Cobalt Capital Management Inc

Item 5: Fees and Compensation

We generally charge each Fund a quarterly management fee at an annual rate ranging from
1.0% to 1.5% of the net assets of the respective Fund. Management fees are charged each
quarter in arrears based on the value of the net assets of the fund as of the last business day
of such quarter. In the event that we are not acting as investment manager under our
investment management agreement for the entire quarter, the fee payable by the Fund for
such quarter will be prorated to reflect that portion of the quarter in which we provided
services under the agreement. We may, in our sole discretion, waive or reduce the fee paid
to us by investors.

Fees are deducted from a Fund’s account by instructing the Fund’s custodian. We pay all
ordinary office expenses which include rent, supplies, secretarial expenses, charges for
furniture and fixtures, and compensation of security analysts and administrative personnel.
The Funds will pay for investment expenses such as commissions, research expenses,
custodial fees, interest on margin accounts, and other indebtedness, borrowing charges on
securities sold short, short sale dividends, bank service fees, expenses attributable to
regulatory filings that are made with respect to the Funds and its assets (including Section
13, Section 16 and Form PF filings and filings required by FATCA), and other reasonable
expenses related to the purchase, sale or transmittal of Fund assets.

Neither Cobalt nor its employees accept compensation, including sales charges or service
fees, from any person for the sale of securities or other investment products.

Item 7: Types of Clients

Our clients are the Funds. Investors in the Funds consist primarily of institutional investors,
high net worth individuals, and endowments. The minimum initial investment for the Funds is
US$1,000,000 subject to exception at the discretion of the General Partner. Investors who
are U.S. persons must be “accredited investors” under Regulation D of the Securities Act of
1933, as amended, be able to enter into a performance fee arrangement under the Advisers
Act and, for certain Funds, be “qualified purchasers” under Section 2(a)(51)(A) of the
Investment Company Act of 1940, as amended. We require our Fund investors to make
representations concerning their financial sophistication and ability to bear the risk of their
entire investment in a Fund.