Candlewood Investment Group LP

ITEM 5.        Fees and Compensation

Compensation and Fee Schedules

The fees applicable to each Candlewood Fund are set forth in detail in each Candlewood
Fund’s Governing Documents. A brief summary of those fees is provided below.

Investors in the Candlewood Funds generally pay a management fee to Candlewood (the
“Management Fee”) on a quarterly basis, either in arrears or advance, equal to an annual
rate of up to 1.5% of net assets, depending on the Candlewood Fund. Generally, at the end
of each fiscal year, each investor in any Candlewood Fund that is an open-end vehicle also
pays an annual performance allocation to an affiliate of Candlewood, equal to 12.5% to
20% of the amount by which the net value of each account as of the end of each calendar
year exceeds the net value of the account as of the beginning of the year, subject to a “high
water mark” (the “Incentive Allocation”). In addition, under the Governing Documents of
each Candlewood Fund that is a closed-end vehicle, generally an affiliate of Candlewood
will receive a performance based allocation calculated and charged based on a percentage
of such Candlewood Fund’s realized capital gains (the “Carried Interest”). Generally, the
Carried Interest payable to Candlewood is 20% of profits over a specified preferred return.

Candlewood (or its affiliate) may, in its sole discretion, reduce, waive or calculate
differently the Management Fee, the Incentive Allocation or the Carried Interest with
respect to certain clients or investors, including members, partners, directors, officers,
affiliates or employees of Candlewood, its affiliates or the Candlewood Funds, or such
person’s family members and trusts or other entities established for the benefit of such
person or his or her family.

Candlewood may enter into “side letters” or similar agreements with certain investors in
the Candlewood Funds, granting such investors specific rights, benefits, or privileges that
are not made available to investors generally. Certain Candlewood Funds have, on a
limited basis, entered into side letters related to certain regulatory obligations affecting
such investors or providing certain other rights related to such investor’s investment.

Deduction of Fees

Candlewood is authorized under the Governing Documents to charge and deduct advisory
fees directly from the assets of the Candlewood Funds, at the times and in the amounts
described above. Candlewood also receives advisory fees from certain clients, as specified
in the relevant investment management agreement governing such relationship.

Other Fees and Expenses

In addition to the fees payable to Candlewood, the Candlewood Funds (with certain
exceptions described in the Governing Documents) pay for all costs and expenses incurred
in connection with the investments in their accounts, including (but not limited to)
brokerage commissions, clearing and settlement charges, custodial fees, interest expenses,
expenses relating to consultants, attorneys, brokers or other professionals or advisers who
provide research, advice, proxy voting services or due diligence services with regard to
investments, research related expenses (including with respect to certain Candlewood
Funds, travel expenses), appraisal fees and expenses, investment banking expenses, costs
related to transactions that are not completed, portfolio valuation and pricing services, other
legal expenses, costs of preparing required regulatory filings directly related to the
Candlewood Fund, the offering of the interests (including, without limitation, offering and
regulatory expenses related to compliance with the Alternative Investment Fund Managers
Directive (“AIFMD”) and other offering and solicitation regulatory regimes and
Regulation D under the Securities Act of 1933, as amended (the “Securities Act”)) and/or
specific portfolio investments (such as Schedules 13D and 13G and HSR notice), fees and
expenses of the advisory committee or board of directors, costs and expenses of forming
and operating any holding company or alternative vehicle (including administration costs),
any expenses associated with FATCA and CRS registration and compliance, including
with any intergovernmental agreements relating to automatic tax information exchange,
any expenses associated with Anti-Money Laundering regulations (“AML”) reporting and
compliance, accounting, audit, tax preparation and other tax related expenses, entity-level
taxes and registration fees, expenses related to obtaining insurance for the directors and
officers of the relevant Candlewood Fund or its general partner, organizational and offering
expenses, administration fees and related costs (including the fees of any third party
provider of middle office functions), and the costs and expenses of any services provided
by Candlewood or an affiliate that would otherwise be performed by third parties and are
permitted to be charged as expenses under the Governing Documents of such Candlewood
Fund, as described in greater detail in the Governing Documents for each Candlewood
Fund.

The section below titled “Brokerage Practices” describes the factors Candlewood considers
in selecting or recommending broker-dealers and determining the reasonableness of their
compensation.

Transaction-Based Compensation

Neither Candlewood nor its supervised persons will receive any compensation with respect
to the purchase or sale of securities or other investment products by any client, including
any Candlewood Fund that is not otherwise set off against the Management Fee or
otherwise disclosed in the Governing Documents for a particular Candlewood Fund.

Types of Clients

Candlewood provides advice to pooled investment vehicles. The limited partners and
shareholders of the Candlewood Funds may include corporations, endowments,
foundations, trusts, estates, individuals and pension and profit sharing plans. The
Candlewood Funds are offered in the United States to accredited investors as defined under
Regulation D under the Securities Act, and to qualified purchasers as defined under Section
2(a)(51) of the Investment Company Act of 1940, as amended (the “Investment Company
Act”), and are therefore not required to register as investment companies under the
Investment Company Act in reliance upon the exemption under Section 3(c)(7) for funds
whose securities are not publicly offered.

Candlewood has provided and may in the future provide investment management and
supervisory services to separate account clients from time to time. Certain of
Candlewood’s separate account clients may invest in existing or future Candlewood Funds.

Minimum Investment Requirements

As noted above, Candlewood and its related persons generally require that each investor in
each of the Candlewood Funds be an “accredited investor” as defined in Regulation D
under the Securities Act and a “qualified purchaser” as defined in Section 2(a)(51) of the
Investment Company Act.

Investors in the Candlewood Funds are generally required to make a minimum initial
investment between $250,000 and $10 million, depending on the particular Candlewood
Fund, although Candlewood may accept lower amounts at its (or the relevant general

partner’s) discretion. Certain of the Candlewood Funds have a defined term, but investors
in the open-ended Candlewood Funds are also generally subject to a lock-up period ranging
from six months to one year after investment, which lock-up may be waived or reduced by
Candlewood, the relevant board of directors or the relevant general partner in its discretion.