DG Capital Management LLC

Item 5.    Fees and Compensation

The Firm generally receives management fees for Clients, calculated periodically based on a percentage of
the value of the assets under management (the “Management Fee”). Management Fees are billed monthly,
in advance or in arrears and is generally at an annual rate of up to 1.75%, as specified in the relevant Client’s
offering documents.

In addition, the Firm collects incentive allocations/fees (the “Performance Fee”) based on the performance
of investments. Please refer to Item 6 below, for a more detailed description of incentive allocations/fees,
and related conflicts of interest. The Performance Fee is calculated based on a percentage of the capital
appreciation as evaluated at the end of each calendar year. The Performance Fee will be payable annually
in arrears.

The fees of each Client are stated in the offering documents of that Client. Fees and fee terms may vary
from Client to Client.

Generally, the Clients bear all costs and expenses related to its investments and its operations, including,
without limitation, brokerage and other transaction costs, clearing and settlement charges, trade break fees,
consulting expenses, research expenses (including related travel expenses), legal fees and other expenses
in connection with conducting due diligence and negotiating the terms of certain investments, custodial
fees, initial and variation margin, interest and commitment fees on debit balances or borrowings, stock
borrowing fees and proxy solicitation expenses, legal expenses, audit and tax preparation expenses,

DG Capital Management, LLC | 420 Lexington Avenue, Suite 2745| New York, NY 10170| Tel: 646.942.5700 | Fax: 212.202.4639

accounting fees, the Funds/Accounts administration expenses (including, but not limited to, fees and
expenses of any administrator), the direct and related costs of portfolio accounting software, fees and
expenses for risk management services, insurance expenses including costs of any liability insurance
obtained on behalf of the Funds/Accounts, indemnification expenses, the Management Fee, regulatory and
compliance costs and expenses (including, but not limited to, filing and license fees and form PF), any issue
or transfer taxes chargeable in connection with any securities transactions, any entity level taxes and fees,
costs of reporting and providing information to partners/investors, and costs of litigation or investigation
involving Funds/Accounts activities, and any extraordinary expenses.

Generally, organizational costs of the Funds/Accounts and the costs incurred in connection with the initial
issuance of interests, including legal and accounting fees, document production and printing costs, federal
and state filing fees, and other related expenses, have been paid for by the Funds/Accounts. Such expenses
are being amortized by the Funds/Accounts, for financial reporting purposes over a period of five years.

Clients should review carefully Item 12, which discusses conflicts of interest related to brokerage practices.
Clients pay brokerage commissions and/or transaction ticket fees charged by the custodian.

If a contract with a Client is terminated before the end of a billing period, the Firm typically refunds any
overpayment of fees pro rata based on the number of days remaining in the billing period.

Item 7.    Types of Clients

The Firm’s Clients are private investment funds and separately managed accounts whose investors are
individuals and institutions. Generally, the minimum investment in a Fund is $1,000,000, and the minimum
subsequent investment is $50,000. In each case, however, the Firm has sole discretion to accept lesser
amounts. Separately managed account terms are individually negotiated.