Office

BDC Fund II L.P . Invest in debt.

604 Arizona Ave., Ste. 23 Santa Monica, CA 90401 Tel: 800.579.1651

Bill Hansen

Chief Marketing Officer Email: bhansen@southlandcapitalmanagement.com

Visit Us @

www.southlandcapitalmanagement.com

BDC Fund II, L.P . Disclosure

This presentation is not an offer to sell or a solicitation of an offer to buy an interest in the Fund. This presentation is intended merely to determine expressions of interest in the Fund. Any offer or solicitation may only be made after formation of the Fund and preparation and delivery of the Funds Confidential Offering Memorandum. This presentation does not include certain information that should be considered relevant to any future investment in the Fund, including , but not limited to, significant risk factors and complex tax considerations. As will be more fully set forth in the Funds Confidential Offering Memorandum, the Fund will not be limited in the types of investments in which Southland Capital Management may invest or on its use of margin. An investment in the Fund is suitable only for qualified investors who understand the risks of such an investment. Each investor should carefully read the Funds Confidential Offering Memorandum when available and, as necessary, ask questions of Southland Capital Management and consult with his or her own professional advisors, before making an investment determination. An investment in the Fund is subject to a variety of risks. There can be no assurances that the Funds investment objectives will be achieved or that investors will not suffer losses. Certain Information contained in these materials has been furnished by third - parties which Southland Capital Management deems reliable but which has not been independently audited and is not guaranteed.

BDC Fund II, L.P .

Only hedge fund principally invested in the common stock of Business Development Companies (BDCs).

Fund utilizes up to 2x margin debt leverage to arbitrage dividend income and price appreciation.

Manage Fund volatility by strategic investments in BDC Notes, High Yield Bonds and Floating Rate debt.

Fund pays dividend monthly and has no lock-up.

To Invest

5 Reasons

1 2 3

Highest Yield Leveraged Debt sector: 9.0% p.a. BDC Asset Coverage Requirement = Low Risk Managed by top financial groups Fast growing: total assets, number of players Sector increasing in popularity but still under-valued

Sector

In BDC

4
5

A Brief BDC Primer

On Business Development Companies

As part of the Small Business Incentive Act of 1980, Congress created a public investment company vehicle called a business development company in order to encourage the flow of public capital to private businesses. BDCs are publicly registered, closed-end investment companies with shares that trade like stock on an exchange. As a result, BDCs are available to public investors who otherwise would not generally have access to private equity funds. Unlike traditional private equity funds, BDCs operate for an indefinite period and continually recycle their contributed capital. Historically, BDCs have made debt and equity investments in small middle-market companies and returned the bulk of the profits to stockholders in the form of quarterly dividends.

The Business of BDCs

BDCs provide capital in the form of senior debt, subordinated debt and equity to Private Equitybacked middle-market companies.

Capital usually required for buy-outs and recapitalizations.

BDCs serve both as financiers and buy-out sponsors.

BDCs income consists of interest on senior and subordinated debt, and gains from sale of equity interests.

BDC expenses consist of interest expense on borrowings, operating expenses & management fees.

Tax Treatment of BDCs

Generally, a BDC will elect to be treated as a regulated investment company (RIC) for tax purposes to avoid corporate level taxation on ordinary income and capital gains distributed to its stockholders as dividends. As a RIC, a BDC is required to distribute at least 90 percent of its ordinary income & realized net short-term capital gains in excess of realized net long-term capital losses and to meet specified source of income and asset diversification requirements. Distributions out of capital gains to individual stockholders are generally eligible for favorable capital gain tax treatment.

BDCs may utilize leverage, but are subject to 1940 Act Limits which generally require at least 200 percent asset coverage as measured after any borrowing.

Effectively, a BDCs debt NEVER exceeds 100% equity.

Currently, average debt to equity around 0.6 : 1.0

BDCs have very low leverage compared to competitors such as banks, finance companies or CLOs, where debt can be 1015x X equity.

Restrictions on Leverage

BDC Universe

40+ active public BDC Companies

We track 36 public BDC companies, with equity value of $58 million to over $3.7 billion

Also track 25 different BDC publicly traded Notes

As of December 31, 2013 BDCs tracked had combined equity market capitalization in excess of $30 billion

BDC Competitors
BDCs compete with:

Banks

Insurance Companies

Private Leveraged Debt Funds

Private Investors

BDC Industry Growing

In 2000, only 5 active high-dividend paying BDCs existed. Thirteen years later; 34 active high-dividend paying BDCs exist.
2009 1 New 2012 4 New 2010 3 New 2013 3 New 2011 3 New

Why invest in BDCs

Regular Dividends
Recession Resistant Diversified Liquid Regulated Top Tier Asset Management Organizations High Yields

Regular Dividends
Required by law to payout 90% of taxable earnings. Virtually all BDCs pay a dividend monthly or quarterly.

Typically 7% 12% yield per annum.

2009-2013: 34 of 36 BDCs paying regular cash dividend

Recession Resistant
Great Recession However 4 of 21 BDCs Dividend Unchanged or Increased Through Recession

Distributions Dropped 54%

Top Ten BDCs of 21: Dividend Down Only 14%

No BDC Has Ever Filed For Bankruptcy

Diversified
BDCs
invest in senior, subordinated and equity.

BDCs
BDCs BDCs

invest in hundreds of different industries.

invest in over 2,000 private companies of all sizes. loan sizes from $50k to over $100 million.

Liquid
All BDC stocks and Notes trade on major U.S. exchanges. Shares volume tens to hundreds of thousands a day.

Average daily trading volume

$200M

Investor base: 60% institutions 40% retail

Regulated And Transparent

As any public company, BDCs must file periodic reports with the SEC as well as proxy statements. Must publicly file quarterly financial statements identifying the current fair value of each portfolio company held by the BDC.

BDCs are subject to SarbanesOxley and the corporate governance requirements of the self-regulatory organizations that govern the markets.

BDCs books are subject to periodic SEC examinations.

Top Tier Managers

Most BDCs sponsored by blue chip financial parents with long track records of credit underwriting.
Managers include: Apollo BlackRock

Kayne Anderson

Kohlberg Capital

Thomas H. Lee

High Yields
Current dividend yield of BDCs 9.0% per annum BDC Notes yield between 6.25% - 7.5% per annum

Many BDCs expected to increase dividend per share

Far higher yield than MLPs, REITs, investment grade bonds etc.

Why invest in the fund?

Experience of Principals Extensive Risk Management Positive Yield Arbitrage Highly Liquid Investment Transparent Fund Management Managers Interests Aligned With Investors

Superior Long Term Return

Experience of Principals
60 years of combined experience in private company buy-outs.
Nicholas Marshi
Lender with Citibank Investment Banker/Lender/Investor with Kleinwort Benson. Founded and managed two Private Buy-Out Firms for over 25 years. Editor BDC Reporter. Investor in BDCs and Leveraged Debt for 10 years +

William Hansen
Investment Banker working with middle market companies Fund Raiser and deal originator for NYC based LBO Firms Co-Founder of Private Buy-Out Firm/Investor for over 25 years.

Extensive Risk Management

Diversify portfolio across multiple Leveraged Debt sectors: to reduce volatility. Implement host of Credit, Liquidity & Interest Rate risk management policies.

De-leverage portfolio and/or shift asset mix at times of market pull-backs.

Positive Yield Arbitrage

Average Asset Yield Across All Debt Sectors:

Margin Interest Cost:

Net Yield:

Low Rates Expected To Continue:

7.0%

1.0%

6.0%

5 Years +

Transparent Fund Management

Independent Custodian: Pershing Securities / Bank of New York

Third Party Administrator: PartnersAdmin, LLC

Annual Audit: Rothstein Kass & Co.

Monthly Reporting

Highly Liquid

Investment
All Fund investments are in highly liquid common stock traded on major U.S. stock exchange.

Fund could sell 90% of entire portfolio same day, 100% 3 days.

Investor has the right to receive dividend income on a monthly basis & repayment of investment without penalty.

Manager

Investment
Manager invested in Fund since inception.

Manager has bulk of net worth in Fund.

Manager committed to maintaining capital invested.

Superior Long-Term Return

Fund launched October 2009

Top Performing Long/Short hedge fund in 2010: Morningstar

Despite setback in 2011, Inception To FYE 2013 Return: 40.54%, after all fees and expenses

2014 On: Manager targeting 15%20% annual return

Management

Southland Capital Management LLC (SCM)

Principals: Nicholas Marshi / William Hansen

Office in Santa Monica, CA

Investment Management
Target: BDC common stocks expected to maintain/increase dividend, and trading at discount to Realizable Value

Diversify portfolio with strategic investments in higher quality BDC Notes, Floating Rate Loans & High Yield Bond ETFs & CEFs.
Sell/Short: Over-valued BDCs to realize gains.

Shift portfolio mix with changing market conditions.

Maintain high levels of dividend/interest income.

Monitoring
In-depth bottoms up analysis on all BDCs tracked through review of all SEC filings, press releases, Conference Calls, etc.
Maintain proprietary database on stock price & trends on 100+ Leveraged Debt investments across all sectors. Track performance of individual stock, sector, volatility performance in real-time.

since inception
Launched: October 2009: Up 4.4% 2010: Up 74% 2011: Down 47% IVQ 2011: Changed Risk Management 2012: Up 28% 2013: Up 13.20% Inception to Date: Up 40.54%

Risk Management Changes

Broadened mix of debt assets: Added BDC Notes, HY Notes, Floating Rate Loans

Tightened limits on single investment position (max 5% of equity)

Established Stop Loss limits on all investments

Limited investment positions based on average daily trading volume

Risk Management Results

Reduced Standard Deviation Comparison by Year

2010 45.9%

2011 29.6%

2012 19.8%

2013 12.6%

Reason To Invest In Fund Now

Leveraged Debt credit quality best in years Expected to continue for years Most BDCs still trading below Realizable Value

BDCs have capital to deploy, which will increase earnings/dividends

Risk management policies limit downside risk

Fund aims to earn double digit return with below average volatility

Contact
Office
604 Arizona Ave., Ste. 23 Santa Monica, CA 90401 Tel: 800.579.1651

Bill Hansen

California Registered Advisor Chief Marketing Officer Email: bhansen@southlandcapitalmanagement.com

Feel free to call for a confidential conversation about investing in the Fund, and other Leveraged Debt investment opportunities

Visit Us @ www.southlandcapitalmanagement.com Accredited investors, Advisors and Institutions Talk to us about the Fund or tailor-made Separately Managed Accounts Follow our highly popular Blog at our site @ www.bdcreporter.com

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