Sound Point Luna LLC

Item 5 – Fees and Compensation

Management Fees and Performance Based Compensation

SPL is compensated for its advisory services generally through a management fee charged to Client
Accounts. SPL typically receives a monthly management fee from the SPL Funds – 1/12 of a per annum
fee of typically up to 1.5% of the net assets of each SPL Fund (although in certain cases such management
fee is paid on a quarterly basis). With respect to the SPL CLOs, SPL typically receives a management fee
made up of two components (i.e., a “Senior Investment Management Fee” of 0.15% (or 0.20%) as well as
a “Subordinated Investment Management Fee” of 0.35% (or 0.30%), in each case, of the net assets 2 of the
SPL CLO, per annum), which fee is typically payable quarterly in arrears (i.e., 1/4 of the aggregate annual
management fee of 0.50% of the net assets of each SPL CLO becomes payable to SPL following the end
of each calendar quarter). For those SPL Funds that are part of a master-feeder structure, the management
fee is typically paid to SPL by the respective master fund on behalf of the feeder funds.

In addition, with respect to certain Client Accounts, SPL (or affiliates of SPL acting as general partners or
managing members of the Client Accounts) receives performance compensation with respect to each
calendar year or lock-up period, typically 20% of net profits allocated to each investor on an annual basis,
payable at the end of each year or lock-up period, as the case may be. With respect to other Client Accounts,
SPL (or affiliates of SPL acting as general partners or managing members of the SPL Fund), as applicable,
receives performance compensation based on an internal rate of return calculation by reference to
distributions made to investors in such Client Accounts (calculated on an aggregate basis or an investment-
by-investment basis); provided that with respect to certain Client Accounts, performance compensation is
payable only if and to the extent a certain minimum rate of return (a “hurdle”) is exceeded. In certain cases,
performance compensation is reduced by the amount of management fees paid over a specified period or
subject to a “high water mark” or loss carry forward provisions. See Item 6 for further information with
respect to performance compensation.

Depending on the characteristics of the Client Account, fees are higher or lower and may be subject to
various reductions and offsets, in each case, as set forth in each Client Account’s offering documents. SPL
reserves the right to waive some or all fees for certain investors in Client Accounts, including for current
or former employees of, or investors who are affiliated with, the SPL. Except as described in the following
paragraph, the management fee and performance compensation for SPL Funds and SPL CLOs are generally
not negotiable.

As explained above in Item 4, SPL enters into Side Letters with certain SPL Fund investors, typically those
with the largest aggregate investments in the relevant SPL Fund, whereby such investors are granted
favorable rights not granted to other investors in the Fund including, among other things, rights to receive
reduced rates of performance compensation and/or management fees earned by SPL or its affiliate.

Where advisory fees are calculated by reference to the net asset value of assets held by a Client Account,
SPL generally relies on prices provided by third parties (whether dealer quotes, third-party data feeds, or
an independent valuation agent) for purposes of valuing portfolio securities held in Client Account
accounts. The third-party administrator (the “Administrator”) for such Client Account verifies the third-
party values that SPL receives. In the event of a disagreement between SPL and the Administrator, SPL
works with the Administrator to investigate and resolve any differences. Although it is extremely rare for
discrepancies to persist after an investigation by SPL and the Administrator, in the event that SPL and the

    The net assets of a CLO generally include the aggregate value of the SPL CLO’s collateral plus available cash. The management fee is typically
    paid from interest revenue, which is segregated from other SPL CLO cash at the time of such management fee payment.

Administrator ultimately disagree on the valuation of a position, the Administrator can withhold the net
asset value if it is unsatisfied with the valuation. SPL maintains policies and procedures relating to the
pricing process.

Except to the extent that better performance increases assets under management and thus the amount of the
management fee (in cases where the management fee is calculated by reference to the net asset value),
management fees are payable without regard to the overall success or income earned by Client Accounts
and therefore may create an incentive on the part of SPL to raise or otherwise increase assets under
management to a higher level than would be the case if SPL were receiving a lower or no management fee.

Other fees payable by investors in Client Accounts are described below.

SPL (or an affiliate) deducts fees (or directs the payment of fees) from Client Accounts’ assets.
Management fees are generally paid by Client Accounts other than the SPL CLOs to SPL (or an affiliate)
pursuant to a management agreement between the parties. With respect to the SPL CLOs, management fees
and performance compensation are generally remitted by the independent trustees of the SPL CLOs on
behalf of the respective SPL CLOs to SPL pursuant to the terms of the applicable indenture and investment
management agreement between the parties.

Performance compensation is typically deducted from Client Account assets and allocated to an affiliate of
SPL pursuant to the governing documents of the Client Account or paid directly out of Client Account
assets to a member of SPL pursuant to a management agreement between the parties.
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Item 7 – Types of Clients

SPL provides investment advisory services to pooled investment vehicles operating as private investment
funds (“SPL Funds”) and collateralized loan obligations (“SPL CLOs”).

Although not considered a Client Account, SPL also manages an account to meet the requirements of the
European and UK risk retention rules and securitization regulations (“Risk Retention Account”). SPL also
makes periodic investments on its own balance sheet on behalf of Sound Point, that are separate from those
held in the Risk Retention Account.

Conditions for Managing Accounts

The minimum initial investment amount for investors in the SPL Funds is generally at least $1,000,000.
The minimum initial investment amount for investors in SPL CLOs is generally at least $250,000.

These requirements generally can be waived at the discretion of the general partner or the board of directors
of the Client Account, or their respective delegees, subject to minimum investment size requirements for
the SPL Funds organized in certain offshore jurisdictions.