Avenue Europe International Management LP

Item 5. Fees and Compensation
Fees

Detailed information regarding fees is included in each fund’s confidential offering memorandum or
prospectus, as applicable. Because this brochure will only be delivered to “qualified purchasers”
investing in our private funds, as defined in Section 2(a)(51) of the Investment Company Act of 1940, a
complete description of our compensation arrangements is not required to be included in this brochure.
Fees paid for services provided to managed accounts are determined on a client-by-client basis and may,
but are not required to, be substantially similar to those paid by funds.

The private funds we advise generally pay management fees and incentive allocations or carried interest,
depending upon each fund’s investment strategy. Management fees for private funds, calculated as a
percentage of the asset value or aggregate commitments of the fund attributable to each investor, are
generally paid monthly, quarterly or semi-annually in advance. With respect to our private funds that pay
us a carried interest, management fees are pro rated for partial periods in the event that our investment
management agreement with the fund is terminated or an investor makes a capital contribution or
purchases shares at any time other than at the beginning of a fund’s valuation period, but are payable in
full for partial periods resulting from distribution of fund assets.

Incentive allocations or carried interest are calculated as a percentage of profits of the private funds.
Some private funds pay incentive allocations, in whole or in part, on mark-to-market performance at the
end of a period (year-end or upon a partial or full withdrawal), subject to a high watermark. Other private
funds pay a carried interest on realized returns. For those funds, such carried interest payments are not
paid to us until investors receive 100% of their capital back plus a preferred return.

Management fees, incentive allocations and carried interest rates may be negotiable.

Avenue Capital Group may receive income in the form of underwriting fees, break-up fees, commitment
fees and other such fees. However, Avenue Capital Group will not accept any fees that would trigger
broker-dealer or other registration unless and until the appropriate parties obtain the proper licenses and
registrations.

For more information regarding certain categories of fee income, including without limitation, break-up
fees, please see Item 5 under the heading “Fees and Compensation – Expenses – Funds.”

Expenses

Whether an expense is a fund or firm expense is governed by each fund’s operative documents and is the
joint responsibility of the Chief Compliance Officer and Chief Financial Officer, with the assistance of
such other parties as they deem necessary, to oversee how expenses are allocated. Expense allocation
determinations may be made as to broad categories or expense types or on an expense item-by-expense
item basis.

If permitted under a fund's controlling documents, from time to time the management company may
advance payment of an expense on behalf of the fund and to the extent that the expense may be
appropriately borne by the funds, the management company may seek reimbursement from the funds.

Once a determination is made that an expense is a fund expense that is attributable to more than one fund,
the Chief Compliance Officer and Chief Financial Officer, with the assistance of such other parties as
they deem necessary, shall determine the appropriate allocation methodology among the funds. For
instance, research that generally could benefit any fund within a strategy or among strategies may be

allocated among such funds/strategies based on the funds’ strategies’ respective net asset values or in
such other manner as Avenue Capital Group deems equitable among the funds. Other expenses that
directly relate to a specific investment may be allocated based on how the investment is held by, or is to
be allocated to, the funds. There may be situations where an expense may be allocable to some but not all
of the funds that receive the benefit of such expense. In these situations, the funds that can bear the
expense shall bear their allocable share of the expense and Avenue Capital Group shall pay the remainder.

 Funds

The payment of expenses by a fund will reduce the value of each investor’s investment in the fund.

Detailed information regarding the expenses to which each fund is subject is set out in the offering
documents or prospectus, as applicable, with respect to the particular fund.
Private Funds

Generally, each feeder fund bears its own expenses and its pro rata share of the expenses of any master
fund or intermediate fund. Private fund expenses may include, without limitation, the following
categories of expenses:
         •   formation expenses of the fund and related entities, including fees and expenses of counsel to,
             accountants for and agents of the fund, its general partner, if applicable, and the applicable
             filing adviser, of personnel of the applicable filing adviser and its advisors, and other
             expenses (including, without limitation, travel and travel-related costs and expenses
             (including business class airfare and first class airfare)), in each case, incurred in connection
             with the formation and marketing of the fund and related entities, the preparation of the
             fund’s operative documents and the offering of equity interests of the fund;

         •   audit fees and other out-of-pocket expenses incurred in connection with the preparation and
             distribution of financial statements for the fund, any portfolio company or special purpose
             vehicles used by the fund with respect to any investment, audit and reporting compliance;

         •   expenses incurred in connection with the evaluation, acquisition or disposition of investments
             (whether or not consummated), including:
...

Item 7. Types of Clients
We serve as the investment manager of, and provide investment advisory services to, private investment
funds (i.e., pooled investment vehicles) and may in the future serve as the investment manager of, and
provide investment advisory services to, one or more managed accounts. Neither Avenue Capital Group
nor any of our affiliates is acting as an investment adviser or otherwise making any recommendation as to
an investor’s decision to invest in the funds. With respect to the private funds, investment advice is
provided directly to the funds and not individually to each of the funds’ limited partners or shareholders,
as applicable. With respect to managed accounts, the investment objective and strategy of each client will
not involve a recommendation or determination by us as to the appropriate investment program for such
client nor due diligence by us as to such client’s financial condition or risk profile. Avenue may also
provide investment advice to registered investment companies.

The private funds’ investors may consist of one or more of the following: individuals, pension and profit-
sharing plans, financial institutions (including funds of funds), trusts, endowments, charitable
organizations and corporations or other business entities.

Each private fund investor or managed account client is required:
    •   to be an “Accredited Investor” as such term is defined in Rule 501(a) of Regulation D under the
        Securities Act of 1933;
    •   to be a “Qualified Client” as such term is defined in SEC Rule 205-3 under the Investment
        Advisers Act of 1940;
    •   to be a “Qualified Purchaser” as such term is defined in Section 2(a)(51) of the Investment
        Company Act of 1940; and
    •   to meet such other eligibility requirements as we determine on a case-by-case basis.

Managed account clients may consist of one or more of the following: individuals, pension and profit-
sharing plans, financial institutions (including funds of funds), trusts, endowments, charitable
organizations and corporations or other business entities.

There is no minimum size for the funds or managed accounts we advise. A majority of the private funds
have minimum investment amounts ranging from $500,000 to $10,000,000. Certain private funds,
however, may have higher or lower minimum investment amounts depending upon the agreement
negotiated between Avenue Capital Group and a fund’s investor(s), particularly in the case of single
investor funds. Subject to applicable statutory minimums, such minimum investment amounts are
negotiable.