Denham Capital Management LP

Item 5. Fees and Compensation

Fees

Below is a general summary of how Denham is compensated by its clients. Existing and prospective
investors should refer to a fund’s offering documents, investment management agreements or other
governing agreements for specific information related to that fund. Denham does not receive a
management fee or carried interest from certain co-investment vehicles.

Denham is compensated for its private funds’ advisory services through a quarterly fee based on a
percentage of assets under management of each of its fund clients, generally payable in advance. This
management fee generally ranges from 1% to 2% per annum of capital commitments and generally is
reduced upon the end of a fund’s commitment period. Following expiration of the commitment period,
the management fee is generally paid only on remaining invested capital, excluding investments that have
been written off. Investors who participated in a fund after the initial closing of the fund are still
responsible for payment of the management fee from the initial closing date of the fund. Investors of the
Denham funds pay management fees via capital contributions called by Denham (or Denham deducts the
applicable amount from distributions), based on their aggregate capital commitment to such Denham
fund.

Denham is also compensated for its advisory services to SMAs through an annual management fee and,
under certain circumstances, a structuring fee, both of which are separately negotiated pursuant to each
SMA’s investment management agreement.

As explained in more detail in the offering documents of each client, the general partner typically receives
20% of distributions from investments (“carried interest”) generally after 100% of capital contributions
for investments and fund expenses are returned to investors of a client and investors receive a preferred
return (typically, an 8% preferred return). In accordance with the funds’ offering documents or other
governing agreements, carried interest allocations are generally subject to general partner catch-ups,
certain tax-related distributions, and a “clawback” obligation requiring Denham to return excess
distributions to investors in the event that Denham receives more than its carried interest percentage of
profits on an aggregate basis over the life of a fund. In the event that tax distributions exceed the actual
amount of carried interest to which we are entitled, we are not obligated to return any such excess
distributions. The method of calculating the carried interest poses conflicts of interest between the
applicable general partner and a Denham fund with respect to the management and disposition of
investments, as well as the determination of the timing, method, and amount of distributions by a
Denham fund, and the use of fund-level credit facilities. Conflicts are addressed in the manner described
in Item 11.

Employees of Denham who are investors of our clients do not pay management fees or carried interest,
and investors in certain of our co-investment vehicles also do not pay a management fee or carried
interest. In certain instances, Aflac will pay a management fee that is negotiated at a different rate than
paid by other investors in the same private fund. After payment of all overhead and expenses, Denham
principals and persons will receive residual portions of the management fee, carried interest or other
compensation received by Denham and its affiliates. Denham is also permitted to reduce management
fees and/or carried interest through side letter arrangements in certain instances, for example where
certain investors have made an early commitment, a large commitment, multiple commitments or any
other material concession to one or more of the funds.

Denham, its affiliates or their employees or partners could in the future transfer their interests in a
Denham fund to third parties. Following any such transfer, Denham is entitled to receive carried interest
and a management fee on such interest, subject to applicable law and the terms of the applicable fund’s
organizational and/or offering documents.

Denham charges the management fee described above on a quarterly basis. The performance-based fee,
or carried interest, is distributed to Denham in accordance with the terms of the applicable partnership
agreement of a Denham fund.

Other Fees and Expenses

Certain other fees are paid to Denham or to a Denham fund’s general partner, managing member, or
affiliates. In particular, we and our affiliates are entitled to certain fees from portfolio companies in which
the Denham funds invest such as break-up, monitoring, directors’, organizational, setup, advisory,
underwriting, syndication and other similar fees in connection with the purchase, monitoring or
disposition of investments or from unconsummated transactions, including warrants, options, derivatives
and other rights in respect of securities owned by the Denham funds. Investors will receive the benefit
from certain such fees only as set forth in a client’s offering and governing documents. All or a portion of
the fund’s pro rata share of these other fees could in certain circumstances offset the management fees
otherwise payable by investors in such Denham fund. In certain but not all circumstances, co-investment
vehicles pay management fees. For the avoidance of doubt, any management fees paid by a co-
investment vehicle do not offset management fees paid by the Denham funds. Neither the Denham funds
nor any of their limited partners will have any claim, through fee offsets or otherwise, to any amount of
other fees received by Denham or its personnel that are allocable to the co-investment vehicle’s pro rata
share of such fees. Historically Denham has not taken such other fees, but reserves the right to do so.

The funds are permitted to fund the making of investments with proceeds from drawdowns under one or
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Item 7. Types of Clients

All of Denham’s advisory clients are private equity funds sponsored by Denham or SMAs. We offer
interests in the Denham funds only to “qualified purchasers” and “knowledgeable employees” (each as
defined under the Investment Company Act of 1940, as amended). Investment advice is provided directly
to the funds and not individually to the investors of the funds. Investors participating in the Denham funds
include high net-worth individuals, banks or thrift institutions, sovereign wealth funds, pension and profit-
sharing plans, trusts, estates, charitable organizations or other corporations or business entities and also
could include, directly or indirectly, past or current service providers, members of the management of a
fund’s portfolio company and principals or other employees of Denham.

Typically, the funds require minimum investment amounts ranging from $1MM to $5MM, but such
amounts have been and in the future will be reduced with the prior agreement of Denham, subject to

applicable legal requirements. Minimum investment requirements in the SMAs are dictated by the
separately negotiated investment management agreement.