ADAR1 Capital Management LLC

Item 5: Fees and Compensation

The fees applicable to each of the Clients are set forth in detail in the corresponding Offering
Documents. A brief summary of such fees is provided below.

ADAR1 Funds:

As a general matter, the Firm or an affiliate is paid an asset-based management fee and
receives performance-based compensation (detailed in Item 6 below) with respect to the
ADAR1 Funds.

Management Fee
The Firm is paid a monthly management fee equal to 0.125% (1.5% annually), payable in
advance, of the net assets of Investors in the Master Fund and Offshore Fund (the
“Management Fee”). The Management Fee is payable in advance based on the value of the
assets as of the beginning of such calendar month. The Management Fee may be waived or
reduced with respect to certain Investors in the discretion of the Firm.

ADAR1 Capital Management, LLC                          Form ADV Part 2A Brochure

The SPV Fund is not subject to an asset-based management fee.

Expenses
Organizational Expenses. All expenses of the Offering and organization of the ADAR1 Funds
(including legal and other expenses) (“Organizational Expenses”) will be paid by the ADAR1
Fund and/or reimbursed by the ADAR1 Funds to the extent paid by the Firm or the General
Partner. The Organizational Expenses will be amortized and charged to the Investors’ capital
accounts on a monthly basis over a period of five (5) years commencing from the launch of
the ADAR1 Funds’ investment activities. GAAP requires that organizational costs be treated
as an expense when incurred. The Firm believes that the impact on the ADAR1 Funds’ results
from this departure from GAAP will result in a fairer apportionment of such expenses among
Investors. This departure from GAAP may also result in a qualified audit opinion from the
ADAR1 Funds’ auditors. If the ADAR1 Funds are terminated within five (5) years of the
commencement of investment activities, any unamortized expenses will be recognized.

ADAR1 Funds Expenses. The ADAR1 Funds pay (or reimburse the Firm or the General Partner)
for all ordinary and reasonable operating and other expenses necessary for the ADAR1 Funds’
operations, including, but not limited to, investment- related expenses (e.g., exchange and
brokerage commissions, exchange deposit and withdrawal fees, clearing and settlement
charges, custodial fees, interest expenses, expenses relating to consultants, brokers or other
professionals or advisors who provide research, advice or due diligence services with regard
to investments, appraisal fees and expenses); research costs and expenses (including fees
for news, quotation and similar information and pricing services); legal expenses (including,
without limitation, the costs of on-going legal advice and services, blue sky filings and all costs
and expenses related to or incurred in connection with the compliance obligations of the
Firm or the General Partner under applicable federal and/or state securities and investment
adviser laws arising out of its relationship to the ADAR1 Funds, as well as extraordinary legal
expenses, such as those related to litigation or regulatory investigations or proceedings); the
Management Fee; accounting fees and audit expenses; administrative fees; tax preparation
expenses and any applicable tax liabilities (including transfer taxes and withholding taxes);
other governmental charges or fees payable by the ADAR1 Funds; costs of printing and
mailing reports and notices; and other similar expenses related to the ADAR1 Funds, as the
Firm or the General Partner determines in its sole discretion.

Firm and General Partner Expenses. ADAR1 and the General Partner will pay for their own
administrative and overhead expenses incurred in connection with providing services to the
ADAR1 Funds. These expenses include all expenses incurred by the Firm and the General
Partner in providing for their normal operating overhead, including, but not limited to, the
cost of providing relevant support and administrative services (e.g., employee compensation
and benefits, rent, office equipment, insurance, utilities, telephone, secretarial and
bookkeeping services, etc.), but not including any ADAR1 Fund operating expenses described
above.

First Loss Fund:

No Asset-Based Management Fee
ADAR1 does not charge any asset-based management fee to the First Loss Fund.

Expenses

ADAR1 Capital Management, LLC                          Form ADV Part 2A Brochure

The First Loss Fund bears its own account trading expenses as set forth in ADAR1’s investment
advisory agreement with the First Loss Fund. ADAR1 has sole liability for all expenses incurred
by it, including, without limitation, salary, bonus and other payments to its personnel,
overhead and any out-of-pocket expenses, in connection with its trading adviser duties under
the investment advisory agreement. The First Loss Fund is also subject to a management fee
and expense pass through charges payable to the third-party sponsor of the First Loss Fund.
The First Loss Fund also bears its own operating expenses set forth in the Offering Documents.

IDF Fund:

Management Fee
The Firm is paid a monthly management fee equal to 0.1667% (2.0% annually), payable in
arrears, of the net assets of Investors in the IDF Fund (the “Subadvisor Management Fee”).
The Subadvisor Management Fee is payable in arrears based on the value of the assets as of
the end of such calendar month.

Expenses
The IDF Fund bears its own trading and other expenses as set forth in ADAR1’s sub-advisory
agreement with the IDF Fund. ADAR1 bears its own ordinary overhead and administrative
expenses arising out of its investment advisory duties under the investment advisory
agreement. The IDF Fund is subject to a management fee and administration fee payable to
the third-party sponsor of the IDF Fund. The IDF Fund also bears its own organizational
expenses and operating expenses set forth in the Offering Documents.

Confidential Sub-Accounts:

Management Fee
...

Item 7: Types of Clients

Our Clients are the ADAR1 Funds, the IDF Fund, the First Loss Fund, and the Confidential Sub-
Accounts, as described in Item 4 above. The ADAR1 Funds are generally open to, among
others, institutions, pension plans, endowments, fund of funds, high net-worth individuals,
financially sophisticated individuals, and other sophisticated investors.

Interests in the IDF Fund are offered only to Insurance Companies on behalf of certain of their
Separate Accounts that fund Variable Contracts under Section 817(d) of the U.S. Internal
Revenue Code of 1986, as amended.

The First Loss Fund and the Confidential Sub-Accounts are each sponsored by unaffiliated third
parties and are offered to investors pursuant to their respective offering documents and
governing agreements.