Saluda Grade Asset Management LLC

ITEM 5              FEES AND COMPENSATION

Below is a summary of the fees and expenses charged by Saluda. Please refer to the relevant Offering
Documents for a complete description of the fees charged by each Fund.

Saluda Grade typically receives a management fee and carried interest in connection with the provision of
advisory services to the Funds. As discussed in more detail below, Saluda Grade is permitted to receive
additional compensation in connection with management and other services performed for Portfolio
Companies and such additional compensation generally will offset subsequent management fees otherwise
payable to Saluda Grade by the Funds to the extent provided by, and subject to certain exceptions in, the
Governing Documents. Investors in a Fund also bear certain expenses.

The Funds that primarily invest in Portfolio Funds typically pay management fees and carried interest to
the managers of such funds, as well as Saluda Grade. Additionally, certain Funds invest in special purpose
vehicles managed by third parties that charge management fees and/or carried interest. As a result,
Investors in these vehicles will generally incur two layers of fees and carried interest.

The actual fees and expenses applicable to each Fund are set forth in detail in such Fund’s Governing
Documents. Investors will receive copies of the Governing Documents (with the exception of subscription
agreements, side letters, and other documents that only pertain to specific Investors) before investing in
any Fund and have an opportunity to negotiate certain terms under certain circumstances. Investors
should refer to the Governing Documents of the applicable Fund for a complete understanding of how
Saluda Grade is compensated for its advisory services. The information contained herein is a summary
only and is qualified in its entirety by the Governing Documents.

Management Fees

As compensation for investment supervisory services rendered to the Funds, each Fund (other than co-
investment vehicles) generally pays Saluda Grade a management fee calculated in accordance with such
Fund’s Governing Documents. For certain funds, management fees are generally reduced during the life
of a Fund, as applicable. The management fees and other fees and distributions described herein are
generally subject to modification, waiver, or reduction by Saluda Grade in its sole discretion, both
voluntarily and on a negotiated basis with certain Investors, which are generally not disclosed to other
Investors in the same Fund. Fees differ from one Fund to another, as well as among Investors in the same
Fund.

The management fees paid by the Funds will generally be reduced by certain fees and expenses, such as
(i) transactional fees, monitoring fees, directors’ fees, financial consulting fees and other similar fees
received by Saluda Grade personnel from a Portfolio Company or Portfolio Fund (less any reimbursement

amounts), (ii) private placement or finders’ fees paid to placement agents, finders or other third parties
performing similar services in connection with a Fund’s formation, offering and/or capitalization (excluding
any out-of-pocket fees and expenses for services required under applicable non-U.S. law or regulation in
connection with the issuance or sale of interests in the corresponding non-U.S. jurisdiction), (iii) breakup
fees and litigation proceeds received from transactions not consummated by the Fund in connection with
a proposed investment (less any reimbursement amounts), and (iv) organizational expenses in excess of
any applicable cap, in each case in accordance with the Funds’ Governing Documents. Management fees
will generally not be reduced by expense reimbursements, compensation received for services provided
in connection with a Portfolio Company’s business, compensation for services provided as an employee
or in a similar capacity, directors’ fees from a public company that don’t exceed amounts paid to other
directors, amounts received as publicly traded securities, breakup fees, or other amounts otherwise
approved by a Fund’s advisory board as not constituting transaction fees. The amount and manner of any
such management fee reductions are set forth in each Fund’s Governing Documents.

Certain Investors that are employees, former employees, business associates and other “friends and
family” of Saluda Grade, its affiliates or their personnel (including any related entity established by any of
the foregoing, such as trusts, charitable programs, endowments or related programs, family investment
vehicles and other estate planning vehicles) will not typically pay management fees or carried interest in
connection with their investment in a Fund. Furthermore, Saluda Grade has established certain investment
vehicles through which such Investors or other third parties may invest alongside Funds, which generally
do not pay management fees or carried interest.

Management fees billed to and received from the Funds are generally payable quarterly in advance on the
first day of each fiscal quarter. If a Fund were to terminate prior to the end of a quarter, management fees
paid in respect of such quarter would be returned on a pro rata basis.

Carried Interest

The General Partner of each Fund will generally receive a performance-based fee in the form of incentive
fee, incentive allocation or carried interest from such Fund’s Investors. The precise amount, the manner
of calculation, and the timing of payment of such carried interest is detailed in each Fund’s Governing
Documents. The carried interest varies across the Funds, as more fully described in the Governing
Documents. The General Partner of a Fund will, from time to time, waive or reduce carried interest for
certain vehicles or Investors in certain Funds, as permitted by the applicable Governing Documents.

Other Fees and Expenses

Each Fund bears all costs and expenses related to its operations and portfolio investments or
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ITEM 7               TYPES OF CLIENTS

Saluda Grade provides discretionary investment advisory services to private investment funds (the
“Funds”), each of which operates as a pooled investment vehicle exempt from registration under the
Investment Company Act. Saluda Grade generally does not provide individualized investment advice
directly to the underlying investors in the Funds. Investors in the Funds typically include high-net-worth
individuals, banks, insurance companies, fund-of-funds, pension and profit-sharing plans, corporations,
limited partnerships, limited liability companies, and other institutional or sophisticated entities.

In addition to advising the Funds, Saluda Grade also provides discretionary investment management
services to certain separately managed account (“SMA”) clients and to fund-of-one vehicles formed for
the benefit of a single investor. These SMA clients and fund-of-one vehicles receive advisory services that
are tailored to their individual investment objectives, guidelines, and restrictions, as documented in their
respective investment management agreements or governing documents. Except with respect to such
SMA clients or fund-of-one vehicles, Saluda Grade does not tailor its advisory services to the individual
needs of investors in the Funds.

Investment in the Funds is limited to persons who meet the eligibility requirements described in the
applicable Fund’s Governing Documents. Depending on the Fund, an investor generally must qualify as an
“accredited investor” under Regulation D of the Securities Act, and as a “qualified purchaser” or
“knowledgeable employee” under the Investment Company Act, and, if applicable, as a “qualified client”
under the Advisers Act. SMA clients and investors in fund-of-one vehicles must also satisfy any eligibility,
financial qualification, and minimum account requirements applicable to those arrangements.