Paloma Partners Management Company

ITEM 5          FEES AND COMPENSATION

PLEASE REVIEW THE RELEVANT FUND DOCUMENTATION, FINANCIALS AND DUE DILIGENCE
QUESTIONNAIRE (“DDQ”) FOR A COMPLETE DISCUSSION OF THE FUND’S FEES AND EXPENSES.

An investment in the Paloma Fund is subject to substantial fees and expenses. Expenses allocated to
the Paloma Fund are material, both on an absolute basis and as a percentage of the Paloma Fund’s
assets. For further details, please see below and the Paloma Fund’s most recent DDQ, Fund
Documentation and financial statements.

The Fund assesses expenses on a “pass through” basis, which means that each feeder fund (and
therefore its investors) is not only responsible for its direct fees and expenses and a pro rata share of
the Master Fund’s (and any SPV Master Fund’s) expenses, but also for all or substantially all of the
expenses incurred by its management entities as described below. Expenses are deducted
periodically in advance or in arrears. Currency hedge share classes will also bear expenses related to
the execution of the currency hedge.

PPMC does not have a fee schedule and does not currently receive asset-based or performance-based
compensation. All or substantially all of PPMC’s expenses are passed through to and paid by the
Paloma Fund and therefore the investors. PPMC’s expenses include expenses incurred by PPMC on
behalf of the Paloma Fund, for the benefit of the Paloma Fund or for the benefit of Paloma
Management. PPMC’s expenses are treated as Paloma Fund expenses regardless of whether or not
they are directly related to the Paloma Fund’s investment activities. Additional information about
PPMC’s expenses is provided below and in the Paloma Fund’s most recent DDQ, Fund Documentation
and financial statements.

Generally, Paloma Advisors receives either a Management Fee payable monthly in arrears of 1/12 of
1.5% with respect to the capital account or net asset value of shares owned by investors in the Paloma
Fund’s A, B and E classes or an annual Incentive Fee (or Incentive Allocation) of 20% of the net realized
and unrealized capital appreciation attributable to each capital account or series of shares owned by
investors in the Paloma Fund’s C and D classes. The Paloma Fund’s administrator calculates the
amount of the applicable Management Fee or Incentive Fee (or Incentive Allocation). The
Management Fee or the Incentive Fee (or Incentive Allocation) for certain investors are (and may in
the future be) subject to a waiver, reduction or rebate, or used (in part) to compensate a placement
agent (to the extent applicable). Fees and compensation paid or allocated to Paloma Advisors are
generally deducted from the assets of the Paloma Fund.

   •   FUND EXPENSES

Each feeder fund will bear its own expenses and its proportionate share of the Master Fund’s
expenses. These will include, without limitation, (i) on a direct basis, any fees payable by the feeder
fund, organizational expenses of the feeder fund and operating expenses of the feeder fund, and (ii)
on an indirect basis, similar fees and expenses incurred at the Master Fund (and any SPV Master Fund)
as well as investment-related expenses of the Master Fund (and any SPV Master Fund) (but only to
the extent the feeder fund participates in such investment), including, but not limited to: (a) the
Management Fee, (b) the Incentive Fee, (c) expenses relating to the research, due diligence and
monitoring of actual and prospective trades and investments (whether or not consummated) and the
clearance, settlement and consummation of trades and investments, (d) organizational and operating
expenses (including, without limitation, third-party professional fees) relating to the creation,
establishment, qualification, ongoing maintenance, reorganization, dissolution, winding-up or
termination of a feeder fund or any other entity through, or in which, the feeder fund or Master Fund
(or any SPV Master Fund) invests, (e) operational expenses (including taxes) and (f) any expenses
related to a particular expense item listed above. The following is a more detailed description of
these Fund Expenses:

   •   Expenses relating to the research, due diligence and monitoring of actual and prospective
       trades and investments (whether or not consummated) and the clearance, settlement and
       consummation of trades and investments, including, without limitation, the following:

       o investment sourcing fees;
       o fees and expenses related to research and market data (including, without limitation,
         information technology hardware, software or other technology used in obtaining or
         utilizing such research and market data, investment and industry research related
         expenses including subscription fees and expenses (e.g., Bloomberg and other data and
         research services), industry news, journals and other publications), which compensation
         may be performance-based;
       o expenses related to obtaining, processing and analyzing “big data” or “alternative data”;
       o costs related to security and custody of digital assets (including third-party wallet
         providers) and fees and expenses relating to technology hardware, software or other
         technology to acquire digital assets;
       o due diligence expenses, including, without limitation, consulting and appraisal fees;
       o investment and research-related travel expenses;
       o brokerage, prime brokerage and futures commission merchant fees, commissions and
         expenses (as explained further in Item 12);
       o expenses relating to reorganizations, restructurings and workouts;
       o expenses relating to short sales and securities borrowing;

    o   clearing and settlement charges, including exchange fees and ticket charges;
    o   custodial fees and expenses;
    o   bank service fees;
    o   interest expenses and fees related to financings or refinancings;
    o   expenses relating to investment-related litigation;
...

ITEM 7         TYPES OF CLIENTS

Paloma Management provides discretionary portfolio management services to the Paloma Fund. The
Paloma Fund and/or shares or interests in the Paloma Fund are not registered under the U.S.
Securities Act of 1933, as amended, and the Paloma Fund is excepted from the definition of an
“investment company” under Section 3(c)(7) of the Investment Company Act of 1940, as amended.
Accordingly, shares or interests in the Paloma Fund are offered exclusively to investors satisfying the
applicable eligibility and suitability requirements either in private placement transactions within the
United States or in offshore transactions. Investors in the Paloma Fund are also Qualified Eligible
Persons as defined in the Commodity Exchange Act.

Paloma Management may (but currently does not) provide investment advice to other clients,
including other private funds or separately managed accounts.

The minimum initial investment in the Paloma Fund is generally $5,000,000 for Classes A, B, C and D
and $300,000,000 for Class E, which may be waived at the discretion of Paloma Management for the
onshore feeder fund or the Board of Directors for the offshore feeder funds, as applicable.