Annaly Credit Opportunities Management LLC

Item 5 – Fees and Compensation

FEE SCHEDULE

All fees are subject to negotiation and are defined within each Fund’s Governing Documents.

The Adviser typically bills fees based on a percentage of assets under management on a
quarterly basis in arrears and prorated for any partial quarterly periods.

The Adviser’s fees are exclusive of brokerage commissions, transaction fees and costs
(including broken deal costs), and other Fund related costs and expenses which are incurred
by Funds. All fees and expenses, and any related limitations and restrictions thereon,
charged by the Adviser, are set forth in each Fund’s respective Governing Documents and

                   ANNALY CREDIT OPPORTUNITIES MANAGEMENT LLC

                               Form ADV, Part 2A BROCHURE

can include (i) administration, legal, auditing, consulting, banking, custody, regulatory,
compliance, reporting (including securities filings related to the Fund) and accounting
expenses (including fees incurred by any blocker subsidiaries); (ii) tax expenses and
expenses related to a Fund’s financial statements, tax returns, tax estimates and filings
(including, without limitation, expenses related to the foregoing incurred to allow a Fund or
its affiliate(s) to comply with non-U.S. and U.S. federal, local and state laws and regulations
(including all expenses incurred with respect to filing the Form PF and Form D); (iii)
expenses associated with the identification, investigation, acquisition, holding, structuring,
organizing, financing, refinancing, restructuring, winding up, liquidation, dissolution and
disposition of the Fund’s assets; (iv) certain delivery fees and expenses of third-party
servicers pursuant to applicable servicing agreements (including, funding fees, pre-close
eligibility fees, scenario fees, non-warrantable condo/COOP submission fees, and tax service
fees); (v) all costs incurred in connection with the organization, management, operation, and
dissolution, liquidation and final winding up of any blocker subsidiaries; (vi) expenses
incurred in connection with valuing a Fund’s assets, including, without limitation, third-
party valuation services; (vii) expenses attributable to any proposed investment that is
ultimately not made by a Fund (including expenses that may have been allocable to third-
party co-investors had such transactions been consummated); (viii) all costs of leverage
incurred by a Fund and other similar fees and expenses, all interest on borrowed funds (if
any), and other expenses relating to the financing or refinancing of any indebtedness of,
guarantees or other obligations of the Fund; (ix) expenses incurred in connection with the
obtaining and maintaining of insurance policies by or on behalf of a Fund, its general partner
and the Adviser (including directors and officers, errors and omissions liability and other
insurance); (x) extraordinary expenses of a Fund (such as investor defaults or fees or
expenses incurred in litigation or in respect of indemnification obligations); (xi) expenses of
an investor led advisory board or committee, if applicable of a Fund, if any; (xii) any taxes,
fees and other governmental charges levied against a Fund; (xiii) any loan servicing fees (e.g.,
structuring and/or underwriting and arrangement fees from loan syndication activities,
administrative loan agency fees and investment advisory fees), whether such fees are paid
to a third-party or to Annaly, or an entity affiliated with Annaly; and (xiv) organizational
expenses of a Fund. Such costs and expenses are exclusive of and in addition to the Adviser’s
fees, and, except as set forth in the applicable Governing Documents with respect to any
Fund, the Adviser does not receive any portion of these costs and expenses.

In addition, Annaly, through its wholly-owned subsidiaries, will incur fees in connection with
the origination or acquisition of loans or other assets or the holding of a loan or asset,
including due diligence fees, commitment fees, unused facility fees, prepayment premiums,
amendment fees, and other similar fees, payments or compensation. Annaly will, subject to
the applicable Governing Documents, allocate to the Funds the portion of these fees
attributable to the loans held by the Fund.

Annaly, through its wholly-owned subsidiaries, will generate fees in connection with the
origination or acquisition of loans or other assets, the holding of a loan or asset or the

                  ANNALY CREDIT OPPORTUNITIES MANAGEMENT LLC

                               Form ADV, Part 2A BROCHURE

sponsorship of securitizations. Certain fees will be retained by Annaly, or its subsidiaries,
and will not offset the fees paid by, or otherwise shared with, the Funds.

Common expenses may be incurred on behalf of the Funds and one or more entities and/or
accounts that are sponsored and/or managed by Annaly. The Adviser will seek to allocate
those common expenses among the Funds and other entities in a manner that is fair and
reasonable over time. Under its current expense allocation policies, the Adviser generally
expects to allocate common expenses among the Funds and other entities pro rata based on
relative assets under management. The Adviser may, however, use other methods to allocate
certain common expenses among the Funds and other entities if it deems another method
more appropriate based on relative use of the product or service, the nature or source of the
product or service, the relative benefits derived by the Funds and other entities from the
product or service, or other relevant factors. Nonetheless, the portion of a common expense
that the Adviser allocates to the Funds for a particular product or service may not reflect the
relative benefit derived by the Funds from that product or service in any particular instance.
The Adviser’s expense allocations often depend on inherently subjective determinations
...

Item 7 – Types of Clients

The Adviser provides discretionary investment advice to the Funds. The sole nonaffiliated
investor in the Funds is a sovereign wealth fund.

With respect to any Fund that is a pooled investment vehicle, any initial and additional
subscription minimums are disclosed in the applicable Governing Documents for such
pooled investment vehicle. The Adviser can waive such minimums for an investor at its
discretion. The minimum size for non-pooled investment vehicles is determined by the
Adviser on a case-by-case basis.

Interests in the Funds are not registered under the Securities Act of 1933, as amended (the
“Securities Act”), and such Funds are not registered under the Investment Company Act of
1940, as amended (the “Investment Company Act”). Accordingly, interests in the Funds
are offered and sold exclusively to investors satisfying the applicable eligibility and
suitability requirements, as set forth in such Fund’s Governing Documents. Generally,
investors participating in the Funds are required to meet certain suitability and net worth
qualifications, such as being an “accredited investor” within the meaning of Rule 501 of
Regulation D under the Securities Act and “qualified purchaser” as defined in
Section 2(a)(51) of the Investment Company Act.