Rare Capital Management LLC

Item 5 - Fees and Compensation

The extent to and specific manner in which our clients are responsible for fees,
performance-based compensation and/or expenses are set forth in each client’s applicable
written agreement with us (and, in the case of clients that are private investment funds, in
the Fund Documents for such funds).

As of the date hereof, certain of our clients pay management fees, while others do not. In
particular, for the Funds that pay a management fee, certain pay a fixed management fee
payable quarterly in arrears, while the SBIC Fund will pay a management fee (i) during the
first five years of the fund’s term, equal to 2% of the fund’s “Unreduced Regulatory
Capital, plus Assumed SBA Leverage”, and (ii) thereafter, equal to 2% of the aggregate
costs of investments (each as further set forth in its Fund Documents).

In addition, so far only the SBIC Fund intends to charge a performance-based
compensation, but other clients may charge a performance-based compensation in the
future. However, the fees and other compensation charged to our clients may change in the
future.

Unless provided otherwise in the applicable Fund Documents, clients that are private
investment funds generally bear all costs and expenses associated with their organization
and operations, including, without limitation: (i) organizational or formation expenses,
including legal and filing costs, (ii) custodial and administration fees; (iii) accounting fees;
(iv) expenses associated with the preparation of reports; (v) fees and direct expenses of
third-party asset managers with whom the assets of each Fund are invested; (vi) costs and
expenses of any Fund relating to the audit of such Fund, the preparation of Federal, state
and local tax returns of any Fund, and the preparation of Schedule K‐1s (and to the extent
applicable, Schedules K-2 and K-3) and all other accounting services requiring specialized
expertise to the extent permitted by applicable law; (vii) interest, principal and expenses
payable by any Fund on any indebtedness incurred by any Fund; (viii) taxes, fees and
expenses payable by any Fund to Federal, state, local and other governmental agencies;
(ix) investment-related expenses incurred in the actual or proposed acquisition or
disposition of assets, including, without limitation, brokerage fees, clearing fees, due
diligence expenses related to consummated and unconsummated investments (i.e., the
costs of broken deals), including legal fees, accounting costs, travel, lodging and
entertainment costs, transfer taxes and costs related to the registration or qualification for
sale of assets; (x) legal expenses of any Fund; (xi) insurance and premiums protecting any
Fund, the Adviser and any of their officers, directors, managers, owners, and employees;
(xii) reasonable costs and expenses associated with meetings of the investors with the
Adviser and meetings of any advisory board of any Fund, to the extent permitted in the
Fund Documents; (xiii) indemnifiable costs; and (xiv) any other costs incidental to, or
incurred in connection with, each Fund, including extraordinary expenses.

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In addition, the SBIC Fund will be subject to certain additional costs, including, but not
limited to, (i) all amounts payable to the Small Business Administration (the “SBA”) under
the Small Business Investment Act of 1958, as amended, and the rules and regulations
promulgated thereunder from time to time (the “SBIC Act”) (including, without limitation,
SBA examination fees) and (ii) all amounts payable in connection with any SBA leverage
commitment, SBA leverage issuance, and outstanding SBA leverage.

The fees, performance-based compensation and/or expenses that are charged to any
separately managed accounts that we may manage in the future will be negotiated on a
case-by-case basis. Clients other than private investment funds, such as any separately
managed accounts that we may manage in the future, will likely have management fee,
performance-based compensation and/or expense arrangements that differ in one or more
respects from those applicable to the Funds.

Management fees, performance-based compensation and/or expenses may be reduced or
waived in certain circumstances, including, without limitation, with respect to investments
in Funds by our personnel and/or other related persons. Our clients may pay our
management fees in advance. Management fees and performance-based fees or allocations
are generally not refundable, including upon the termination of the advisory contract.

To the extent that we incur any expenses for the benefit of multiple clients, we generally
will allocate such expenses in any manner that we deem equitable, taking into account our
written agreements with such clients (and, if applicable, Fund Documents in the case of
clients that are Funds) and applicable facts and circumstances, including the relative size
of the applicable entity or account, the nature or source of the product or service and the
benefits derived from and the extent of use of the product or services. Nonetheless, the
portion of an expense that we allocate to a client for a particular product or service might
not reflect the relative benefit derived by such client from that product or service in any
particular instance. Furthermore, it is possible that under some of our advisory contracts
we may not require a client to incur certain expenses, despite the fact that such client will
receive a benefit in connection with our incurrence of such expenses. In such an event, our
other clients may bear the additional share of any such expenses that would have been
allocable to the client that is not required to incur such expenses. Our expense allocations
often depend on inherently subjective determinations, but the expense allocations made by
us will be in good faith. There may be situations in which the appropriate allocation of
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Item 7 - Types of Clients

We currently provide investment advice only to clients who are private investment funds.
Investors in such private investment funds generally must qualify as “accredited investors”
(as defined in Rule 501 under the Securities Act of 1933, as amended (the “Securities
Act”)) and “qualified clients” (as defined in Rule 205-3 of the Advisers Act), and may be
subject to other suitability requirements to the extent provided in the applicable Fund
Documents. We may provide investment advice to other types of clients in the future.

The minimum initial investment in the SBIC Fund will be determined by the SBIC General
Partner in its sole discretion. We will determine the minimum investment amount (and any
other conditions for opening and maintaining an account) for other clients, such as any

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separately managed accounts, on a case-by-case basis.