Angelo Gordon & Co LP

Item 5—Fees and Compensation

Fees Generally. We establish and negotiate with the applicable Client the precise amount of, and
the manner and calculation of, fees and compensation. Client Advisory Services Agreements,
organizational documents, offering documents and/or other documentation, which we refer to
collectively as, together with any applicable side letters, the “Governing Documents,” set forth the
precise amount of, and the manner and calculation of, the fees and compensation.

Compensation we earn from Clients generally is comprised of negotiated fees calculated on (i) a
percentage of (a) net asset value or (b) invested net assets, (ii) capital commitments to the Client
or (iii) capital contributions to the Client net of distributions and total permanent impairments in
value of investments held by the Client (“Management Fee”) and performance-based amounts
(“Performance Compensation”). Management Fees are generally charged at annual rates and
payable monthly or quarterly after the close of the calendar month or quarter during which we
performed the services to which the fees relate. However, payment of Management Fees quarterly
in advance is required of certain Clients. If Management Fees are paid in advance, in the event the
account is terminated, the Management Fees generally will be prorated to the date of termination
and any unearned fees will be refunded. For Management Fees payable in advance, the amount of
such fees is generally adjusted to take into account intra-quarter changes in the base on which such
fees are calculated. Management Fees and Performance Compensation for Client Funds are
determined by the general partner or board of directors or the investment manager, as applicable,
and as set forth in the Client Funds’ Governing Documents or relevant agreements. Management
Fees and Performance Compensation, as applicable, are deducted from the accounts of Clients

unless, with respect to SMAs, other arrangements have been agreed upon between us and the
investors in those SMAs.

Performance Compensation can be (i) a percentage on a mark-to-market basis over an annual or
other period, in some cases over a priority return or hurdle amount or (ii) on a distribution basis,
subject to a priority return or hurdle, and generally subject to a catch-up.

Where part of the investment mandate, we invest cash balances of Clients in temporary short-term
investments, including in some instances money market funds or similar investments which charge
a separate management fee payable to the money market fund’s adviser. The adviser’s fees
associated with such money market fund investments are in addition to the fees charged by us.
Such money market advisers may be affiliated with our service providers or Clients.

Management Fees and Performance Compensation can vary from the description set forth herein.
In any such case, the applicable Management Fees and Performance Compensation will be as
disclosed in Clients’ Governing Documents. If a Client Fund is sponsored by others, fees will be
negotiated with the sponsor. Likewise, the sponsor selects the service providers of such Client
Funds and negotiates fees paid to such service providers.

Our and our affiliates’ employees and former employees maintain (directly or indirectly)
investments in Client Funds. Generally, Management Fees and Performance Compensation are
waived in whole or in part for such employees and former employees. In addition, when our
affiliate acts as the general partner of a Client Fund, Management Fees and Performance
Compensation generally are not charged on the general partner’s capital commitment.

Portfolio fees (as described below) allocated to a portfolio investment at the time of investment
are generally capitalized into the amount of invested capital. Invested capital generally includes
the value of other capitalized fees, expenses and costs, including those payable or reimbursable to
us or our affiliates. Accordingly, to the extent that Management Fees for a Client are calculated
based on invested capital (or any similar standard set forth in a Client’s Governing Documents),
this would increase the amount of Management Fees paid to us. Such amounts are in addition to
portfolio fees paid to us and/or our affiliates. We are incentivized to have such amounts be
capitalized into the cost of a transaction, not only to avoid having portfolio investments pay such
amounts out of available operating cash, but also to increase the base on which future Management
Fees will be calculated.

To the extent that a Client’s Management Fee is at any time based on invested capital (or any
similar standard set forth in a Client’s Governing Documents), the Management Fee base may be
subject to reduction for certain events to the extent set forth in such Client’s Governing Documents.
Such reductions may relate to investments that have been permanently written off (or another
particular impairment standard set forth in the applicable Client’s Governing Documents) or that
have been disposed of (or otherwise have reached any similar standard set forth in the applicable
Client’s Governing Documents). Unless explicitly provided in a Client’s Governing Documents,
there will generally be no reduction or refund of Management Fees following any partial
realization, repayment, dividend, distribution (including those arising from dividend
recapitalizations), reorganization, restructuring, roll-over investment or similar transactions or any
decrease in value (whether temporary or permanent). As a result, unless explicitly provided in a

Client’s Governing Documents, the Management Fees generally will not track changes in the fair
value of any individual investment or of a Client.

Please see Item 6 for more information on Performance Compensation.

Service Fees. In certain instances, the general partners to some of our Clients have appointed
...