Karmel Capital Management LLC

ITEM 5: FEES AND COMPENSATION

Management and Performance-Based Fees

Fees are paid as set forth in each Fund’s respective Governing Documents. The information
contained in this Item 5 is a summary only and is qualified in its entirety by the relevant Governing
Documents. It is important that Investors refer to the relevant Governing Documents for a complete
understanding of expenses and fees they may pay through an investment in one or more of the
Funds. Each Fund has a unique combination of the items described below, which may change over
the life of the Fund or be impacted by side letters.

Management Fees:

The Adviser is compensated for its advisory services to the Funds through asset-based
management fees (“Management Fee”).

Most of the Funds pay a Management Fee. Depending on the nature of the Fund and investment
strategy, the Fund may pay a one-time Management Fee at the outset of the Fund or quarterly in
advance. For Fund’s with a one-time Management Fee, the Management Fee is set by the Fund or
Manager as part of the formation process. For Funds that pay a recurring Management Fee, the
maximum annual rate equal to 2% of the aggregate Fund commitments during the investment
period (as defined in the Fund’s Governing Documents). Following the applicable investment
period, the Management Fee is reduced and, in most cases, corresponds to a maximum of 2% of
the Fund’s remaining invested capital (i.e., the cost basis of Portfolio Company investments then
held by the Fund, reduced by any investments that have been entirely written off or permanently
written down). The post-investment period Management Fee is typically calculated quarterly,
unless otherwise determined by the General Partner.

Management Fees are generally not negotiable; however, the Adviser or General Partner has
waived or reduced the Management Fee for certain Investors. Such reductions or waivers are
included in side letters discussed later in this Brochure.

Management Fees are deducted directly from the assets of each Fund or charged in addition
depending on the Investor’s particular circumstances.

In addition to the above a Fund may be charged a management fee if it invests in a third-party
fund.

Carried Interests:

In some cases, the General Partner of each Fund is entitled to receive “carried interest” or a profit
percentage based on Fund returns, most typically at a maximum amount equal to 20% of the
proceeds (in excess of cost basis) from the sale or liquidation of a Fund’s Portfolio Company
investments. The specific percentage and amount of carried interest or profit sharing arrangement
is outlined in each Fund’s respective Governing Documents. The carried interests are generally
not negotiable; however, the Adviser or General Partner has waived or reduced the carried interest
for certain Investors. Such reductions or waivers are included in side letters discussed later in this
Brochure.

Information Regarding Costs and Expenses

The Adviser is responsible for its normal overhead and administrative expenses, including
expenditures on: salaries, wages, benefits, and other expenses of the Adviser’s or General Partner’s
members, agents and employees; rent payable for space used by the Adviser, General Partner or
the Funds; bookkeeping, legal, tax and other service providers related to the Adviser or General
Partner; and all other general office related expenses.

Each Fund is responsible for all costs and expenses relating to its activities and operations as
provided in each Fund’s respective Governing Documents. Generally, each Fund will bear all Fund
operating expenses, including expenses related to the investigation (whether or not consummated),
purchase, holding and sale of Portfolio Company securities, investment-related travel, legal,
accounting, investment banking, research, brokerage and finders’ fees, custody, transfer, Fund
registration, Fund securities filings, advisory board, interest, accounting, audit, Fund related data
feeds, taxes, extraordinary expenses, and other similar fees and expenses. The foregoing list of
expenses is not intended to be exhaustive and is qualified in its entirety by the applicable
Governing Documents of each Fund.

From time to time, the Adviser or the respective General Partner will be required to decide whether
costs and expenses are to be borne by a Fund, on the one hand, and one or more other vehicles
advised or managed by the Adviser, General Partner, or any of their respective affiliates, on the
other hand. The Adviser or General Partner will allocate such costs and expenses in a manner it
believes in good faith to be fair and equitable, but in its sole discretion. In some cases, the
allocation may not be proportional, as each Fund may have different expense reimbursement terms.

ITEM 7: TYPES OF CLIENTS

The Adviser provides investment advice solely to the Funds, as described in Item 4 above. The
Funds include limited partnerships, limited liability companies, and/or other investment entities
formed under domestic laws. The Funds are not required to register as investment companies in
reliance on section 3(c)(1) or 3(c)(7) of the Investment Company Act of 1940, as amended (the
“Investment Company Act”). Investors in the Funds are required to be “accredited investors”
within the meaning of Rule 501(a) of the Securities Act of 1933, as amended (the “Securities Act”)
and “qualified clients” within the meaning of Rule 205-3 of the Investment Advisers Act of 1940,
as amended (the “Advisers Act”). Some or all of the Investors (depending on the nature of the
Fund) are also “qualified purchasers” under the Investment Company Act (all investors in Funds
relying on 3(c)(7) exemption are required to be qualified purchasers). The Adviser does not
provide discretionary investment advice or services to Investors in the Funds directly or to any
other client other than the Funds.