Prana Capital Management LP

ITEM 5 – FEES AND COMPENSATION
Management Fee and Performance Allocation

Management Fee

Prana is compensated by certain Fund Investors in the form of a quarterly management fee (the
“Management Fee”) payable in advance as of the beginning of each quarter. The Management Fee is
calculated based on the balance in each Partnership Investor’s capital account and equals 1.5% or 1.9%
annualized depending on the series the Investor subscribes to. The Management Fee is prorated for partial
quarters.

Performance Fee

Prana generally receives a performance fee from Fund Investors (the “Performance Fee”) equal to a
percentage of the net income (including realized and unrealized gains and losses) allocated to each Fund
Investor for the year, but only to the extent net income allocated to that Investor exceeds any cumulative
losses that were allocated to such Fund Investor for earlier periods and that have not been recovered (a
“high water mark”). This incentive allocation is generally 20% and is typically made at the end of each
calendar year, or at such time a Fund Investor requests a withdrawal/redemption.

In connection with the advisory services provided to the Sub-Advisory Funds, Prana will receive
compensation that is negotiated with each Sub-Advisory Fund adviser on an account-by-account basis.

Fees and other compensation are negotiable in certain circumstances and arrangements with any particular
Investor or Client may vary.

Management fees, incentive performance fees, and third-party fees (discussed below) are deducted from
Fund assets. For Fund Investors, management fees, which are paid in advance, are withdrawn at the
beginning of the quarter. In the event of a withdrawal, distribution, transfer or termination during a quarter,
the Management Fee would be refunded or adjusted on a prorated basis, as appropriate. Incentive
allocations are allocated as of the last business day of the calendar year and as of any date on which an
Investor makes a withdrawal or receives a distribution from such Fund Investor’s capital account(s).

In connection with the investment management services Prana provides, it will bear all of its own normal
and recurring operating expenses and overhead costs, except that research and research-related expenses
may be paid for through the permitted use of “soft dollars” (as described in Item 12 - Brokerage Practices).
The Management Fee may exceed the expenses borne by Prana on behalf of certain of the Clients.

Expenses & Other Fees

In addition to fees payable to Prana, the Clients (and therefore Investors) may pay a variety of expenses
related to each Client’s investments and operations, including, without limitation, (i) management fees; (ii)
all general investment expenses (i.e., expenses which Prana reasonably determines to be directly related to
the investment of the Client’s assets); (iii) all administrative, legal, accounting, auditing, recordkeeping,
and tax form preparation expenses; (iv) fees, costs, and expenses of third-party service providers that
provide such services; and (v) any extraordinary expenses, among other expenses.

In addition to the operating expenses discussed above, the Partnership and Offshore Feeder will also bear
its own organizational expenses. The organizational and initial offering expenses of the Partnership and
Offshore Feeder will either be expensed as incurred or, where permitted by applicable rules, amortized over
a period not to exceed 60 months beginning at the commencement of the respective entity’s operations.

A portion of each Clients’ expenses may be shared with other investment entities or accounts managed by
Prana, the General Partner or their affiliates on an equitable basis.

The expenses to be paid by the Clients (and therefore Investors) are set forth in detail in the applicable
offering documents. Thus, although the foregoing is a brief summary of the types of expenses the Clients
(and therefore Investors) will generally bear, it is not an exhaustive or complete list. Investors and
prospective investors should therefore review the applicable offering documents carefully because such
documents, and not this brochure summary, describe the exact expenses the Clients (and therefore
Investors) will bear.

Neither Prana nor its supervised persons accept compensation, including sales charges or service fees, from
any person for the sale of securities or other investment products, including interests in the Clients.

Please refer to Item 12 of this Brochure for a description of Prana’s brokerage practices.

ITEM 7 – TYPES OF CLIENTS
As previously described in Item 4, Prana provides investment advice and management to the Funds and
Sub-Advisory Funds and may in the future provide the same or similar services to other privately placed
investment funds and/or separately managed accounts. With respect to the Funds, Prana intends to offer
Interests only through non-public transactions in order to maintain the Funds’ exclusion from “investment
company” status under the Investment Company Act of 1940, as amended (the “Investment Company
Act”).

Prospective Investors must meet eligibility criteria, and are subject to certain withdrawal requirements and
limitations. Prospective Investors are encouraged to thoroughly review the applicable Governing
Documents, which set forth all of the terms in detail. Though the Clients generally pursue the same strategy,
offering terms may differ.

The minimum investment in the Fund is $5,000,000, which may be reduced by the General Partner and the
Offshore Feeder’s Board of Directors, each in their respective sole discretion.

Interests in the Clients may only be purchased by investors that are “accredited investors,” as defined in
Regulation D under the Securities Act and “qualified purchasers” or “knowledgeable employees,” each as
defined in the Investment Company Act.