Lightbay Management LLC

FEES AND COMPENSATION

         In general, LightBay receives a management fee and a carried interest in connection with advisory
services. LightBay may receive additional compensation in connection with management and other
services performed for portfolio companies of Funds and such additional compensation will offset in whole
or in part the Management Fees (as defined below) otherwise payable to LightBay in accordance with the
relevant Offering Documents. In addition, in certain circumstances, LightBay may receive compensation
for management and other services performed in connection with co-investments made in portfolio
companies of the Funds. Investors in a Fund also bear certain expenses.

        The actual fees and expenses applicable to each Fund are set forth in detail in each of the Fund’s
respective Offering Documents. A brief summary of those fees and expenses is provided below.

         In addition, the Executive Funds, which are offered to partners, personnel, Service Providers,
friends and family of the Adviser and its affiliates, are subject to preferential terms, specifically with respect
to fees and carried interest. It is generally expected that the Executive Funds will make charitable
contributions in lieu of the payment of a management fee and carried interest.

Management Fees

         The Funds (other than the Executive Funds) will pay LightBay a management fee (the
“Management Fee”) quarterly in advance equal to 2% on an annual basis of aggregate Fund investor capital
commitments (“Commitments”) made by investors not designated by the General Partners as “affiliated
partners,” during each Fund’s investment period (the “Investment Period”). Upon a date set forth in the
applicable Partnership Agreement (the “Stepdown Date”), the Management Fee with respect to limited
partners not designated as “affiliated partners” will equal 2% of (i) the aggregate investment contributions
(including for bridge financings with respect to certain Funds), less (ii) the aggregate amount of investment
contributions with respect to the portion of each investment that has been disposed of or completely written-
off for U.S. federal income tax purposes, less (iii) the aggregate amount of any permanent write-downs of
investments not described in (ii), but only if and to the extent such investments in the aggregate have been
permanently written down on a cumulative basis (after giving effect to any write-ups) to an aggregate
amount that is less than 25% of their aggregate cost, in each case with respect to partners not designated as
“affiliated partners,” as further detailed in the Offering Documents. Installments of the Management Fee
payable for any period other than a full quarterly period are adjusted on a pro rata basis according to the
actual number of days in such period.

      Limited partners participating in a subsequent closing after the initial closing date will be assessed
Management Fees retroactive to the initial closing date as if such limited partner were admitted for its full
Commitment on the initial closing date, plus interest.

         As is generally the case in private equity funds, the Offering Documents provide that a Fund’s
Management Fees will be calculated and charged on a basis that generally is not tied to the Fund’s then-
current net asset value. As further specified in the Offering Documents, from the effective date of the
relevant Fund until the Stepdown Date, Management Fees generally will be charged based on a formula
tied to the amount of the relevant Fund’s aggregate Commitments. Further, after the Stepdown Date,
Management Fees generally will be charged and calculated based on a formula tied to the amount of
investment contributions (including, where applicable, a Fund borrowing component (including interest
expenses) and the amount of any capitalized Transaction Fees (as defined below) or expenses) made by the
relevant Fund relating to the Fund’s aggregate investment(s) in any portfolio company to the extent not (i)
realized, (ii) completely written off for U.S. federal income tax purposes or (iii) permanently written down
(if and to the extent such investment(s) in the aggregate have been permanently written down on a
cumulative basis (after giving effect to any write-ups) to an aggregate amount that is less than 25% of their
aggregate cost) (any investments described in clauses (ii) and (iii), “Impaired Value Investments”).

         Under the Offering Documents, where the fair market value of an investment exceeds the total
amount of investment contributions relating to such investment, post-Stepdown Date Management Fees
will not be calculated based upon such appreciated value, and will instead continue to be calculated based
on the amount of applicable investment contributions. Conversely, the Offering Documents do not require
Management Fees to be reduced or refunded following the occurrence of a write-down, decrease (including
a significant decrease) in fair value or other event not constituting a complete realization, such as a partial
sale or disposition, recapitalization (including recapitalizations involving dividends), reorganization, roll-
over investment in connection with a sale or dividend distribution, except in the case of fully realized
investments and investments meeting the relevant Impaired Value Investment standard under the Offering
Documents. Following the Stepdown Date, portfolio company investments that have been partially

disposed of or completely written off for U.S. federal income tax purposes will only reduce the Management
Fee to the extent that, as of the date of the relevant event, the aggregate value of all remaining investments
in such portfolio company is less than the aggregate investment contributions with respect to all existing
and former investments in such portfolio company.

         As a result, the amount of Management Fees generally will not correspond with fluctuations in the
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TYPES OF CLIENTS

        LightBay provides investment advice to the Funds. The Funds will include investment partnerships
or other investment entities formed under U.S. or non-U.S. laws and operated as exempt investment pools
under the Investment Company Act of 1940, as amended. The investors participating in the Funds may
include individuals, banks or thrift institutions, other investment entities, university endowments, sovereign
wealth funds, family offices, pension and profit-sharing plans, trusts, estates, charitable organizations, other
corporations or business entities, and will include, directly or indirectly, the Partners, principals, or other

personnel of LightBay and its affiliates and members of their families, or other Service Providers retained
by LightBay or a Fund.

         The Funds potentially will include alternative investment vehicles established in order to permit
one or more investors to participate in one or more particular investment opportunities in a manner desirable
for tax, regulatory or other reasons. Alternative investment vehicle sponsors generally have limited
discretion to invest the assets of these vehicles independent of limitations or other procedures set forth in
the organizational documents of such vehicles and the Offering Documents of the related Fund.

        The Funds generally have a minimum investment amount of $1.5 million for third-party investors,
and the Funds’ interests are offered and sold solely to accredited investors that are also qualified clients.
LightBay is permitted to waive such minimum investment amount in its sole discretion.

                METHODS OF ANALYSIS, INVESTMENT STRATEGIES, AND RISK OF LOSS

        The investment strategies, methods of analysis, and material risks applicable to each Fund are set
forth in detail in each of the Fund’s respective Offering Documents. A general summary of those
investment strategies, methods of analysis, and material risks is provided below.

         There can be no assurance that LightBay will achieve the investment objectives of any Fund and a
loss of investment is possible.

Investment Strategy and Method of Analysis

         On behalf of the Funds, LightBay seeks to invest in middle market companies through various
transaction types, ranging from traditional buyouts to complex balance sheet reorganizations. The Firm
takes a value-oriented analytical approach to evaluating investment opportunities, with a focus on finding
elements of undercapitalization preventing high quality businesses from achieving optimal growth.
LightBay seeks to work with portfolio company management teams to accelerate growth by making
investments in people and infrastructure in order to remove constraints to critical financial, human, and
intellectual components of the business and optimizing the company’s capital allocation process.
        LightBay believes its flexible “all-weather” strategy is currently underserved in the middle and
lower middle markets by sophisticated, sponsor-oriented firms. With over 30 years of combined
experience, the Partners believe they bring to LightBay the insight and expertise necessary to evaluate and
pursue attractive risk / reward opportunities across the capital structure at each phase of the economic cycle.
LightBay believes this is a significant competitive advantage in the middle market, as the Firm is not
dependent on the availability of debt financing and intends to deploy capital in periods of market dislocation
by making distressed debt, structured equity, or rescue capital investments.
        LightBay will primarily focus on North American investment opportunities in the consumer,
healthcare, and business services sectors.

Risks of Investment and Conflicts of Interest

        Each Fund and its investors bear the risk of loss that LightBay’s investment strategy entails. The
risks and conflicts of interest involved with LightBay’s investment strategy and an investment in a Fund
include, but are not limited to:

        Business Risks. The Funds’ investment portfolios may consist primarily of securities issued by
privately held companies, and operating results in a specified period will be difficult to predict. Such
investments involve a high degree of business and financial risk that can result in substantial losses.

        Future and Past Performance. The performance of the Partners’ prior investments is not
necessarily indicative of the Funds’ future results. While LightBay intends for the Funds to make
investments that have estimated returns commensurate with the risks undertaken, there can be no assurances
that any targeted internal rate of return will be achieved. On any given investment, loss of principal is
possible.

       Investment in Junior Securities. The securities in which the Funds will invest may be among the
most junior in a portfolio company’s capital structure and, thus, subject to the greatest risk of loss.
Generally, there will be no collateral to protect the Funds’ investment once made.

         Concentration of Investments. The Funds will participate in a limited number of investments and
may seek to make several investments in one industry or one industry segment and/or within a short period
of time. As a result, the Funds’ investment portfolio could become highly concentrated, and the
performance of a few holdings or of a particular industry may substantially affect its aggregate return. To
the extent the capital commitments raised are less than the targeted amount or a Fund requires an extended
period of time to raise such capital commitments, such Fund may not be able to implement its investment
strategy or achieve its investment objectives in the intended manner or on the intended timeline. Such Fund
will likely invest in fewer portfolio companies and/or decline certain investment opportunities if there is
insufficient capital available, and thus be less diversified. Additionally, a Fund’s organizational expenses
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