DAFNA Capital Management LLC

5. Fees	and	Compensation

Private Investment Funds

A.		Types	of	Fees
Under Adviser’s investment management agreement with each Fund, Adviser will receive an annual
management fee based on the account balance of each Fund investor. Adviser, in its discretion, may
waive or reduce the management fee as to all or any of the investors in the Fund or agree with an
investor to waive or alter the management fee as to that investor.

Under Adviser’s investment management agreement with each Fund or the Fund’s charter documents, as
applicable, Adviser will also receive an annual performance-based fee or allocation in arrears based on the
net capital appreciation (i.e., capital appreciation less capital depreciation) of each investor’s account in
the Fund. The performance-based fee or allocation is payable only if, and to the extent that, the net
capital appreciation of the investor’s account exceeds any net capital depreciation accumulated in prior
years (as adjusted for withdrawals of capital). Adviser, in its discretion, may waive or reduce the
performance-based fee or allocation as to all or any of the investors in the Fund or agree with an investor
to waive or alter the performance-based fee or allocation as to that investor.

B.		Payment	Method
The management fee will be paid by each Fund monthly in arrears by deduction from each investor’s
account in the Fund on the last business day of the calendar month. The performance-based fee or
allocation is also paid by deduction from each investor’s account in the Fund on December 31 of each year
in which a performance-based fee or allocation is earned. If an investor withdraws all or a portion of its
account in a Fund on a date other than December 31, a performance-based fee or allocation will be made
on the amount withdrawn for the period from the prior January 1 to the date of withdrawal.

C.		Costs	and	Expenses
Each Fund bears all expenses of its organization and operations, expenses incurred in the purchase and
sale of investments, and accounting fees, as determined by Adviser. Such expenses include but are not
limited to: (i) brokerage and execution charges, commissions, custodial charges, and fees for quotation
and other data services; (ii) fees related to accounting, trading, portfolio management and risk
management systems; (iii) research subscriptions and expenses; (iv) broken trade and broken deal fees;
(v) expenses to register securities and transfer taxes; (vi) costs and expenses incurred for the purpose of
protecting and enhancing the value of the Fund’s investments (including the costs of instituting and
defending litigation); (vii) taxes, filing and registration fees of the Fund; (viii) all costs, fees and expenses
relating to investor communications, relations, accounting and the preparation and mailing of financial,
tax and performance information to investors, including an allocable share of the Adviser’s costs, fees and
expenses relating to internal accounting and tax preparation function; (ix) fees, costs and expenses
incurred in connection with borrowings; (x) Fund administration fees, costs and expenses; and (xi) fees for
attorneys, accountants, consultants and other professionals or experts including legal and consulting fees
related to investment research; (xi) premiums and other costs of D&O/E&O and other insurance and (xii)

Form ADV Brochure – Part 2A
DAFNA Capital Management LLC
SEC #: 801-62559

all regulatory and compliance fees, costs, and expenses incurred in complying with regulatory
requirements that directly result from management of the Fund (including expenses incurred in
complying with FATCA and preparing Form PF). For additional information regarding brokerage and
execution fees, see Item 12 below.

D.		Refunds.
Not applicable.

E.		Sales	Compensation.
Adviser will not receive sales commissions in connection with sales of interests in a Fund.

 Form ADV Brochure – Part 2A
 DAFNA Capital Management LLC
 SEC #: 801-62559

7. Types	of	Clients

Private Investment Funds

Adviser is organized and serves as general partner and/or discretionary investment adviser to several
private investment funds, including DAFNA Fund, L.P., a Delaware limited partnership (the “Onshore
Fund”), DAFNA International Fund, Ltd., a Cayman Islands exempted company (the “Offshore Fund”),
DAFNA LifeScience, L.P., a Delaware limited partnership and DAFNA LifeScience Select, L.P., a Delaware
limited partnership (the “Master Funds”). Adviser may decide in the future to sponsor or manage
additional private investment funds.

Adviser generally requires investors in a Fund to make a minimum initial investment of at least $1,000,000
and to maintain a minimum account balance of $1,000,000 in the Fund. Investors generally must be
“accredited investors” under Regulation D who are also “qualified purchasers” under Section 2(a)(51)(A)
of the Investment Company Act of 1940, as amended. Adviser generally requires Fund investors to make
representations concerning their financial sophistication and ability to bear the risk of loss of their entire
investment in the Fund. The minimum contribution and investor requirements may be waived by Adviser
in its sole discretion.

Form ADV Brochure – Part 2A
DAFNA Capital Management LLC
SEC #: 801-62559