K2 Advisors LLC

Item 5           Fees and Compensation
TIMING AND PAYMENT OF ADVISORY FEES
K2/D&S generally receives investment management fees from each Account. Investment
management fees may be calculated and paid quarterly in advance or in arrears, as specified in
each Account’s constituent documents. In addition to the management fee paid to K2/D&S, the
Adviser may receive performance-based compensation from certain Accounts, typically in the form

K2 Advisors, L.L.C.                                                                          Page A-2

of an incentive allocation which entitles the Adviser to a percentage of the net profit of the Account,
or series of interests therein, during the incentive allocation period, subject to a loss-carryforward
or “high water mark” as specified in the relevant Account’s offering documents. The percentage of
the incentive allocation may vary among Accounts and among classes of interests within an
Account, and certain classes of interests within an Account may not pay an incentive allocation
while others do.
If an investor in a class of interests in an Account that is subject to an incentive allocation or other
performance-based compensation redeems all or part of its interests in the Account other than as
of a date the incentive allocation or other performance-based compensation is calculated, such
compensation is paid with respect to the redeemed amount at the time of the redemption. Incentive
allocations or other performance-based compensation are paid by an Account following the
calculation of its net asset value for the relevant period.
The amount of, and terms governing, any performance-based compensation that the Adviser may
receive from a Single Investor Fund are negotiated on a case-by-case basis. The fees vary
depending on the size of mandate, scope of services, client service and reporting, the type of
strategy and any unusual features of the arrangement between the Adviser and the applicable
Single Investor Fund.
OTHER FEES AND EXPENSES
When an Account invests in an Affiliated Fund, such Account will typically not pay management
fees or performance fees or make an incentive allocation to the underlying Affiliated Fund with
respect to such investment, unless the Client (or investors therein) have been provided disclosure
regarding such compensation arrangements that may involve fees charged both with respect to
advisory services provided to the Account and fees received by the Adviser or its affiliates for
management of the Affiliated Fund. Where an Account invests in an Affiliated Fund, the Account
will indirectly bear its pro rata share of the expenses of such Affiliated Fund as an investor therein.
In addition, each Account that invests in Investment Funds indirectly bears its pro rata share of the
expenses of each Investment Fund in which that Account invests.

Item 7           Types of Clients
The Adviser acts as general partner or managing member of Fund of Funds, other Private Funds,
Single Investor Funds and Platform Funds. Investors in these Accounts may include, without
limitation, trusts and estates, public and private pensions, corporations, state and municipal
government entities, other business entities, high net worth individuals, or certain of the Adviser’s
employees. The Adviser’s Single Investor Funds are generally established for entities rather than
individuals but could be established for qualified individuals.
In many cases, each Account requires a minimum initial investment amount. These minimums
generally range from $100,000 to $5,000,000 (but may be more or less), depending upon the
Account and class or tranche of shares or interests.