Silverback Asset Management LLC

Item 5 – Fees and Compensation

As the investment manager for the Funds, the Adviser receives a monthly management fee ranging
from 0.75% to 1.75% per annum based on the net assets of the Funds as of the last day of the prior

month, before deduction of any performance-based compensation (as described below). The
management fee is payable by the last day of the month in which such fee is due.

The Adviser is also entitled to performance-based compensation from the Funds in amounts ranging
from 10% to 17.5% of the net profits (including realized and unrealized gains), if any, subject to a
loss carry forward provision and, in certain limited circumstances, a clawback provision. The
performance-based compensation is generally paid on an annual basis.

Management fees are prorated for partial periods based on the portion (i.e., number of days) of the
relevant period during which the Adviser provided its services. Performance-based compensation is
charged to all investors generally at the end of the fiscal year or upon redemption, subject to
adjustment (if any) following completion of the annual audit of the Funds’ financial statements.

The Adviser may waive or reduce the management fee and/or performance-based compensation for
investors that are members, directors, principals, employees or affiliates of the Adviser, relatives of
such persons and for certain large, strategic or initial investors.

In addition to the management fees and performance-based compensation, the Funds, a master-
feeder structure in which the feeder funds bear a pro rata share of the expenses associated with the
related master fund, are also subject to other investment expenses such as custodial charges,
brokerage fees, commissions and related costs; research services; interest expenses; taxes, duties
and other governmental charges; legal and organizational expenses; fund administration and
accounting costs; audit and tax preparation expenses; transfer and registration fees or similar
expenses; costs associated with foreign exchange transactions; other portfolio expenses; and costs,
expenses and fees associated with products or services that may be necessary or incidental to the
operation of the Funds.

The allocation of expenses by the Adviser between it and any client and among clients represents a
conflict of interest for the Adviser. The Adviser allocates expenses to each of its clients in accordance
with its arrangements with that client (including applicable client disclosures). The Adviser seeks to
allocate shared expenses for products and services benefitting the Adviser and a particular client and
not covered in the client’s arrangements in a fair and reasonable manner. The Adviser may use a
variety of methods to allocate common client expenses among multiple clients, including methods
based on assets under management, relative use of a product or service, the nature or source of a
product or service, the relative benefits derived by a client from a product or service, or other
relevant factors. Because the Adviser’s expense allocations often depend on inherently subjective
determinations, it is possible that the portion of a common expense that the Adviser allocates to a
client for a particular product or service may not reflect the relative benefit derived by that client
from that product or service in any particular instance.

The Adviser receives monthly management fees from the Accounts in amounts ranging from 0.75%
to 1.750% per annum based on the net assets of the relevant Account and is also entitled to
performance-based compensation, both at rates which are privately negotiated in the applicable
advisory agreements.

Please refer to Item 12 of this Brochure for a discussion of the Adviser’s brokerage practices.

Item 7 – Types of Clients

The Adviser currently provides investment advice and portfolio management services to private
investment funds and separately managed accounts set up for investment by private funds, pension
plans, corporations and other business entities.

For the Adviser’s private investment fund clients, any initial and additional subscription minimums
are disclosed in the offering memorandum for each private fund.

Additionally, the Adviser provides investment advisory services to separately managed accounts,
provided such managed accounts meet certain size and other appropriate criteria as determined by
the Adviser in its sole discretion on a case by case basis.