Merced Capital LP

Item 5           Fees and Compensation

The fees, compensation, and expenses applicable to the Clients are set forth in detail in the
respective Governing Documents.

Merced Capital or its affiliate receives a management fee from Clients in exchange for investment
advisory services provided. Management fees are typically a specific percentage of each Investor’s
aggregate capital commitment, invested capital or net asset value in the applicable Client, but are
sometimes a flat fee. The percentages on which Merced Capital’s management fee is based
typically range from 0.90% to 1.5% per annum, as set forth in the applicable Governing Documents.
In some cases, Merced Capital and its affiliates do not receive a management fee.

Generally, a Client’s management fee will typically be payable monthly or quarterly in advance
and may be paid by disposition proceeds, income from investments, capital contributions from a
Client’s Investors or a Client’s credit facility, as well as Client-level reserves as set forth in the
applicable Governing Documents.

Merced Capital, or its affiliates, is permitted to elect, in its discretion, to reduce, waive, or defer all
or a portion of any payment of its management fee with respect to any Client or Investors in any
Client.

In addition to management fees, Merced Capital or its affiliate receives performance-based
compensation either (a) in the form of a percentage of profits from the Clients or a participation
right in the profits of a Client (commonly referred to as “Carried Interest”) based on the distributed
cash proceeds generated by Client’s investments, typically subject to a preferred return to
applicable Investors, or (b) in the form of a percentage of the net realized and unrealized
appreciation in the value of the Client’s assets (commonly referred to as an “Incentive Fee”).
Merced Capital, or its affiliate, is permitted to, in its sole discretion, reduce, waive, or defer the
distributions or payments of Carried Interest or Incentive Fees with respect to any Client or
Investors in any Client.

Carried Interest is generally paid out as proceeds attributable to dispositions of Clients’ investments
are distributed to Investors. Generally, no payouts are made until a Client has first received invested
capital together with a preferred return in accordance with the Client’s Governing Documents.
Incentive Fees are typically allocated to Merced Capital or its affiliate on an annual basis. Merced
Capital sets the value of each Client’s portfolio. In the case of Clients that pay an Incentive Fee,
there is the risk that Merced Capital could increase its management and annual incentive fees by
overstating the increase in value of the Client’s assets. To protect against this risk, Merced Capital
has established a valuation policy to assure that its investment valuations reflect fair value.

Merced Capital’s valuation policy is available to Investors in its Clients upon request. Valuation
methods include, as appropriate, financial models, appraisals, reference to sales of comparable
assets, bids or other valuations received from third parties, and other methods that Merced Capital
determines are likely to be reliable. Except to the extent required by applicable law, Merced Capital
is not required to have valuations independently determined.

In addition to paying management fees, Carried Interest and Incentive Fees, the Clients reimburse
Merced Capital and its affiliates for certain expenses. These expense reimbursement items vary by
Client, but typically include tax advice and preparation expenses, accounting expense, custodial
fees, brokerage commissions, legal, and other operational expenses. In some cases, Clients
reimburse Merced Capital and its affiliates for customary and routine overhead expenses, including
compensation of all personnel. If any reimbursable expenses are incurred for the account of more
than one Client, then Merced Capital charges a Client only that portion of the expense that Merced
Capital in its discretion deems equitable under the circumstances, taking into account such factors
as Merced Capital and its affiliates deem appropriate in the circumstances.

The Clients incur brokerage and other transaction costs. See Item 12 – Brokerage Practices for
information regarding Merced Capital’s practices with respect to these costs.

Under certain circumstances specified in the Governing Documents, the Clients are generally
obligated to indemnify Merced Capital and its affiliates and other identified persons and entities as
described in the relevant Governing Documents (together, the “Indemnified Persons”), in each
instance, for costs arising out of or in connection with the Clients’ business and affairs, except for
any such costs that have resulted from certain bad acts of the Indemnified Person seeking
indemnification as detailed in the applicable Client’s Governing Documents.

In terms of co-investment opportunities, until a co-investor has irrevocably committed in writing
to participate in an investment opportunity alongside the Clients, such co-investor may not be
obligated to bear any portion of the due diligence or broken-deal expenses associated with a

potential transaction. As a result, in some cases, despite the fact that a co-investor may be offered
an opportunity to participate in a potential investment alongside a Client, the Client may ultimately
bear all of the associated due diligence expenses and costs associated with an unconsummated
investment.

Merced Capital or its affiliate will pay (either directly or by offset to its management fees) all
organizational expenses in excess of the limit set forth in the applicable Governing Documents and
placement compensation, to the extent not borne by the Clients.

Merced Capital and its supervised persons do not receive (directly or indirectly) any compensation
from the purchase or sale of securities or investments for the Clients. Merced Capital and its
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Item 7           Types of Clients

Merced Capital provides discretionary investment advisory services to Funds and Other Accounts.
The Clients are typically limited partnerships and other investment vehicles that are exempt from
registration under the US. Investment Company Act of 1940, as amended, and whose interests will
not be registered under the Securities Act. The minimum investment into the Clients is outlined in
each Client’s’ Governing Documents, subject to waiver by Merced Capital or its affiliate.

Investors in the Clients include public and private pension funds, foundations, endowment funds,
“funds of funds”, high net worth individuals and family offices.