Item 5. Fees and Compensation
A. Compensation
We are typically compensated for our services through the payment of base management fees that
are expressed as a number of basis points of assets under management (“Management Fees”) and,
subject to meeting certain pre-determined performance metrics set forth in the CLO Documents,
we are also entitled to performance-based incentive fees (as described in Item 6 below).
Management Fees and performance-based fees are set forth in detail in the CLO Documents for
the relevant CLO.
The nature and amount of compensation paid to EWIM may differ from one CLO to another, and
the compensation indirectly borne by investors in the CLOs, even those investing in the same CLO,
may differ from one investor to another.
B. Manner of Payment
In most instances, an unaffiliated third party will pay EWIM’s fees by applying an appropriate
portion of the cash flows from the Client’s underlying assets toward payment of EWIM per the
agreed-upon periodic schedule under the CLO Documents.
C. Additional Expenses
EWIM’s CLO Clients and, indirectly, investors in the CLOs, bear certain other fees, expenses and
costs (in addition to the compensation payable to EWIM) which are incidental or related to the
operation of CLOs or the buying, selling and holding of investments. Such fees, expenses and costs
are detailed in the CLO Documents for each CLO; as a non-exhaustive summary, such amounts
may include: (1) custodial charges; (2) credit support fees; (3) brokerage fees; (4) fees for
administrative services provided by third parties and/or affiliated entities; (5) fees for professional
services provided in-house for EWIM (to the extent there is a tangible benefit of such services to
a Client); (6) commissions and other related transaction costs and expenses, such as deal fees,
origination fees and deferred sales charges; (7) governmental charges, taxes and duties; (8) transfer
fees, registration fees and other expenses associated with buying, selling or holding investments,
such as wire transfer and electronic fund fees; (9) withholding taxes payable and required to be
withheld by issuers or their agents; (10) legal fees incurred in connection with the discharge of its
investment management responsibilities; (11) travel (including first class or private airfare, as
discussed below), meal and entertainment expenses; (12) expenses incurred with respect to
investor communication, meetings and conferences; (13) audit fees; and (14) insurance expenses.
D. Advance Payment of Fees
Generally, Management Fees payable to EWIM are paid periodically in arrears.
E. Compensation for Sale of Securities/Investment Products
None of EWIM’s supervised persons receives compensation for the sale of any securities or
investment products that are purchased or sold by Clients under EWIM’s advice or management.
As discussed in the response to Item 10 below, EWIM is affiliated with East West Markets, LLC
(“EWM”), a registered broker-dealer and a wholly owned subsidiary of EWIM’s parent company,
EWB. At least one EWIM employee is also employed by EWM. Neither EWM nor its supervised
persons, including supervised persons shared with EWIM, is expected to receive compensation in
connection with portfolio transactions by Clients; however, as discussed in the response to Item
10 below, EWM is expected to receive compensation in connection with the offer and sale of the
notes issued by certain Clients.