Freeman Spogli Management Co LP

Item 5.        Fees and Compensation

A.     Management Fees

As compensation for investment supervisory services rendered to the FS Funds, the Firm receives
from each such FS Fund a management fee. Management fees paid by an FS Fund are indirectly
borne by investors in such FS Fund. The precise amount of, and the manner and calculation of, the
management fees for each FS Fund are established by the Firm and are set forth in such FS Fund’s
Organizational Documents. The management fees are generally subject to waiver or reduction by
the Firm in its sole discretion. The fee structures described above are modified from time to time.
Fees will on occasion differ from one FS Fund to another, as well as among investors in the same
FS Fund. Parallel Funds generally do not pay management fees. Unless otherwise agreed with a
Fund’s investors, management fees will continue to be payable during any term extensions. Details
about such fees and expenses are contained in the Organizational Documents of a Fund.

The Funds’ General Partners are also entitled to receive from each Fund performance-based
compensation (“Carried Interest”) as further described in Item 6 below. The specifics of each
fee arrangement are negotiated for each Fund and are set forth in the limited partnership agreement
(“Partnership Agreement”) related to the specific Fund.

B.     Payment of Management Fees

The General Partner of each FS Fund calls capital from investors not affiliated with the Firm in
each respective FS Fund for payment of management fees. Management fees are then paid by each
of the FS Funds to the Firm.

Subject to an FS Fund’s Organizational Documents, management fees paid by a FS Fund will
generally be reduced by a percentage of (1) the amount of fees paid by such FS Fund to persons
acting as a placement agent in connection with the offer and sale of interests in such FS Fund to
certain potential investors and/or (2) certain Transaction and Monitoring Fees (as defined below)
received by the Firm from a FS Fund’s portfolio companies and prospective portfolio companies
(with respect to a break-up fee), as further described in Item 5.C below.

In the event the Firm receives compensation that would be applied to offset an FS Fund’s
management fees and such compensation exceeds any remaining management fees due at the end
of the life of the FS Fund, such excess compensation generally will be remitted to the investors in
the applicable FS Fund.

On a date specified in the Organizational Documents (the “Stepdown Date”), the management fee
customarily decreases and is thereafter calculated based on the aggregate amount of capital
contributions by a limited partner with respect to portfolio companies that have not been sold or
otherwise disposed of (each a “Disposition”), less the amount of any writedowns with respect to
any unrealized portfolio companies (each, an “Impaired Investment”). Because management fees
are calculated based on invested capital following the Stepdown Date, the Organizational
Documents do not require any reduction or refund of management fees following any dividend,
distribution (including those arising from dividend recapitalizations), reorganization,
restructuring, roll-over investment, or similar transactions where one or more other Fund(s) exit
their investment(s) in the relevant portfolio company, whether in whole or part, where the Fund

has not completely disposed of its interest in the portfolio company, even if the value of the Fund’s
interest has been reduced (including materially reduced) (each a “Recap Distribution”) or any
decrease in value (whether temporary or permanent), in each case except to the extent such events
constitute a Disposition or Impaired Investment. As a result, the management fees generally will
not track changes in the fair value of any individual investment or of a Fund.

Transaction and Monitoring Fees (as defined below, and which include but are not limited to
transaction fees) and other fees, costs and expenses allocated to a portfolio company at the time of
investment (collectively, “Capitalized Costs”) are generally capitalized into the amount of invested
capital with respect to such portfolio company. Accordingly where the management fee base post-
Stepdown Date is based on invested capital, such base will include the value of such Capitalized
Costs, including such those payable or reimbursable to the Firm and its affiliates. This would
increase the amount of management fees paid to the Firm. Such increase is in addition to the
Transaction and Monitoring Fees paid to the Firm and/or its affiliates.

The Organizational Documents generally do not provide for the reimbursement or refund of
management fees in the event of Dispositions or Impaired Investments occurring mid–calculation
period.

C.     Other Fees and Expenses

Transaction and Monitoring Fees

As described in Item 11 the portfolio companies and prospective portfolio companies (with respect
to a break-up fee) in which a Fund invests typically pay a variety of cash and equity compensation
such as directors’ fees, transaction fees, consulting fees, advisory fees, monitoring fees, break-up
fees and other fees (“Transaction and Monitoring Fees”) to the Firm or any of its employees in
connection with the consummation, holding or disposition of a portfolio company investment or
the termination of an unconsummated investment by the Fund. Any such Transaction and
Monitoring Fees received by the Firm or any of its employees will be remitted to the Firm. These
Transaction and Monitoring Fees are often substantial.

As noted in Item 5.B above, in general, a percentage of such fees received by the Firm or any of
its employees (after a deduction for applicable expenses) will be credited toward an offset of the
management fee. The remainder will be retained by the Firm. The amount and manner of such
offset is set forth in the Organizational Documents of the applicable Fund. To the extent any
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Item 7.        Types of Clients

Each Fund is a client of the Firm. As further described in Item 4 above, the Firm provides
investment advice to the Funds and makes investment decisions on behalf of the Funds consistent
with the stated investment objectives set forth in each Fund’s respective Organizational
Documents. Investment advice is provided directly to the Funds (subject to the direction and
control of the General Partner of each such Fund, if applicable) and not individually to investors
in such Fund.

The Funds generally accept potential investors who are “accredited investors” as defined in
Regulation D under the Securities Act of 1933, as amended (the “Securities Act”) and “qualified
purchasers” as that term is defined in Section 2(a)(51) of the Investment Company Act of 1940, as
amended (the “Investment Company Act”).

The Firm does not have a minimum size for a Fund, but, depending on the Fund documents,
minimum investment commitments have in the past and may in the future be established for
investors in the Funds.