Lakewood Capital Management LP

Fees and Compensation
Management Fees
As compensation for investment advisory services rendered to the Funds, Lakewood deducts a
quarterly management fee calculated at the annual rate of 1.5% of each Limited Partner’s capital
account with Series One Interests or Sub-Class One Shares and 1.75% of each Limited Partner’s
capital account with Series Two Interests or Sub-Class Two Shares. The management fee is paid
quarterly in advance based on the value of each Limited Partner’s capital account as of the first day
of each calendar quarter (adjusted for contributions made during the quarter). If a Limited Partner
redeems from the Funds, the management fee will be prorated for any period that is less than a full
fiscal quarter and will be deducted in calculating the net profit or net loss of the Fund. The General
Partner, in its sole discretion, may waive or modify the management fee for Limited Partners that
are members, employees or affiliates of the General Partner or the Investment Manager, relatives
of such persons, and for certain large or strategic investors.

In addition, from time to time, the Fund may invest in unaffiliated money market funds, mutual
funds or exchange-traded funds, which charge management fees and expenses as disclosed in the
specific fund’s prospectus.

Incentive Fees
For any fiscal year in which a Limited Partner has a net profit, the General Partner will be entitled
to an incentive fee equal to 20% of such net profit (including realized and unrealized gains) which
will be deducted from the Limited Partners capital account at the end of each fiscal year. Under a
loss carry forward provision contained in the Limited Partnership Agreement, no incentive fees will
be made from the capital account of a particular Limited Partner until any net loss previously
allocated to the capital account of such Limited Partner has been offset by subsequent net profits.
Any such loss carry forward will be subject to reduction for withdrawals on a pro rata basis. In the
event that a Limited Partner withdraws capital (in whole or in part) or retires at any time other than
at the end of a fiscal year, such deduction will be made with respect to such Limited Partner as
though it were being made at the end of a fiscal year; provided, however, that in the case of a partial
withdrawal, the General Partner may, in its sole discretion, elect to delay the deduction of the
incentive fee until the end of the fiscal year. The General Partner, in its sole discretion, may waive
or modify the incentive fee for Limited Partners that are members, employees or affiliates of the
General Partner or the Investment Manager, relatives of such persons, and for certain large or
strategic investors.

Withdrawal Fee
Limited Partners with Series One Interests or Sub-Class One Shares may, upon at least 60 days’
prior written notice, withdraw all or any portion of its capital account attributable to a particular
capital contribution as of the last day of the calendar quarter during which the one-year anniversary
of such contribution occurs. Limited Partners with Series One Interests or Sub-Class One Shares
will be charged a 3% withdrawal fee that is payable to the Fund if they withdraw prior to the one-
year anniversary. Limited Partners with Series Two Interests or Sub-Class Two Shares may, upon
at least 60 days’ prior written notice, withdraw all or any portion of its capital account attributable
to a particular capital contribution as of the last day of the calendar quarter. Limited Partners with
Series Two Interests or Sub-Class Two Shares are not subject to an early redemption fee. The
General Partner, in its sole discretion, may waive or modify the conditions relating to withdrawals
for Limited Partners that are members, employees or affiliates of the General Partner or the
Investment Manager, relatives of such persons, and for certain large or strategic investors. Limited
Partners will not be permitted to make any withdrawals from their side-pocket accounts. Please
refer to the Funds’ offering documents for additional information regarding Limited Partner
withdrawals.

Expenses
The Funds are responsible for certain expenses including the following: management fees; Fund
legal, compliance, administrator, review committee and directors’ fees, audit and accounting fees
and expenses (including third party accounting services); organizational expenses; investment
expenses such as commissions, research fees and expenses (including expert networks, research
providers and research-related travel expenses); interest on margin accounts and other indebtedness;
borrowing charges on securities sold short; custodial fees; bank service fees; Fund-related insurance
costs; and any other expenses related to the purchase, sale or transmittal of Fund assets (including

order management systems - please refer to the Brokerage Practices section below for brokerage
disclosures). Expenses related to research, execution and related services furnished or paid for by
brokers falling within the “safe harbor” under Section 28(e) of the Securities and Exchange Act of
1934, as amended, may be paid through soft dollars, and Fund expenses may also be paid through
soft dollars.

Lakewood seeks to allocate expenses fairly, equitably, and consistent with the documents governing
the Company's relationship with each private fund and any applicable employee fund. When
allocating expenses, Lakewood must interpret private funds’ governing documentation and make
determinations whether expenses are allocated and paid, in full or in part, by a private fund, private
funds, employee fund and/or the Company, which may create a conflict of interest. The Company
has implemented written policies, procedures, and guidelines designed to mitigate conflicts of
interest.

Performance Based Fees and Side-by-Side Management
As disclosed above in the Fees and Compensation section, the Funds pay incentive fees based on
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Types of Clients
Lakewood provides investment supervisory services to the Funds. Investment advice is provided
directly to the Funds, subject to the direction and control of the general partner of such Fund and
not individually to the Limited Partners. Investors in the Funds may include, but are not limited to,
high net worth individuals, pension plans, endowments, foundations, trusts, estates or charitable
organizations, and corporate or business entities.

Details concerning applicable investor suitability criteria are set forth in the respective Fund’s
offering documents and subscription materials. Although Lakewood and/or its affiliates have the
authority to accept subscriptions for lesser amounts, the minimum initial investment in Series One
Interests and Sub-Class One Shares is generally $3 million, and the minimum subsequent
investment is $250,000, and the minimum initial investment in Series Two Interests and Sub-Class
Two Shares is generally $250,000, and the minimum subsequent investment is $100,000. Each
Limited Partner is required to meet certain suitability qualifications, such as being an “accredited
investor” and “qualified purchaser” within the meaning set forth in Regulation D under the
Securities Act 1993, as amended.

Methods of Analysis, Investment Strategies and Risk of Loss
Method of Analysis
Lakewood focuses on finding mispriced securities for the Funds. The Investment Manager focuses
its efforts on securities that are likely to be affected by factors that give rise to pricing inefficiencies
based on its experience and judgment. Lakewood’s investment team has together analyzed and
researched several hundred investment opportunities, resulting in a productive idea generation
process. In addition to generating ideas from the numerous companies that Lakewood has followed
over many years, the Investment Manager is always searching for interesting opportunities in areas
such as stock overreactions, companies undergoing change or restructurings, spin-offs/IPOs and
securities that are affected by technical factors (such as forced selling, momentum or limited
liquidity). Lakewood’s ideas for short positions are generally catalyst-driven and are focused on
securities that are undergoing extreme pricing distortions and Lakewood suspects that the positions
are likely to re-price quickly. Most of the Funds short positions fall into two categories: (i)
companies undergoing temporary changes in earnings power that are mistaken for secular growth
by a momentum (often retail-oriented) shareholder base and (ii) companies engaged in deceptive or
fraudulent behavior in an attempt to mask businesses that possess little or no economic value.
Lakewood regularly searches for companies that possess the tell-tale signs that make a profitable
short such as a surge in retail buying, momentum buying, sudden changes in earnings or margins,
insider selling and valuation distortions when measured against assets, employees, and other factors.

Investment Strategy
Lakewood employs a fundamental investing approach that seeks to exploit inefficient pricings in
equities (both long and short equity positions) and fixed income securities. Lakewood seeks to
capitalize on the best risk/reward opportunities across many diverse industries, geographies and
securities. A summary of each investment strategy is described below:

Long Equity: Long equity positions generally consist of those securities that Lakewood believes
will have the potential for significant capital appreciation over a multi-year horizon with a minimal
degree of capital loss. The common themes of long equity investment opportunities consist of
companies that are out of favor, subjected to forced selling or liquidation, complex, undergoing
change or uncertainty, misunderstood or underappreciated by the market. Target investments are
typically companies with severe price declines, spin-offs, initial public offerings, under-followed
companies, restructurings, reorganizations and companies with hidden assets.

Short Equity: Short equity positions generally consist of those securities that Lakewood believes
are trading at significant premiums to intrinsic value and are likely to decrease in value in the near
to intermediate-term. Lakewood tends to focus our short equity strategy in two areas: (i) companies
that are undergoing temporary increases in earnings that Lakewood believes are being
misinterpreted by the market as secular or permanent increases in the earnings power of the
businesses or (ii) companies with deceptive practices and/or misleading or fraudulent management
teams.

Long Fixed Income: Fixed income positions generally consist of securities where Lakewood can
earn attractive cash returns on its investment or establish an attractive post-reorganization equity
buy-in price, providing for equity-like returns with a good risk profile. Lakewood invests in stressed
high grade bonds, high yield/distressed bonds, convertible notes/bonds and preferred stock. These

positions are typically found in companies that are out of favor, subjected to forced selling or
liquidation, undergoing an industry rationalization or fixing their capital structure despite relatively
healthy underlying operations.

Risk of Loss
The list of risks described below is not all inclusive. Limited Partners should also review the Risk
Factors section of the Fund’s Confidential Private Offering Memorandum for additional
information.

Investing in securities is inherently risky. An investment in individual securities or in a portfolio
of securities could lose money. The investments selected by Lakewood should be deemed
speculative investments and are not intended as a complete investment program. These types of
investments are designed for sophisticated investors who fully understand and are capable of
bearing the risk of loss of their entire investment. Lakewood cannot give any guarantee that it will
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