American Discovery Investment Advisors LLC

Item 5. Fees and Compensation

American Discovery Investment Advisors receives compensation from a combination of management fees,
carried interest allocations, and other fees payable by or in respect to portfolio or prospective portfolio
companies. The fees payable to American Discovery Investment Advisors varies from fund to fund and
could differ from the fees and compensation of any prior or successor fund. The Operative Documents set
forth in detail each Fund’s fee and expense structure, and Investors should consult these documents for
further information on fees and expenses.

Management Fees

The Firm generally receives a management fee, calculated as a portion of assets under management by the
Firm, from each Fund. The specific fee percentage, timing of payments, and calculation of the management
fee basis varies amongst the Funds. Investors should consult the Operative Documents of a particular Fund
prior to investing to understand the specific management fee calculations pertaining to such Fund.

ADF I will pay to the Firm a management fee, quarterly in arrears, an amount equal to two percent (2%) of
the aggregate capital commitment of Investors prior to the end of the Investment Period. Subsequent to the
close of the Investment Period, ADF I will pay to the Firm quarterly in arrears an amount equal to two
percent (2%) of the sum of the remaining Cost Basis of each investment held by the Fund on the last day of
the calendar quarter calculated pro rata for each Investor based upon such Investor’s commitment to such
investment.

ADF II will pay to the Firm a management fee, quarterly in advance, equal to two percent (2%) of the
aggregate Commitments of Investors, including any Commitments made by Investors later admitted or any
increase in Commitments by Investors, during the Investment Period. Following the close of the Investment
Period, ADF II will pay to the Firm an amount equal to two percent (2%) per year of the unrecouped Bridge
Financing Contributions, Investment Contributions for investments which have not been fully exited, and
any outstanding borrowings made in anticipation or lieu of Investor Contributions.

Neither the General Partners of the Funds, the Firm, its affiliates nor any of its respective directors, officers,
managers or employees are expected to bear any portion of the Management Fee.

Management Fee Offset

The Management Fee will be reduced pursuant to a formula described in the Funds’ Operative Documents
in exchange for structuring a portion of the General Partner’s Commitment as a profits interest. The
Management Fee shall be further reduced by an amount equal to 25% of Transaction Fees received by an
affiliate of the Firm. In the event that a fee reduction exceeds the payable Management Fee for a given
period, the Funds’ Operative Documents provide for a carry forward of such reduction to a subsequent
period or reimbursement of the amount owed by the Firm to Investors’ accounts.

Carried Interest

As described in Item 6 below, the General Partners are entitled to be allocated carried interest (“Carried
Interest”) with regard to the Funds, which generally equals twenty percent (20%) of realized profits net of
all expenses and is subject to preferred return and catch-up provisions. Each Fund’s Carried Interest
arrangement differs and each calculation is described in the relevant Fund’s Operative Documents.

Certain Operative Documents permit American Discovery Investment Advisors or the General Partners to
waive or agree to reduce the Carried Interest.

Expenses

Generally, all organizational expenses and certain enumerated partnership expenses (as defined in the
Operative Documents) shall be paid by the Funds. To the extent that the General Partners, the Firm or any
of their affiliates pays any organizational expenses or partnership expenses on behalf of the Funds, the
Funds shall reimburse the General Partners, the Firm or such affiliate, as the case may be, upon request. All
Firm overhead and similar expenses shall be paid by the General Partners or the Firm. For avoidance of
doubt, the Firm will pay normal operating overhead, including salaries of its employees and rent and other
expenses incurred in maintaining its place of business.

American Discovery Investment Advisors will allocate fees and expenses to be borne by the Funds in
accordance with the Operative Documents or, to the extent the Operative Documents do not expressly
provide for a method of allocation, as determined by the Firm in good faith and in its fair and reasonable
discretion in accordance with its internal policies and procedures.

Please refer to the Funds’ Operative Documents for further information regarding the fees and expenses of
the Firm and the Funds.

Item 7. Types of Clients

American Discovery Investment Advisors provides discretionary investment advice to the Funds, which are
private investment vehicles that are exempt from registration under the Investment Company Act.

Investors in the Funds come from a diverse base of qualified investors and includes employees of the Firm,
their family members, and affiliated entities.

Each Investor is required to meet certain suitability requirements. Additionally, the Funds generally require
a minimum investment of $5,000,000, although such minimum investment may be reduced or waived at
the discretion of the General Partners. Interests in the Funds are sold only to Investors who meet
qualification requirements under applicable securities laws. An investment in one or more Fund should be
based on a prospective Investor’s careful analysis of its overall portfolio and its own objectives and needs
in the areas of diversification, liquidity, return on investment and risk management.

The Funds generally limit Investors to (i) “accredited investors” as defined in the Securities Act, (ii)
“qualified purchasers” or “knowledgeable employees,” each as defined in the Investment Company Act and
(iii) “qualified clients”, as defined in the Advisers Act. Investors in the Funds must meet certain suitability
and net worth qualifications prior to making an investment in the Funds. The Funds are not registered or
required to be registered under the Investment Company Act; the Funds’ securities are not registered or
required to be registered under the Securities Act and are privately placed to qualified investors in the United
States and elsewhere.