Five Arrows Managers North America LLC

Item 5 – Fees and Compensation

Advisory Contracts and Fees

5.A.    Adviser Compensation

The Adviser’s fees are generally described below and detailed in each client’s advisory
agreement or applicable account documents as well as, with respect to a Private Fund
(such as a CLO), in the Private Fund’s governing documents.

Fees for service may be negotiated with each client on an individual basis prior to the
engagement of the Adviser. Typically, the Adviser charges clients quarterly in arrears,
a base management fee (which for CLO clients may include both a senior and
subordinated management fee component which are discussed below) for investment
services. Base management fees are typically paid quarterly in arrears and are
generally calculated on the value of gross assets (taking leverage into account) under
management at the beginning of the quarter. At present, for purposes of the calculation

of base management fees with respect to CLO clients, gross assets are being calculated
utilizing par value of Bank Loans and other related debt securities as well as the value
of cash and cash equivalents which the Adviser believes is standard practice with
respect to CLOs.

Private Funds other than CLOs or Managed Accounts will generally have similar, but
not identical arrangements to those of CLOs in terms of base management fees.
However, such accounts typically will not have a subordinated fee component of the
base management fee. Also, it would be expected that the calculation of the base
management fee will be based on the market value rather than par value.

Private Funds, as well as Managed Accounts may, under certain circumstances, pay a
performance fee to the Adviser as well as the base management fee. Performance fees
are discussed in Item 6 of this Brochure.

Fees for Private Funds are typically calculated and paid by an independent trustee
(CLO clients) or a third-party independent custodian.

With regards to Private Funds, the respective fund’s governing documents will
generally permit the Adviser to waive, rebate or defer all or part of the management
fee and/or performance fee with respect to investments made by certain investors
without waiving, rebating, or deferring the fees charged to other investors. In addition,
in certain cases the Adviser, as the investment manager, may have the discretion to
grant special or more favorable rights, without limitation, with respect to fees,
transfers, notices and transparency. Such rights may be granted to any Fund investor.
To effect, such waivers, or modifications or to grant any special or more favorable
rights, the Adviser or the Fund(s) will enter into agreements or issue other classes of
shares.

The difference between the senior fee and subordinated management fee components
of base management fees with respect to CLO clients relates to amount and certainty
of collection. Typically, the senior fee and the subordinated fee are of differing
amounts. The collection of such senior management fees by the Adviser is fairly
certain. This is because senior management fees are typically paid by the Private Funds
(including CLO clients) prior to most interest expense, if any, is paid to the fund’s
debtholders. Subordinated management fees (which are typically associated with CLO
clients) are paid after most interest expense to the CLO’s debtholders is paid and the
CLO’s coverage tests have been met. The collection of such subordinated management
fees may be less certain under certain adverse credit conditions which may cause a
failure in connection with the CLO’s coverage test. However, in such instances,

subordinated management fees will typically be deferred and may be paid at a later
date assuming there are sufficient funds and the CLO’s coverage tests have been met
at a later date.

In the event that additional assets are placed under management during the calendar
quarter, the Adviser’s compensation with regard to base management fees will be
calculated and payable on a pro rata basis.

Fees may change over time and as discussed below, different fee schedules may apply to
different types of clients or advisory arrangements. The amount, timing, and type of
fees charged (i.e., base management fee and performance fee), and the manner in
which fees are calculated, are determined through negotiations with clients and are
set forth in an investment advisory agreement with the client. Accordingly, there may
be differences in fees paid by certain clients based on a variety of factors. Negotiations
between the Adviser and clients are influenced by such factors as the nature and extent
of the investment advisory services to be rendered and the size of the managed
account, among other things. The Adviser reserves the right to waive or reduce the fees
charged to a particular client in its sole and absolute discretion.

Total base management fees charged to the client will typically range from
approximately 30 to 50 basis points of gross AuM based upon negotiations with the
client and depending upon the type of account/fund and strategy.

5.B. Direct Billing of Advisory Fees
The specific manner in which fees are charged by the Adviser is established in a client’s
written agreement with the Adviser. Generally speaking, the independent trustee,
custodian, and administrator for the Private Fund (such as a CLO) will calculate the
base management and performance fees and remit payment to the Adviser. In the
unlikely absence of such a procedure by the independent custodian, the Adviser would
seek to bill the client its fees on a quarterly basis in arrears.

Although it is not current practice, pursuant to the investment management
agreement, clients could also elect to be billed directly for fees or to authorize the
Adviser to directly debit fees from client accounts. In such instances, if any, where the
client has authorized direct billing, the Adviser will take steps to assure itself that the
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