Bayview Asset Management LLC

FEES AND COMPENSATION

A.      Fees and Compensation

Management Fee

Generally, Clients pay the Management Company a fee for investment management services
(the “Management Fee”). For the Funds, the fee paid for each fiscal quarter ranges from
approximately 0.25% (1.00% per annum) to 0.5% (2.0% per annum) of the beginning net asset
value of each investor’s capital account for such fiscal quarter. In consideration for the
Management Fee, the Management Company provides to Clients certain office space and
utilities, secretarial, clerical and other personnel services.

For the Funds, the Management Fee is calculated and paid in advance but is amortized monthly
by each Fund over the quarter for which such Management Fee is paid. For the SMAs, the
Management Fee generally is calculated annually and paid quarterly in arrears. With respect to
certain Funds, the Management Fee generally will be prorated for any capital contribution or
withdrawal by an investor that is effective other than as of the first day of a quarter. With
respect to certain Funds, in the event of a withdrawal by an investor other than as of the last
day of the quarter, the Management Company will repay to the Fund a pro rata portion of the
Management Fee, based on the actual number of days remaining in such quarter.

In the sole discretion of the Management Company, the Management Fee may be waived,
reduced or calculated differently with respect to certain investors. The Management Fee may
be calculated differently with respect to certain Funds and SMAs that are set up for a single
investor or a group of related investors, in accordance with the relevant Client’s constituent
documents.

Incentive Allocation

The general partner of each Fund generally will receive an annual performance-based
allocation (an “Incentive Allocation”) of a portion of the net capital appreciation allocated to
each investor’s capital account, as more fully described below.

Generally, at the end of each calendar year of the Funds, net capital appreciation, if any,
allocated or apportioned to an investor’s capital account in such Fund will generally be
reallocated or reapportioned by the Fund, as applicable, in the following order of priority (as
more fully described in such Fund’s constituent documents): (i) first, to the investor until the
investor has made up previous losses; (ii) second, to the investor until it has achieved a hurdle
rate of return; (iii) third, to the general partner and the investor pursuant to a catch-up allocation
until the general partner has received 15% of such net capital appreciation for such year; and
(iv) fourth, an 85/15 split between the investor and the general partner, respectively, until the
return equals a threshold amount.

In the sole discretion of the relevant Bayview entity, the Incentive Allocation or Sub-Advisory
Fee (as defined below) may be waived, reduced or calculated differently with respect to certain
investors. With respect to certain Funds that are set up for a single investor or a group of related
investors, the Incentive Allocation may be calculated differently, in accordance with the
relevant Fund’s constituent documents.

Sub-Advisory Fee

As a sub-adviser of BXMIX, the Registrant generally will receive an annual sub-advisory fee
(a “Sub-Advisory Fee”) generally at a rate of 0.80% multiplied by the average daily net assets
of the allocated portion of BXMIX’s assets.

B.     Payment of Fees

Fees and compensation paid or allocated to the Management Company and the general partners
by the Funds are generally deducted from the assets of such Funds (or reallocated from the
investors’ capital accounts to the general partners’ capital accounts) at the times and in the
manner discussed above. The investment adviser to the Blackstone Fund pays the Registrant’s
Sub-Advisory Fee. For the SMAs, the Registrant issues invoices to the SMA investor for fees
and expenses and does not deduct fees from the SMA assets.

C.     Additional Fees and Expenses

Operational Fees and Expenses for Funds

In addition to the fees described above, each Client will, to the extent not borne by an
underlying portfolio investment, also bear all of the following operational and other fees, costs,
liabilities, obligations and expenses and their pro rata share of any trading subsidiary’s
(including BGOF (as defined below)) or special purpose vehicle’s costs, liabilities, obligations
and expenses (collectively “costs”):

       (i) investment-related costs, including:

               (a) the costs associated with all investments and transactions considered,
               pursued, evaluated, owned, acquired and/or consummated by Clients, including
               but not limited to, costs associated with sourcing, negotiating, investigating,
               researching, diligencing (including, but not limited to, indexing of files, loan
               reviews, final collateral handling, fraud and compliance tools and quality
               assurance checks), financing, refinancing, structuring, acquiring, organizing,
               bidding-on, operating, holding, custodying, monitoring, hedging, shorting,
               restructuring, trading, selling, valuing, winding up, liquidating, dissolving or
               otherwise disposing of investments and potential investments (including follow-
               on investments), whether or not consummated or seeking to do any of the
               foregoing (including third-party research, data, analytics, modeling, structuring,
               pricing, execution and other third-party information systems, software, and
               service fees (including data feeds, subscriptions, periodicals, databases, reports
               and similar items)) related thereto;

               (b) costs incurred in the collection of monies owed to Clients;

               (c) travel and related costs associated with investments and potential
...

TYPES OF CLIENTS

As described in Item 4, Bayview provides investment advice to the Funds, the SMAs, and the
Blackstone Fund. Bayview also provides investment advice to its affiliate, the Oceanview
Group, as well as certain accounts of unaffiliated insurance companies that are re-insurance
clients of the Oceanview Group (with respect to investment accounts related to such
reinsurance arrangements for which the Oceanview Group is the economic beneficiary).

For each Fund, the constituent documents set minimum amounts for investment by prospective
investors. Bayview may modify or waive such minimum investment requirements in a Fund
from time to time; however, investors in each Fund and SMA must: (i) be “accredited
investors,” as defined in Regulation D under the Securities Act; (ii) either a “qualified
purchaser,”, as defined in the Company Act, or a “knowledgeable employee,” as defined under
Rule 3c-5 of the Company Act; and (iii) meet other suitability requirements.