Sapphire Star Capital LLC

Item 5 - Fees and Compensation

Investment Advisory Accounts
In general, we charge an annualized management fee based on the value of the advisory client’s
separately managed account that we manage or advise. We assess management fees quarterly.
Depending on the terms of the management agreement we have entered into with the advisory client,
we typically calculate quarterly management fees based on the value of the advisory client’s accounts
on the last day of a quarter or the first day of the following quarter. Fee amounts and payment provisions
are included in the management agreement that we enter into with our advisory clients.

The amount of our management fee varies from client to client but will not exceed 1% per annum. On
occasion, we charge advisory clients a performance-based management fee. We negotiate the terms of
these performance-based arrangements on a case-by-case basis and include such terms in the
management agreement that we enter into with the applicable advisory clients.

Sub-Advisory Accounts
Sapphire Star Capital receives management fees as compensation for performing sub-advisory services
to other Investment Advisors. Fees for these services are negotiated separately with each adviser.

Private Funds
Sapphire Star Capital receives management fees as compensation for performing advisory services to
Sapphire Star Partners L.P. The management fee is 2% per annum of the net assets of the Limited
Partners. Sapphire Star Capital receives management fees as compensation for performing advisory
services to Sapphire Star Partners Concentrated Stock L.P. The management fee is 1.5% per annum of
the net assets of the Limited Partners. The management fees are payable monthly in advance, based on
the net asset value of each limited partner’s capital account on the first day of each calendar month.
Sapphire Star may, in its sole discretion and without the consent of the other private fund investors,
waive or reduce the management fee for limited partners, including for limited partners that are
principals, employees or affiliates and/or for certain large or other investors it deems to be strategic.

The capital accounts of the private funds were created at the inception of the private fund, based on the
amount committed by the limited partners.

In the case of a termination of our investment management agreement with the private fund prior to
the end of a month, the management fees for such period would be pro-rated to the date of such
termination with any excess payment refunded to the private fund and credited to the limited partners’
capital account.

Potential investors should review the fund’s offering circular for a complete disclosure of fees and
expenses.

Item 7 - Types of Clients

Sapphire Star provides investment advisory services to the following types of clients:

         • Pooled investment vehicles
         • Other investment advisors

Although Sapphire Star Capital provides discretionary management services directly to the private
funds, each investor in the private funds is treated as a Sapphire Star client to whom we owe a
fiduciary duty. Before you make an investment in our private fund, we obtain information from you, to
make a determination as to the suitability of the investment based on certain criteria.

Each private fund investor is required to be an “accredited investor” meeting one of the qualifications
below:

   1. a natural person who has individual net worth, or joint net worth with the person’s spouse, that
      exceeds $1 million at the time of the purchase, excluding the value of the primary residence of
      such person;
   2. a natural person with income exceeding $200,000 in each of the two most recent years or joint
      income with a spouse exceeding $300,000 for those years and a reasonable expectation of the
      same income level in the current year; or
   3. a trust with assets in excess of $5 million, not formed to acquire the securities offered, whose
      purchases a sophisticated person makes.

 In addition, each investor in Sapphire Star Partners L.P. must also meet the definition of “qualified
 client”:

1. Has a net worth (together, in the case of a natural person, with assets held jointly with a
   spouse) of more than $2,100,000. For purposes of calculating a natural person's net worth:

         a.    The person's primary residence must not be included as an asset;
         b.    Indebtedness secured by the person's primary residence, up to the estimated fair
               market value of the primary residence at the time the investment advisory
               contract is entered into may not be included as a liability (except that if the
               amount of such indebtedness outstanding at the time of calculation exceeds the
               amount outstanding 60 days before such time, other than as a result of the
               acquisition of the primary residence, the amount of such excess must be included
               as a liability); and
         c.    Indebtedness that is secured by the person's primary residence in excess of the
               estimated fair market value of the residence must be included as a liability; or

2. A natural person who has assets under management with Sapphire Star in excess of
   $1,000,000.