Trimaran Advisors LLC

FEES AND COMPENSATION
The following provides a general description of fees, compensation and expenses of the CLO private
funds. The governing documents and offering documents of the CLO private funds describe the
fees, compensation and expenses in greater detail.

As compensation for the portfolio management obligations under the relevant agreements related to
CLOs, the Firm receives fees for its investment advisory services. There are two types of fees:
management fees and incentive fees.

Funds that retain the Firm directly as Collateral Manager pay fees based on the total principal
amounts of their portfolio investments in debt securities. The funds pay their investors and their
service providers, including the Firm, according to established priorities. The source of payments is
investment returns from portfolio investments. The Firm’s management fee is paid at two different
priorities; one prior to payment of amounts payable to senior investors and one subsequent.
Generally, the “Senior Collateral Management Fee” and the “Subordinated Collateral Management
Fee” rate is equal to approximately 0.38% per annum of portfolio assets. Fees are paid by the fund
quarterly in arrears. Upon termination of the investment management agreement (the “Collateral
Management Agreement”) for any reason both the Senior and Subordinated Collateral Management

Fees will be prorated for any partial period between quarterly payment dates.

Funds that retain the Firm as Collateral Manager may also pay incentive fees. Payment of this fee
depends on whether the fund has met all senior payment obligations and whether the fund has met
certain minimum standards of investment return with respect to one or more junior classes of
securities. Generally, the incentive fee is equal to 20% of the amount available for distribution by
the fund once all prior payment obligations are satisfied, and is paid quarterly in arrears.

The CLO private funds may invest in securities and other assets that are illiquid and lack a readily
assessable market value.

The Firm may also waive fees to noteholders under certain circumstances. The Firm has entered
into certain arrangements with certain noteholders where such noteholders effectively pay lower
fees. This arrangement could provide further incentive for the Firm to make more speculative
investments than would otherwise be the case.

In the event of a termination of an advisory contract, the Firm may be compensated pro rata for the
period for which advisory services were rendered.

Neither the Firm nor any of its supervised persons accepts compensation for the sale of securities
or other investment products.

The funds do incur and may be responsible for other expenses separate and apart from the Firm’s
investment management or performance fees. The funds reimburse the Firm for expenses incurred
by the Firm in the performance of its services and these expenses typically may include:

(1) costs and expenses with respect to any workout, restructuring, recapitalization, amendment,
waiver or consent of or with respect to certain investments and the protection or enforcement of
rights thereunder; (2) costs and expenses in connection with the acquisition of director and officer
insurance; (3) legal, custodial, accounting, audit, specialty and custom software, and related costs
and expenses for the monitoring of the investments; (4) expenses incurred in obtaining credit ratings
on investments; and (5) certain other fees and expenses that may be authorized under a fund’s
governing documents or investment management agreement. Each Fund, as determined by the Firm,
shall be responsible for only a pro rata portion of the reasonably documented cost or expenses
allocable to one or more Funds, based on the aggregate assets under management to which such
costs or expenses are allocable, or other considerations that the Firm may deem equitable.

Please also refer to “Brokerage Practices” under Item 12 of this brochure for more information
regarding the transaction costs that clients bear.

              PERFORMANCE-BASED FEES AND SIDE-BY-SIDE MANAGEMENT
As described above in Item 5, the Firm may be compensated by its clients based on incentive fees.
This compensation may create an incentive for the Firm to make riskier or more speculative
investments than the Firm would make in the absence of such compensation. The Firm has strict
investment guidelines that limit the types of assets it can acquire for client accounts, including the
perceived creditworthiness of such assets. In addition, the Firm’s affiliate, KCAP, has a significant
amount of capital invested in the funds, which serves to align the interests of the Firm with the

funds.

The Firm addresses this potential conflict of interest through its Investment Allocation Policies and
Procedures designed to allocate investment opportunities in a manner that is fair and equitable. The
basic principle is allocation of opportunities according to “optimum investment amounts” for each
client based on criteria such as investment objectives, diversification, cash flow, liquidity
requirements and asset allocation targets specific to each directly advised and sub- advised private
fund. If the desired total investment for all clients is unavailable the lesser amount generally is
allocated among clients pro rata based on the optimum investment amount for each. Exceptions to
the above pro rata allocation are made in certain instances for good cause, but in all cases the
allocation must be fair and equitable over time. Exceptions are specifically approved on a case-by-
case basis in the Firm’s sole discretion. It should also be noted that although the Firm acts as a sub-
adviser to other CLO private funds, these funds, like the Firm, are also solely owned by KCAP, and
thus the financial performance of the Firm and its affiliate manager/adviser entities are to the benefit
of one direct owner.

TYPES OF CLIENTS
The Firm provides discretionary investment management services to private fund clients known as
CLO private funds. These private funds are not registered under federal securities laws and generally
are only offered to investors that are (1) “accredited investors” as defined under Regulation D of the
Securities Act of 1933, as amended (the “1933 Act”) and either “qualified clients” as defined under
the Investment Advisers Act of 1940 (the “Advisers Act”) or “qualified purchasers” as defined under
the Investment Company Act of 1940, as amended or (2) not U.S. Persons as defined under
Regulation S of the 1933 Act. The CLO private funds have varying minimum investment amounts
as described in the funds’ governing documents.

              METHODS OF ANALYSIS, INVESTMENT STRATEGIES AND RISK OF
LOSS
The Firm performs a thorough credit analysis on issuers whose debt (or other securities) it considers
for an investment. This includes consideration of the cyclical nature of the credit markets, as well
as the issuer’s position and access to credit.

The Firm also performs a thorough credit analysis of the issuer, including analysis of the debt
structure of the company and the priority of the Firm’s investment. This analysis involves a detailed
review of creditworthiness of the borrower and of the collateral, if any, securing the loan. The Firm
analyzes the issuer’s expected cash flow together with a top-down review of the issuer’s credit
structure. The Firm expects this analysis to inform its decision of whether to invest on behalf of its
clients.

The Firm will generally recommend investments in U.S. dollar denominated commercial loans,
including participation and assignment interests therein, or high-yield corporate and other debt
obligations, including synthetic securities and asset-backed securities. The Firm expects to invest
heavily in interest-bearing loans and other instruments, which are expected to provide sufficient
income to pay the interest to creditors, pay the management fee and expenses and potentially provide
additional returns to investors. The types of instruments in which the Firm may invest are generally
limited to primarily interest-bearing instruments. The instruments that the Firm recommends must

also generally meet certain standards for creditworthiness, including having received certain ratings
from nationally recognized statistical rating organizations (NRSROs).

Risks of the Firm’s Investment Program

Investors and creditors should be aware of certain special risk factors relating to the Firm’s
investment strategies and securities recommended. The following explanation of certain risks is not
necessarily exhaustive, but rather highlights some of the more significant risks involved in the Firm’s
investment strategies. Investors should carefully review each fund’s offering circular and other
governing documents, which may contain additional explanations of risks not discussed below.

CLO Structure

A CLO is similar to a closed-end investment fund in that it is an investment vehicle that has a specific
investment strategy, a designated investment manager and all investment/trading activity is
governed by an indenture and reported upon by an independent trustee. The CLO structure, however,
utilizes financial leverage to purchase assets (corporate loans and other credit instruments) and, by
doing so, allocates risk of loss among various classes of investors. The individual investor classes
(or tranches of debt) each have a unique claim on the assets of the CLO in terms of their priority of
payment for both interest and principal proceeds of the collateral. The senior debt tranches have a
priority claim on the cash flows generated by the assets of the CLO over the junior debt tranches.
To the extent that losses are suffered on the collateral, or the cash flow generated by the assets is not
sufficient to pay interest and principal on the debt tranches, the holder(s) of the most subordinated
notes bear the initial risk of loss before any such losses are incurred by more senior debt tranches.
Additional risks associated with CLO structure are referenced in the clients’ respective CLO
indentures.

Impact of downturn in global credit markets on CLO investments

Among the sectors that have been particularly challenged by a downturn in the global credit markets
are the CLO and leveraged finance markets. CLOs are subject to credit, liquidity, interest rate, and
other risks. CLO private funds invest on a leveraged basis in loans or securities that are themselves
highly leveraged investments in the underlying collateral, which increases both the opportunity for
higher returns as well as the magnitude of losses when compared to unleveraged investments. As a
result of such leveraged positions, CLOs and their investors are at greater risk of suffering losses.
The CLO markets have experienced increased defaults and downgrades. Many CLOs have failed in
the past or may in the future fail one or more of their ‘‘overcollateralization’’ tests. The failure of
one or more of these “overcollateralization” tests may result in reduced cash flows that may have
otherwise been available for distribution. This would reduce the value of such CLO private fund’s
investments. There can be no assurance that market conditions giving rise to these types of
consequences will not once again occur, subsist or become more acute in the future.

Dependence on Key Personnel

The Firm’s investment program is highly dependent on the financial and managerial experience of
its personnel. The loss of one or more of the individuals managing the Firm could have a significant
material adverse effect on the funds’ performance.

Additionally, the management agreements governing some of the CLO private funds have “key

person” provisions that provide certain CLO investors with rights upon the departure of a “key
person,” as defined in each agreement. As a result, the departure of a “key person” could trigger a
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