Jefferies Finance LLC

Item 5 FEES AND COMPENSATION

A.     Advisory Fees and Compensation

              The Firm may charge carried interest, incentive fees, performance
compensation, management fees, advisory fees and other fees to its Advisory Clients.
Advisory Clients should review the Governing Documents of the respective Private Fund,
Issuer or Separate Account for complete information on all fees and compensation. In
certain circumstances, the advisory fees payable to the Firm by Separate Account or Private
Fund investors may be negotiable. The fees as set forth in the collateral management
agreements for Issuers are non-negotiable.

              With respect to Separate Accounts, as such accounts are structured for a
single investor or a group of investors, the fees and compensation to be received by the
Firm may contain more customized calculations than those for Issuers or Private Funds.
The calculation method for the services provided to Separate Accounts and Private Funds
are disclosed in the applicable Governing Documents.

B.     Payment of Fees; Timing of Payments; Termination

             For many of our Advisory Clients, we are authorized under the Private Fund’s
or Separate Account’s Governing Documents to charge and deduct advisory fees directly
from the assets of the applicable Private Fund or Separate Account, at the times and in
the amounts set forth in the Governing Documents. For funds of one and Separate
Accounts, our ability to deduct advisory fees may be negotiable.

             Base advisory fees for many of our Advisory Clients, including many of the
Private Funds, are payable in arrears, generally on a quarterly or semi-annual basis.
Because such advisory fees are payable in arrears, they are not paid until after services
have been rendered. With respect to certain Private Funds and other Advisory Clients, the
base advisory fees are payable in advance, generally on a quarterly basis. Please refer to
the applicable Governing Documents for complete information on the timing of advisory
fee payments.

              Advisory Clients have the right to terminate the advisory or investment
management agreements in accordance with the terms of such agreements. Our policy is
to repay advisory fees paid in advance in excess of the pro rata portion earned (based on
the number of days during the period) through the termination date.

              With respect to Issuers, the management fees (and if applicable, any
incentive fees) are paid on a quarterly basis. Fees are determined by the Trustee (or
administrator, if applicable) in conjunction with the other payments that are required to
be made on each payment date, based on the collections received by each Issuer during
the quarterly period preceding such payment date. Pursuant to each Issuer’s Governing
Documents, such fees and other payments are set forth in a report that is prepared by the
Trustee, reviewed and approved by the Firm and distributed to the noteholders prior to the
applicable payment date. Payment of fees is made by the Trustee on behalf of Issuers on
the applicable payment date. Fees with respect to Issuers are not otherwise invoiced.

              The payment method for fees, and calculation thereof, to be received by the
Firm in connection with services provided to Private Funds and Separate Accounts are
disclosed in the applicable Governing Documents.

C.     Transaction-Related Fees.

              Jefferies Finance lead arranges and underwrites a variety of debt products
consisting of senior secured loans, revolving credit facilities, bridge backstop
commitments, asset-based loans and other leveraged loan products. The leveraged finance
business of Jefferies Finance will involve a mix of both committed and “best efforts”
broadly syndicated and private credit transactions. Jefferies Finance may also act as
administrative agent and/or collateral agent in connection with these credit facilities, and
may also act as a lender on a proprietary basis and earn fees and interest in such capacity.
The Firm and its affiliates may receive origination, commitment, arrangement,
documentation, structuring, facility, monitoring, amendment, administrative agent, and
other transaction-related fees from portfolio companies in which one or more Advisory

Clients invest (or are considering investing). The Firm and its affiliates will also receive
fees and interest with respect to the loans and commitments that it invests on a propriety
basis.

The receipt of these fees creates conflicts of interest because it gives the Firm and its
affiliates an economic incentive to pursue or recommend transactions that generate such
compensation. However, these fees and interest are not considered advisory compensation
and are not management-fee offsets unless a client’s governing documents expressly
provide for an offset. The Investment Adviser believes that serving in these roles provides
more attractive investments to the Firm’s Advisory Clients over time, even if any particular
role (and the fees received in connection therewith) could conflict with the short-term
interests of any Advisory Clients on any particular deal.

              In some cases, a portion of an asset (or commitment) is held by the Firm on
proprietary basis in anticipation of a subsequent transfer to an Advisory Client or to a third
party. When that portion is sold to third parties, the Firm may receive a fee or profit. We
have an incentive to find larger deals than our Advisory Clients would ordinarily want to
purchase to generate these transaction fees and profits. Further, these fees and profits
create an incentive for the Firm to sell a larger portion of a loan to third parties (thereby
reducing the Advisory Clients’ shares of the loan) rather than Advisory Clients because
such sale could allow the Firm to receive such fees or profits. To partially mitigate these
conflicts, our Advisory Clients generally receive their minimum desired allocations, as
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Item 7 TYPES OF CLIENTS

            As described in Item 4 above, the Firm’s Advisory Clients include Private
Funds, Issuers and Separate Accounts. The terms and conditions of the advisory
arrangements with the particular type of Private Fund, Issuer or Separate Account vary
depending upon the type of services provided or the type of Private Fund, Issuer or
Separate Account, and these terms and conditions may vary among Advisory Clients.

              The minimum account size necessary to open and maintain a Separate
Account with the Firm varies by the type of Advisory Client and the relevant strategy.
Furthermore, while we generally do not impose an investment minimum on our Advisory
Clients, certain Advisory Clients, such as Private Funds, often impose investment
minimums for investors in such funds. These investment minimums, if any, can be found
in the applicable Advisory Clients’ documents. We reserve the right to reduce or waive any
investment minimums that are required of investors, depending on a variety of factors,
such as a particular Advisory Client’s circumstances or investment strategies.

              The Firm may advise additional Advisory Clients in the future (including
additional Issuers under new CLOs, as well as new Private Funds, Separate Accounts, and
Business Development Companies).