8 Knots Management LLC

Item 5. Fees and Compensation

   A. Our Compensation

With respect to the Fund, the Adviser is paid a quarterly management fee (the “Fund Management
Fee”), of 0.375% (1.5% per year) or 0.50% (2.0% per year) (depending on the class of investor) of
the net assets of the Fund, and is reimbursed for certain expenses related to its investment advisory
services. Pursuant to the terms of the Fund’s governing documents, an affiliate of the Adviser will
receive either 15% or 20% of any profits generated by the Fund as an incentive allocation (the
“Allocation”), subject to a high water mark, but only to the extent that such profits exceed any
losses carried forward from prior years. The Adviser may reduce or waive any Fund Management
Fee or Allocation applicable to any limited partner in the Fund, in its sole discretion.

Clients with separately managed accounts pay an annual management fee of up to two percent
(2.0%) (the “SMA Management Fee” and together with the Fund Management Fee, the
“Management Fees”). The SMA Management Fee is payable monthly in arrears. With respect to
separately managed accounts, performance fees will be up to 20% based on the net profits of the
SMA Client’s portfolio as of the last day of the fiscal year or performance period (calculated as the
excess of the net asset value of the client account on the last day of the fiscal year or performance
period over such value on the first day of such period), subject to a high water mark, but only to
the extent that such profits exceed any losses carried forward from prior years (“SMA Performance
Fee”).

   B. How we collect fees

With respect to the Fund, the Fund Management Fee is payable quarterly by the Fund in advance
and will be debited against the capital account balance of each Limited Partner as of the first day
of each quarter. The Allocation is debited against the capital account of each Limited Partner in
the Funds and simultaneously credited to the capital account of the General Partner as of the close
of each performance period.

SMA Management Fees for separately managed accounts are charged monthly in arrears and will
be billed to the SMA Client as of the last day of each month. The SMA Management Fee shall be
pro-rated for any mid-month subscriptions, withdrawals, distributions or termination. The SMA
Performance Fee shall be paid by the individual SMA Clients following the applicable performance
period.

   C. Other fees or expenses

The Fund bears all costs and expenses directly related to its investment program, including
expenses related to proxies, underwriting and private placements, brokerage commissions, interest
on debit balances or borrowings, custody fees and any withholding or transfer taxes imposed on
the Fund. The Fund also bears all out-of-pocket costs of the administration of the Fund, including,

but not limited to, accounting, audit and legal expenses, costs of any litigation or investigation
involving the Fund’s activities, and costs associated with reporting and providing information to
existing and prospective limited partners.

Each SMA Client bears all costs and expenses in connection with the management of their account,
including but not limited to, transaction, exchange, and margin interest expenses, brokerage
commissions, interest on debit balances or borrowings, custody fees and any withholding or
transfer taxes imposed on that SMA Client. Please refer to Item 12 below for brokerage expenses.

Also, we have hired a third party administrator, which we pay customary fees based on the net asset
value of the Fund or applicable account.

   D. Advance Payment

Fund Management Fees are payable quarterly in advance until the termination of the Fund.
Installments of the management fee payable for any period other than a full quarterly period will
be adjusted on a pro rata basis according to the actual number of days in such period.

   E. Compensation for sales of Securities

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

Item 7. Types of Clients

The Adviser provides portfolio management services to the Fund and to high net worth individuals
and institutional clients in separately managed accounts. Generally, the minimum investment
amount in either the Fund or for a separate account is five hundred thousand dollars $500,000. A
lesser amount may be accepted at the sole discretion of the Adviser or General Partner.

Because the Clients charge a performance allocation or performance fee, all investors in the Fund
or SMA Clients must be “qualified clients” under the definition in Rule 205-3 of the Investment
Advisers Act of 1940. Generally speaking, qualified clients include 1) a person or company with
at least one million dollars ($1,000,000) under management; 2) a person or company with a net
worth of more than two million one hundred thousand dollars ($2,100,000) or who is a qualified
purchaser as defined in Section 2(a)(51)(A) of the Investment Company Act of 1940; and 3) certain
key employees of the Adviser.

Item 8. Method of Analysis, Investment Strategies, and Risk of Loss

   A. Analysis and Strategies

The Adviser’s principal focus for separately managed accounts is on exchange-listed, over-the-
counter, and foreign-issuer equity securities, primarily in the healthcare industry, but the Adviser
has flexibility to invest in other equity securities and in option contracts on securities. There is
some variability from investor to investor. Separately managed accounts are typically market-
neutral and managed pari-passu to the main fund.

The Fund, directly or indirectly through the Investment Manager, seeks to achieve its investment
objective primarily through capitalizing on fundamental, technical, and cyclical analysis of
securities. The Investment Manager intends to earn a positive return on investment for investors
through the use of such securities.

The Fund, directly or indirectly through the Investment Manager, employs industry-standard
analytical and research tools to analyze individual investments. This includes: financial
newspapers and magazines, inspections of corporate activities, research materials prepared by
others, filings made with the Securities and Exchange Commission, and company press releases.

The Adviser may use any of a number of strategies to implement its investment advice. These
include: long- and short-term purchases, trading, short sales, margin transactions, and option
writing.

   B. Material Risks

General Risks

Potential Loss of Investment. Any investment involves a high degree of risk. There can be no
assurance that our Clients’ investment objectives will be achieved or that Clients will not lose all
or substantially all of their investment. Past results are not necessarily indicative of future

performance. No assurance can be made that, in the future, profits will be achieved or that
substantial losses will not be incurred.

No Guarantee of Profit. There is no assurance that investments made or recommended by the
Adviser will be profitable. Any prior successful investment management, recommendations or
analysis by the Adviser and any future successful performance cannot be relied upon as assuring
further successful performance. Any future return on investment to investors will depend upon
successful investments made at the direction of the Adviser. The value of any such investments
will depend upon many factors beyond the control of the Adviser.

Investment and Trading Risk Generally. Investments in securities and other financial instruments
involve a degree of risk that the entire investment may be lost. The use of short sales and option
trading can, in certain circumstances, substantially increase the impact of unfavorable price
movements on our Clients’ investments. Also, changes in the general level of interest rates may
negatively affect our Clients’ results. In addition, overall market volatility, which has been more
pronounced in recent years, can result in significant price swings in securities and portfolio values.

Limited Operating History for the Adviser. The Adviser has a limited operating history. Past
performance of any other entity or account managed by the Principal or the Adviser or any of their
affiliates may not be indicative of future performance of the separate accounts.

Discretion; Investment Judgment. The Adviser has broad discretion with respect to the investment
program of the separate accounts the Adviser manages, which involves assets that will be affected
by various business, financial market, or legal uncertainties. Profitability depends to a great extent
upon correctly evaluating these uncertainties in order to assess the future course of the price
movements of securities and other investments. There can be no assurance that the Adviser will
correctly evaluate the nature and magnitude of the various factors that could affect the value or
return on investments. In addition, changing market and economic conditions may lead to investor
losses.

Risks Relating to the Adviser’s Strategies

Investment Due Diligence and Research; Reliance on Corporate Management and Financial
Reporting. In certain instances, due diligence information available to the Adviser at the time of
an investment decision may be limited and the Adviser may have neither access to adequately
granular information nor adequate time to analyze the information necessary for a complete
evaluation of the investment opportunity. It is also possible that the due diligence and research
conducted may not reveal all the relevant facts and information that may be necessary to evaluate
such investment opportunity. In the worst-case scenario, information may be manipulated or
fraudulent. Our Clients could incur material losses as a result of the misconduct or incompetence
of such individuals and/or a substantial inaccuracy in such information.

Concentration of Opportunities. Investments made or recommended by the Adviser may be
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