekSource in connection
therewith. Each client’s portfolio is managed on a discretionary basis according to the client’s
management agreement, investment objectives and guidelines and, for CLO Issuers, in
accordance with the indenture, collateral management agreement and other contracts that are
binding upon such CLO Issuer and/or CreekSource. Investment minimums for each CLO are set
forth in the applicable indenture. Interests in CLO Issuers are generally offered only to
sophisticated institutional investors that meet applicable eligibility requirements under federal
securities laws and the governing offering documents.