Folger Hill Asset Management LP

Fees and Compensation
   A. Funds

The Feeder Funds employ an expense-based pass-through model and do not pay management
fees or any other asset-based fee to Folger Hill. Rather, each Investor will generally be subject
to its pro-rata share of pass through expenses (“PTEs”) based on the ratio of the balance of such
Investor’s “Capital Account” to the Capital Accounts of all of the Investors in the Feeder Funds.
As a general matter, PTEs include both “Fund Expenses” and “Manager Expenses” as included
below (note that the list is not exhaustive):

Fund Expenses
   • the Master Fund’s trading related expenses, such as brokerage commissions, financing,
      interest and borrowing fees and expenses, mark-ups, securities lending fees and expenses,
      exchange fees and clearing fees, all fees and expenses related to the trading of derivatives,
      all fees and expenses paid to prime brokers and all other fees or expenses related to the
      Master Fund’s trading and investment activities, including management and incentive
      fees paid to Third-Party Managers as described below;
   • all costs and expenses related to the organization and initial offering of the Funds
      (“Organizational Expenses”), as well as all costs and expenses related to the organization
      of any subsidiary of the Master Fund formed in the future;
   • the Funds’ professional expenses including legal, administrative, accounting, auditing,
      tax compliance and consulting expenses (including the fees paid to SS&C GlobeOp, the
      Funds’ Administrator, accountants, auditors and other service providers), the fees and
      expenses of the independent directors of the Offshore Feeder, and costs and expenses

       relating to regulatory compliance, including costs of regulatory filings relating to the
       Funds;
   •   all fees charged by placement agents in connection with their placement of interests in
       the Feeder Funds, which will be specially allocated to the particular Investor introduced
       to a Feeder Fund by such placement agent;
   •   any taxes and duties payable in any jurisdiction in connection with the Funds’ investing
       and trading activities or operations imposed on the Fund or Master Fund as determined
       by the Investment Manager;
   •   all of the expenses and/or liabilities incurred in connection with or arising out of the
       Funds’ or Folger Hill’s activities, including bank fees, indemnification, litigation or other
       extraordinary or nonrecurring expenses.

Manager Expenses
  • performance-based bonuses paid to Folder Hill employees, including (a) Portfolio
      Manager (as defined below) bonuses based on the gross performance of their respective
      portfolios net of any expenses allocated to such Portfolio Manager in Folger Hill’s sole
      discretion (“PM Bonuses”) and (b) discretionary performance-based compensation paid
      to non-Portfolio Manager personnel of the Investment Manager (other than Mr. Kumin);
  • all expenses in connection with all employees of Folger Hill and entities under common
      control with Folger Hill, including all base compensation and benefits. Such employee-
      related expenses may include holiday gift cards and team-building activities such as
      employee social events, holiday parties and related travel;
  • expenses relating to personnel recruiting and severance arrangements of Folger Hill
      including hiring, on-boarding and termination of employees (including recruitment fees
      and retainers paid, fees and expenses relating to participation at industry-related
      conferences and events, certain up-front compensation and buy-out payments payable to
      employees, and related legal expenses);
  • Folger Hill’s expenses relating to their professional service providers including legal,
      administrative, accounting (including costs associated with the annual audit of FHAM
      US’s financial statements), auditing, tax compliance and consulting expenses and fees
      and expenses relating to compliance matters, including costs of compliance programs,
      surveillance, regulatory examinations, regulatory or legal inquiries and regulatory filings
      relating to Folger Hill;
  • insurance expenses including errors and omissions policies which protect certain
      employees and affiliates of Folger Hill and in respect of which a Fund is the beneficiary;
  • fees or expenses relating to consultants retained by Folger Hill for investment and non-
      investment purposes, including public relations and other consultants retained by Folger
      Hill to improve their business;
  • communication systems expenses, including expenses relating to advanced
      telecommunications equipment and data transmission lines;
  • information systems and technology expenses incurred by Folger Hill (such as costs
      associated with employees’ home-office technology set-ups and shared remote working
      locations), including trading systems, order management systems, middle and back office
      expenses, risk management systems, investor reporting expenses, data warehousing
      expenses and software development;

   •   expenses relating to furniture and fixtures (such as artwork and related office furnishings)
       and the rent and facilities of Folger Hill (for the current offices in New York, Boston, and
       Hong Kong, as well as any future offices established by Folger Hill), including leasehold
       improvements;
   •   expenses relating to investment research, development of investment strategies, quotation
       services, data feeds and services employed by Folger Hill;
   •   expenses relating to the marketing, offering and sale of the Funds, as well as the ongoing
       investor relations and servicing expenses associated with the Funds;
   •   investment-related travel and non-investment-related travel (including travel by
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Types of Clients
As noted in the Advisory Business section above, Folger Hill provides discretionary investment
advisory services to its Clients. Although capital contributions may be accepted for lesser
amounts, the minimum investment in a Feeder Fund is generally $5,000,000, and the minimum
additional capital contribution is $1,000,000. No minimum asset level has been established, and
FHAM US and the APAC Business will consider requests for SMAs on a case-by-case basis.
Fund Investors and SMA account holders must be: (i) “qualified purchasers” within the meaning
of the Investment Company Act; and (ii) “accredited investors” within the meaning of Regulation
D under the Securities Act.

In addition, each U.S. Investor in the Feeder Funds that is charged the Profit Allocation and each
SMA account holder described in the Performance Based Fees section above must also satisfy
the eligibility requirements of a “qualified client” as set forth in Rule 205-3 under the Investment
Advisers Act of 1940, as amended (the “Advisers Act”).

From time-to-time, certain firms or individuals that Folger Hill and/or the Funds conduct
business with may invest in the Feeder Funds and/or maintain an SMA managed by FHAM US
and/or FHAM HK and FHAM SG. There is a potential conflict of interest arising from such
investments in that Folger Hill and/or the Funds may have an incentive to maintain or increase
its level of business with such individuals or firms as a result of these investments (e.g., service
providers and broker/dealers utilized by FHAM US and/or the APAC Business). However, the
relationships are evaluated on an ongoing basis in the context of these investments in order to
ensure that these potential conflicts of interests are appropriately addressed.

Methods of Analysis, Investment Strategies and Risk of Loss
Methods of Analysis, Investment Strategy and Objective. The Funds’ investment objective is to
consistently generate attractive, risk-adjusted returns in all market environments and to preserve
investor capital. The General Partner and FHAM US will seek to achieve this investment
objective by allocating the assets of the Master Fund to the discretionary investment authority of
a number of Folger Hill’s Portfolio Managers and their investment teams (“Portfolio Managers”)
that employ a wide range of long/short equity and related investing strategies. Certain of the
Master Fund’s assets may also in the future be allocated for management by unaffiliated third-
party managers that provide exposure to specific jurisdictions and/or investment strategies. The
long/short equity and related investing strategies collectively employed by Portfolio Managers
will not be limited in any respect, including but not limited to, in respect of sector, market
capitalization, geography or style.

The SMAs’ investment objectives are to realize maximum capital appreciation, consistent with
the investment guidelines (as set forth in the SMAs’ IMAs), by trading in certain equity
securities, futures contracts, options contracts and other products.

Clients will invest on both a cash and synthetic basis and take short positions for both speculative
and hedging purposes. Folger Hill may cause Clients to incur significant leverage in executing
the investment programs through both cash and synthetic borrowings, as well as a result of any
leverage embedded in any derivative that it trades. In addition to equities and equity indices,
Clients may invest in foreign and domestically traded preferred stocks, warrants, fixed income
instruments, options, futures and other derivatives and financial instruments to supplement its
investment strategies. Folger Hill will have full discretion to allocate capital among its Portfolio
Managers subject to any applicable investment guidelines, and may expand Clients’ investment
program over time by incorporating quantitative and other strategies or adding additional asset
classes in which Clients may invest or trade.

When evaluating securities for investment, Folger Hill employs various valuation techniques and
conducts comprehensive due diligence, including, but not limited to: company and manager
visits, discussions with company management, qualitative and quantitative screening, and
consultations with its network of industry and due diligence consultants.

Risks. There is high risk associated with Folger Hill’s investment techniques. An investment in
a Feeder Fund or in an SMA should only be made after consultation with independent qualified
sources of investment and tax advice.

General Risks

Potential Loss of Investment. No guarantee or representation is made that the Clients’ investment
programs will be successful, achieve its objective or avoid losses. There is a risk that Clients’
investments will be lost entirely or in part. Folger Hill’s investment programs do not represent a
complete investment program and should represent no more than a portion of an Investor’s or
SMA account holder’s portfolio management strategy. Set forth below is a non-exhaustive list
of risks associated with Folger Hill’s investment strategies.

Limited Operating History. There is only a limited operating history by which to evaluate the
potential future performance of FHAM HK and FHAM SG. Regardless, past performance is not
necessarily indicative of future results.

Possible Positive Correlation with Stocks and Bonds. One of the goals in incorporating a non-
traditional investment into a portfolio is to provide a potentially valuable element of
diversification. However, there can be no assurance, particularly during periods of market
disruption and stress when the risk control benefits of diversification may be most important, that
Clients will, in fact, experience a low level of correlation with a traditional portfolio of stocks
and bonds. Folger Hill’s general focus on equity investments may increase the likelihood of such
correlation.
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