Source Capital LLC

Item 5 – Fees and Compensation
Source Capital and/or its affiliates are entitled to receive management fees for providing investment
management and advisory services to certain Funds. Currently, management fees equal to 2% per annum
of the total capital commitments made by limited partners during the Fund’s investment period are paid by
Source Capital Credit Opportunities Fund III, LP. Additional funds may pay management fees in the future.
After the investment period, management fees are calculated as 2% of the aggregate capital contributions
made by limited partners for investments that remain unrealized (or the unrealized portion of partially
realized investments). Management fees are paid quarterly in advance. Source Capital reserves the right to
waive all or a portion of the management fee.

In addition to management fees, the general partners or managing members of the Funds are entitled to
receive carried interest or incentive allocations from each Fund, which vary by Fund, and are generally
subject to a hurdle rate. Source Capital's carried interest is subject to claw-back provisions and detailed
allocation and distribution terms outlined in the relevant fund Documents. Carried interest charges range
from 10% to 30%, may be tiered based on the magnitude of gains, and are dependent on the positive
performance of the portfolio companies.

Source Capital, LLC                                                                                      1
Form ADV, Part 2A

In connection with certain portfolio company investments, Source Capital or its affiliates may receive fees
from portfolio companies. These fees are separate from the management fee and carried interest described
above and are paid directly by the portfolio company. These fees compensate Source Capital for services
provided in connection with the origination, structuring, closing, or monitoring of the investment. Fees paid
by portfolio companies (or potential portfolio companies in the case of break-up fees) offset the
management fee in some cases by an amount specified in the fund’s operating agreement or are retained in
some cases by Source Capital or its affiliate that receives the fee.

Detailed information on fees charged to the Funds can be found in the Fund Documents. In addition to
management fees and carried interest allocations, limited partners indirectly bear fees and expenses
associated with acquiring or selling portfolio investments paid to third parties, as well as direct fund-level
fees and expenses. These expenses vary but include legal, consulting, insurance, and accounting fees, taxes,
bank fees, insurance premiums, deal-related expenses, costs associated with Source Capital personnel
meeting with portfolio companies, indemnifications, and other expenses allowed under the Fund
Documents.

Source Capital does not use third-party fund administrators for its fund accounting, but may choose to do
so in the future, incurring administration expenses. Investors also bear compliance consulting fees and
ongoing compliance-related expenses like email retention services.

Certain fund-level expenses, such as insurance premiums covering directors and officers liability,
employment practices liability, professional liability, and identity fraud reimbursement extend beyond
managing the Funds and are bundled under private equity fund liability insurance. Source Capital allocates
a portion of this coverage to the Funds, introducing a potential conflict of interest.

Source Capital does not seek reimbursement from the Funds for general overhead costs. Investors should
carefully review the Fund Documents to fully understand the fees and expenses paid directly or indirectly
by the Funds. Source Capital ensures fair and equitable expense allocation across Funds, typically on a pro
rata basis based on Fund assets or another method deemed fair by Source Capital.

Item 7 – Types of Clients
Source Capital provides investment management and advisory services to the Funds which are exempt from
registration under federal securities regulations pursuant to either Section 3(c)(1) or Section 3(c)(7) of the
Investment Company Act. Investment management services and advice are provided directly to the Funds,
subject to the direction and control of the Source Capital affiliate that serves as the relevant Fund’s general
partner. Investment advice is not provided individually to the investors in the Funds. The stated minimum
capital commitment for the investors in the Funds varies by offering, although Source Capital and the

Source Capital, LLC                                                                                            2
Form ADV Part 2A

general partner has the authority to waive (and has waived in the past) these minimum commitment
requirements.

Investors are required to make certain representations when investing in a Fund. These representations
include, but are not limited to representations that (i) the investor has the capacity and authority to enter
into the relevant legal documents and has validly executed and delivered such documents, (ii) the investor
is an “accredited investor” as such term is defined under Regulation D promulgated under the Securities
Act, (iii) the investor is a “qualified client” as such term is defined in Rule 205-3 under the Advisers Act
(subject to periodic adjustment by the SEC for inflation), and that (iv) the investor will make, and has
sufficient funds to make, capital contributions in accordance with the relevant Fund documents.

The Funds and/or Source Capital are permitted to and have entered into separate agreements, commonly
referred to as “side letters,” with certain investors that have the effect of establishing rights under, or altering
or supplementing the terms of, the relevant Fund Documents in order to meet certain requirements of the
applicable investor. Side letters generally include, among other provisions, “most favored nation” clauses;
supplemental or modified reporting or disclosure rights; provisions addressing specified laws or regulations
applicable to the relevant limited partner; understandings regarding certain permitted transfers of limited
partner interests; acknowledgement of interest in co-investment opportunities; fee modifications; and
membership on the advisory boards of the Funds. Source Capital will not be required to notify, or provide
copies to, all of the other investors of any such side letters or any of the rights and/or terms or provisions
thereof, nor will Source Capital be required to offer such additional and/or different rights and/or terms to
all of the other investors. Certain investors are provided, through such side letters, with “most favored
nation” status and will be notified of side letters with other investors and can elect to receive terms which
are the same or better than other investors.