Hillcrest Credit and Income Fund II Manager LLC

ITEM 5:         FEES AND COMPENSATION

                A. Fee Schedule

                Hillcrest receives management advisory fees (“Management Fees”) and carried interest1
                for their investment advisory services to its Clients.

                Until the investment period for each Fund has terminated, each Fund pays to Hillcrest
                annual Management Fees equal to a certain percentage of the total capital commitments
                (regardless of whether such capital has been invested) of the partners of the applicable
                Fund, as described in the Fund’s Governing Documents. Following the end of the
                investment period of each Fund, the Management Fee of such Fund is equal to a certain
                percentage of the invested capital of such Fund, as determined in accordance with such
                Fund’s Governing Documents.

                Hillcrest, in its discretion, may waive or reduce the Management Fee applicable to any
                Client or all or any of the investors in each Fund or agree with an investor to waive or alter
                the Management Fee as to that investor. The Management Fee charged by certain of the
                Funds is reduced by the amount of any transaction, break-up, or similar fees received by
                Hillcrest as described in the Governing Documents of the applicable Fund.

                There can be no assurance as to when capital will be invested or that the entire capital
                commitment of an investor will be invested by each Fund.

                Hillcrest is apportioned carried interest distributions from each Fund (“Carried Interest“)
                based on the net cash proceeds attributable to Fund investments through related general
                partner entities. Each such general partner, in its discretion, may waive or reduce the
                Carried Interest as to all or any of the investors in each Fund or agree with an investor to
                waive or alter the Carried Interest as to that investor. The Carried Interest is also subject
                to a “clawback”, which means that each general partner is required to return to the
                investors of each Fund, distributions it receives from such Fund which constitute Carried
                Interest under such Fund’s Governing Documents if the general partner of such Fund has
                which exceeds the amount of Carried Interest distributions payable to the general partner
                pursuant to the terms of the applicable Governing Documents, applied on an aggregate
                basis covering all investments of such Fund over the term of such Fund.

                With respect to each Fund, Management Fees do not exceed 1.55% per annum and
                Carried Interest distributions do not exceed 20% of the profits earned by such Fund.

                Investors should refer to each Fund’s Governing Documents for additional or
                supplementary information regarding such Fund as well as the fees paid by such Fund,
                since fees and expenses may vary across Funds.

    Carried interest is received via the General Partner of the applicable Fund.

Fees associated with the SMAs/IMAs are negotiated directly with each Client and range from
50 basis points to 150 basis points. Incentive fees are also negotiated with such Clients,
and do not exceed 25% of profits earned by such Client, as calculated in accordance with
applicable hurdles as described in the applicable Governing Documents.

B. Payment Method

The Management Fees are paid by each Fund Client quarterly in advance by
(i) issuing capital calls to the investors, (ii) borrowing under credit facilities, or (iii) or from
investment proceeds or other cash held by each Client. The Carried Interest for each Fund
Client is paid out as a distribution of the net cash proceeds attributable to dispositions
and/or pay-offs of portfolio investments of such Fund Client.

The Management Fees are paid by each SMA/IMA Client in accordance with the vehicle’s
Governing Documents by (i) issuing capital calls to the SMA/IMA, (ii) invoicing the SMA/IMA,
(iii) borrowing under credit facilities, or (iv) or from investment proceeds or other cash held
by each SMA/IMA Client. The Carried Interest for each SMA/IMA Client is paid out as a
distribution of the net cash proceeds attributable to dispositions and/or pay- offs of
portfolio investments of such SMA/IMA Client.

C. Other Fees and Expenses

Each Client bears the expenses of its organization (subject to a maximum amount as set
forth in the applicable Governing Documents) and all operational expenses incurred in
connection with the acquisition, origination, sale, financing, refinancing, management,
disposition, and pay-off of investments, and the fees and expenses of third-party service
providers to the Client. Such expenses include, but are not limited to:

(i)      legal, auditing, consulting, financing and accounting fees and expenses of the
         Client;
(ii)     expenses associated with the preparation and distribution of the Client’s financial
         statements and reports to Fund investors and the costs of preparing and filing the
         Fund’s tax returns;
(iii)    out-of-pocket expenses and other expenses incurred in connection with the
         operation of the Client’s account under the laws of the jurisdiction in which it is
         organized;
(iv)     expenses incurred in connection with transactions pursued, but not ultimately
         consummated;
(v)      expenses of appraisers and consultants;
(vi)     expenses of litigation and indemnification;
(vii)    insurance premiums;
(viii)   expenses of advisory committee meetings and meetings of the Client or, as
         applicable, Fund investors;
(ix)     other expenses associated with the acquisition, origination, holding, financing,
...

ITEM 7:   TYPES OF CLIENTS

          For a discussion of our Clients, please refer to Item 4 above, part describing the Types of
          Advisory Services provided to both Private Funds and Investment Vehicles for SMA’s.

          We require investors in a Fund to make a minimum capital commitment to that Fund,
          although the amount of the minimum varies from fund to fund. The minimum investment
          requirements may be waived by Hillcrest or the Funds’ general partner in its sole discretion.
          Investors that are U.S.-based persons must be “accredited investors” under Regulation D
          under the Securities Act, and, for certain, “qualified purchasers” under Section 2(a)(51)(A)
          of the Investment Company Act. The Funds’ charge performance fees only with respect to
          those investors in each Fund or Clients who are “qualified clients” eligible to pay
          performance fees under the Advisers Act.

          We require Client’s and investors to make representations concerning their financial
          sophistication and ability to bear the risk of loss of their entire investment.