River Canyon Fund Management LLC

Fees and Compensation
Clients are typically charged an asset based management fee, and Clients other than open-ended RICs, may
additionally be charged an incentive based fee (commonly referred to as a performance allocation or fee).
The asset based management fees are normally charged at an annual rate of between 1% and 2% of the
value of the Client’s net assets under management and are generally payable monthly or quarterly in arrears
depending on the investment advisory agreement. The fee will generally be based on the account value on
the last business day of the preceding calendar month or quarter, as applicable. The first payment, if based
on less than a full period, will be pro-rated to cover the period from the date the account is opened through
the end of that calendar year, quarter or month, as applicable. The performance allocation or fee, if
applicable, generally equals 20% per annum of the net profit in a Client’s account, typically subject to a
loss carryforward adjustment and a “high water mark”, and is generally payable in arrears at the end of each
calendar year but may be payable more frequently if provided for in the investment advisory agreement.
Upon termination of the investment advisory services, any unpaid portion of fees will be determined and
due on a pro rata basis. In certain circumstances the performance allocation or fee may be measured over
a multi-year period and/or subject to hurdle. Actual asset based management fees and performance based
fees/allocations may differ from those noted above.
Clients charged performance based allocations or fees are done so in accordance with the requirements of
Rule 205-3 under the Investment Advisers Act of 1940, and River Canyon will not accept clients who do
not satisfy the eligibility criteria of applicable law. Under this compensation framework, River Canyon is
compensated based in part on capital appreciation, and as a result, there may be an incentive for River
Canyon to make investments that are riskier or more speculative than would be the case in the absence of
such framework. In addition, River Canyon would receive performance based compensation on unrealized
appreciation as well as realized gains with respect to certain of these Clients.

Prepayment of fees is generally not required. In certain circumstances, fees may be individually negotiated
by Clients, fund investors and/or SMAs. Negotiated fees may be higher or lower than those discussed
above. Similar services may be available from other investment advisers at a lower cost.
Clients will also bear direct and indirect costs, fees and expenses incurred by or on behalf of such Clients
including, among others, (i) all costs, fees and expenses of the Client directly related to the investigation,
purchase, sale, preservation or retention of investments by the Client (including all fees and commissions
of brokers and custodians, research expenses, quotation services, travel costs, all fees and expenses relating
to the registration and qualification for sale of such investments and all transfer taxes); (ii) all federal, state
and local taxes and filing fees payable by the Client; (iii) all fees and disbursements of the independent
attorneys, accountants and consultants retained by the Client, or on behalf of the Client; (iv) all filing and
recording fees; and (v) all interest expense of the Client. To the extent such expenses are incurred for the
benefit of multiple Clients, River Canyon will make a good faith allocation of such expenses among its
Clients.
In the event a Client invests in a transaction which includes break-up, standby, commitment, consent,
waiver or similar fees, the Adviser may retain such fees and reduce the management fee or reimburse
expenses on the next payable by a like amount.
Investors should refer to each fund’s relevant offering documents (e.g., Prospectus and/or Statement of
Additional Information, Confidential Offering Memorandum) for additional/supplemental information
regarding the fund as well as the fees and expenses associated with such fund.

Performance-Based Fees and Side-by-Side Management
As noted above, River Canyon (and certain of its affiliates) may earn a performance allocation or fee from
Clients other than open-ended RICs. In the event that River Canyon charges a performance fee to some of
its Clients, there may be an incentive for River Canyon to make investments that are riskier or more
speculative than would be the case in the absence of such a compensation framework or to favor those
Clients with performance allocations or fees over Clients without performance allocations or fees. If the
actual performance allocation or fee charged to a specific Client varies, there may also be an incentive for
River Canyon to favor those Clients with higher performance allocations or fees over Clients with lower
performance allocations or fees. In addition, River Canyon may receive performance based compensation
on unrealized appreciation as well as realized gains with respect to certain Clients.
River Canyon seeks to mitigate these risks by, among other things, seeking to allocate investments in a fair
and equitable manner over time among its Clients. For more information on River Canyon’s allocation
procedure, please see Brokerage Practices – Allocation of Investment Opportunities.

Types of Clients
River Canyon provides investment advice primarily to registered investment companies, and may also
provide such services to private funds and separate accounts managed for “accredited investors” and
“qualified purchasers,” as such terms are defined in the federal securities laws.
With respect to each private fund, investors must meet the applicable investor qualifications. And for
separate accounts, River Canyon would expect to generally manage investment advisory accounts with a
minimum size of $50,000,000 and would further require that no withdrawal be permitted if doing so reduces
the account to less than $25,000,000, unless the account is being terminated. However, River Canyon may,
in its discretion, based upon its total client relationship and other circumstances, accept or continue to advise
smaller accounts from time to time.

Methods of Analysis, Investment Strategies and Risk of Loss
River Canyon seeks to extract value from complex situations to generate income and benefit from price
movements caused by anticipated events, such as corporate reorganizations, restructurings, mergers,
acquisitions, spin-offs or other special situations. River Canyon will invest in a broad array of asset classes,
including corporate bonds (high yield and distressed and subordinated and unsubordinated), convertible
bonds, municipal bonds, equities, senior bank loans (both on assignment and participation), and structured
products (including mortgage- and other asset-backed securities). Investment themes include liquidations,
restructurings, refinancing arbitrage, merger and acquisition-related investments, convertible arbitrage
(which may include selling certain securities short), total return investing, capital structure arbitrage and
volatility arbitrage (long and short). Allocations across these asset classes will shift over time in response
to evolving value propositions and risk/reward profiles.
Messrs. Sam Reid, Jeffrey Kivitz, and Adam Rizkalla are portfolio managers for certain Clients focused on
structured product investments and related investments. Prior to implementation of such investment ideas,
Messrs. Reid, Kivitz, and Rizkalla may discuss the investments with Messrs. Friedman and Julis. Such
discussions generally focus on, among other factors, the merits of the investment on a stand-alone basis,
risks embedded in and those implied by the investment, how the investment fits in with the rest of the
portfolio, hedging considerations, sizing goals and/or price targets.
Messrs. Martin Downen and Erik Miller are the portfolio managers for Clients focused on bank loans. Prior
to implementation of certain loan investment ideas Messrs. Downen and Miller may discuss the investments
with Messrs. Friedman and Julis. Such discussions generally focus on, among other factors, the merits of
the investment on a stand-alone basis, risks embedded in and those implied by the investment, how the
investment fits in with the rest of the portfolio, hedging considerations, sizing goals and/or price targets.
“Value-Oriented” and “Event-Driven” Investing
River Canyon’s strategy is to combine “value-oriented” and “event-driven” investing. River Canyon
believes in employing a “bottom up” approach and focuses on rigorous research of business, credit and
legal issues in order to determine values, analyzes corporate events and special situations, identifies
securities which can be purchased at a price it believes represents a discount to intrinsic value, and identifies
catalysts which can unlock value.
“Value-oriented” investing is an investment strategy characterized by research directed at identifying gaps
between the market valuations of financial instruments and the intrinsic values of the underlying assets or
enterprises. These gaps are frequently created by business, financial or legal uncertainties that depress
market valuations of financial instruments, or discrete events that affect the valuation of a company or pool
of assets. In such situations, River Canyon performs extensive research to develop an opinion about the
true nature and extent of the risks presented by those uncertainties. If River Canyon determines that a
discount is sufficiently large and unwarranted, it may take a long position in such security. Conversely,
when River Canyon believes that the market value of a security is significantly above its intrinsic value
because investors are underestimating the risks associated with the security or for other reasons, it may
establish a short position in that security.
“Event-driven” investing complements River Canyon’s value approach by identifying near- and
intermediate-term catalysts that may affect investors’ perceptions of securities. By understanding the
likelihood of value-creation catalysts, River Canyon positions itself to better gauge the holding period and
internal rates of return of its investments. Generally, River Canyon attempts to purchase a security at a
discount from its intrinsic value in event-driven situations where: (i) diminution of value is limited by
either the security’s ranking in the capital structure or the underlying hard asset or going concern value; (ii)
there is potential for significant capital appreciation or ongoing current income; and (iii) there is an

identifiable catalyst that can result in price appreciation.
Investment Process
River Canyon’s approach to “value-oriented” investing integrates the core analyses it generally performs
for investments. The foundation for investing in a company’s securities or instruments or structured finance
vehicles is based on a discounted cash flow or an abnormal earnings valuation, with a particular emphasis
on the timing of the cash flows and the risks associated with various components of that cash flow stream.
River Canyon’s approaches to its two main areas of investment (corporate credit and structured finance)
are described below.
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