Piper Heartland Healthcare Capital LLC

Item 5 – Fees and Compensation

All investors and prospective investors of PHHC investment vehicles should review the Governing
Documents in conjunction with this Brochure for complete information on the fees and
compensation payable in connection with any investments. Investors and prospective investors
should note that similar advisory services may (or may not) be available from other investment
advisers for similar or lower fees.

A Management Fee: During the period from any investment vehicles initial closing until the
expiration or termination of the Commitment Period, 2% of a Limited Partner’s Capital
Commitment, and thereafter 2% of such Limited Partner’s invested capital less disposed of
investments and investments written off as worthless.
A Limited Partner’s “Actively Invested Capital” will be equal to the aggregate outstanding amount
with respect to such Limited Partner that is invested, valued at cost, in Portfolio Investments,
Bridge Financings and Temporary Investments, reduced by the amount of any write-offs.
Subject to tax distributions, distributions will initially be apportioned among the partners in
proportion to their respective capital contributions. The amount so apportioned to the General
Partner will be distributed to the General Partner, and the amount so apportioned to each Limited
Partner will be distributed to each such Limited Partner and the General Partner as follows:
First, 100 percent to such Limited Partner until it has received distributions equal to its capital
contribution;
Second, 100 percent to such Limited Partner in an amount equal to a return of 10 percent on its
unreturned capital contribution (the “Preferred Return”);
Third, 100 percent to the General Partner, until the General Partner has received in respect of such
Limited Partner an amount equal to 20 percent of the total amounts distributed pursuant to
paragraph Second and this paragraph Third, respectively; and
Fourth, 80 percent to the Limited Partners in proportion to their capital contributions and 20
percent to the General Partner (distributions to the General Partner pursuant to paragraph Third and
this paragraph Fourth, the “Carried Interest Distributions”).
Management Fees payable by investors may, in certain circumstances, be negotiated. Some
investors may pay higher or lower management fees with respect to their investment, depending on
various considerations, including but not limited to:
   •   The size of the investor’s capital commitment;
   •   The amount of time the investor has invested in one or more strategies offered by PHHC;
   •   The total amount of the investor’s assets under management with PHHC.

 Piper Heartland Healthcare Capital LLC                                                                7
 Form ADV Part 2A – Disclosure Brochure

Deduction of Fees; Timing of Payments; Termination
As a general matter, PHHC will charge and deduct advisory fees directly from the investment vehicle
pursuant to the terms of the Governing Documents. Such advisory fees will take the form of, and be
limited to, the management fee described above.

Payments of advisory fees are generally made quarterly in advance and in accordance with the terms
of the Governing Documents. Please refer to the Governing Documents for complete information
on the timing of advisory fee payments.

Upon termination of an investment management agreement with respect to any investment vehicle,
prepaid, unearned fees will be promptly refunded (determined on a pro rata basis based on the
number of days elapsed in the applicable payment period), and any earned, unpaid fees will be due
and payable by the investment vehicle.

Other Fees and Expenses
In addition to the fees payable to PHHC and its affiliated entities, each investment vehicle (and
therefore, indirectly, the investors in each such Investment vehicle) may incur certain charges
imposed by third parties and other expenses as set forth in the Governing Documents attributable
to such investment vehicle. Such expenses may include (but are not limited to): legal, auditing,
accounting and custodian fees and expenses; expenses associated with the applicable investment
vehicle’s financial statements, tax returns and Schedules K-1; expenses related to annual meetings
of the investment vehicle’s investors (if any); expenses of the investment vehicle’s advisory
committee attributable to the Investment vehicle; consulting; insurance; other expenses associated
with the sourcing, holding and disposition of Investment vehicle investments, including the costs
of unconsummated investments and extraordinary expenses (such as litigation, if any); any taxes,
fees or other governmental charges levied against the Investment vehicle and travel (to the extent
related to the investigation of identified companies in connection with investment or potential
investment transactions or monitoring of portfolio companies (to the extent not reimbursed)) and
other similar fees and expenses.

The types of such other fees and expenses incurred may vary by investment vehicle. All investors
and prospective investors should review the Governing Documents of the applicable investment
vehicle in conjunction with this Brochure for complete information on the charges and expenses
payable with respect to a particular investment vehicle.

Item 12 of this Brochure describes the factors PHHC considers in selecting or recommending
broker- dealers on behalf of the investment vehicles and determining the reasonableness of their
compensation.

 Piper Heartland Healthcare Capital LLC                                                             8
 Form ADV Part 2A – Disclosure Brochure

Item 7 – Types of Clients

PHHC provides Heartland Healthcare Crossover Strategy-related investment advice solely to the
investment vehicles, which are pooled investment vehicles generally offered to accredited investors
and/or qualified purchasers pursuant to Section 3(c)(1) or 3(c)(7) of the Company Act. As a result,
the investment vehicles are not required to register as investment companies under the Company Act
in reliance upon the exemptions available to the investment vehicles pursuant to Section 3(c)(1) or
3(c)(7) of the Company Act. Investors in an investment vehicle may include high net worth
individuals, corporations, investment vehicle of investment vehicles, financial institutions, endowments,
foundations, trusts, estates and public and private pension and profit-sharing plans.

PHHC and/or its affiliates may establish certain alternative investment vehicles, parallel investment
vehicles and/or special purpose vehicles (collectively, “AIVs”) for the purpose of addressing tax,
regulatory and/or structural issues and/or facilitating certain investments by one or more Investment
vehicles and/or investors. Prospective investors should refer to the Governing Documents of the
applicable investment vehicle for complete details on any AIV that may be established by such
investment vehicle and its ability to make investments through AIVs.

In general, the minimum investment commitment required of an investor to participate in the Piper
Heartland Healthcare Strategy is $10 million, subject to reduction at the sole discretion of the General
Partner.

Investors are requested to refer to the Governing Documents of each investment vehicle for
complete information on minimum investment requirements for participation in a particular
investment vehicle.

 Piper Heartland Healthcare Capital LLC                                                                    9
 Form ADV Part 2A – Disclosure Brochure