Solas Capital Management LLC

Item 5      Fees and Compensation

The fees and expenses associated with an investment in the Funds or Pool vary, depending on the Client,
and are described in detail in the Client’s Offering Documents or investment advisory agreement, as
applicable. We may, in our discretion, manage assets for other Clients or accounts with higher or lower
fees, different fee structures, and different expense payment arrangements, than the Funds or Pool,
subject to some restrictions.

The fees we charge for managing pooled investment vehicles are negotiable and are described in the
Client’s investment advisory agreement with us. We have some restriction in offering a more favorable
fee structure to any other Client than that of the Pool.

The Funds

Solas generally charges a 1.5% annual management fee and earns a 20% performance allocation.

Each Fund generally pays the Adviser a management fee calculated and payable quarterly in advance, at
an annual rate of 1.5% (i.e., 0.375% per quarter) of the Fund’s net asset value. The management fee is
paid promptly after the first day of each calendar quarter based on the value of the net assets of the Fund
as of the first day of such quarter. If additional contributions are made to the Fund during the quarter, the
fee will be prorated and charged to the capital account of each such investor at the time of such
contribution. In the event that Solas only advises a Fund for a portion of any quarter, the management
fee for any such quarter shall be prorated.

The General Partner is generally entitled to an incentive allocation equal to 20% of the annual net capital
appreciation of each investor’s capital account in a Fund. The incentive allocation to the General Partner
is typically made at the end of the calendar year after deduction of the management fee and subject to a
high-water mark provision. If an investor withdraws (in whole or in part) at any time other than at the end
of a fiscal year, a performance allocation will be taken, if earned, with respect to such withdrawal. The
specific terms governing the structure and calculation of the incentive allocation and high-water mark are
described in detail in the Offering Documents.

Solas has waived, reduced, or modified the management fees and performance allocation for certain
investors and, in its sole discretion, may waive, reduce, or modify the management fees and performance
allocation in the future for investors that are members, principals, employees or affiliates of Solas or

relatives of such persons and for certain large or strategic investors. In certain cases, Solas may be required
to obtain consent from its seed partner (the “Strategic Investor”) to waive, reduce or modify such fees.
Among other rights, the Strategic Investor receives preferential fee terms compared to those described
above and offered to other current and potential investors in the Fund. Please refer to Items 10 and 14
for more detail about the Strategic Investor.

The Portfolio Manager has the majority of his liquid net worth invested in the Funds. The Portfolio
Manager may withdraw all or any part of his investment in the Funds monthly. Notwithstanding the
foregoing, the General Partner will not make a withdrawal if the withdrawal would reduce its overall
investment in the Funds below the lesser of $100,000 or 1% of the total net assets of Solas Capital
Partners, LP or below the lesser of $10,000 or 1% of the total net assets of Solas Capital Partners II, LP.
The Adviser’s personnel are not charged a management fee or performance-based fee by the Fund.

Each Fund is responsible for all direct expenses related to its operations and activities, including all
expenses associated with its investment portfolio such as brokerage commissions and other transaction
costs, if any. Item 12 of this brochure discusses how we select brokers and determine the reasonableness
of their compensation. Each Fund pays its expenses directly or reimburses the Adviser as instructed for
expenses paid on its behalf.

The Adviser is responsible for and pays for all office overhead expenses of the Funds. Office overhead
expenses include overhead expenses of an ordinarily recurring nature such as rent, supplies, secretarial
expenses, stationery, charges for furniture and fixtures, employee insurance, payroll taxes, compensation
of employees and research expenses and other reasonable overhead expenses of the Funds as
determined by Solas in its sole discretion. Operating expenses of a Fund will be borne by the Fund
including, among others, legal, auditing, accounting (including out-sourced accounting) and other
professional expenses, administration expenses, investment expenses such as commissions, interest on
margin accounts and other indebtedness, custodial fees and other expenses related to the purchase, sale
or transmittal of the Fund assets. Fund investors should refer to the applicable Offering Documents for
additional disclosures addressing Fund expenses.

Pool

Solas is bound by confidentiality provisions in a written investment advisory agreement we have with the
Pool. Our compensation for services provided to the Pool is negotiable and generally includes a
management fee based on a percentage of the assets in the account and a performance-based fee paid
at the end of each performance period or December 31. For services rendered to the Pool, we are entitled
to management fees, payable quarterly in advance, at a fixed rate of the modified net asset value as of
the last trading day of each quarter as determined in the investment advisory agreement. The specific
manner in which fees are charged for additional intra-quarter funding by the Client or intra-quarter
withdrawal by the Client is established in our written investment advisory agreement with the Client. The
performance-based fee is equal to a percentage of the appreciation of the modified net asset value in
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Item 7      Types of Clients

 Solas provides investment advisory services to private investment funds, based on the investment
 objectives and strategies described in the applicable Fund’s Offering Documents. In addition, the Adviser
 provides investment advisory services to a pooled investment vehicle managed by a third party in
 accordance with similar investment objectives, strategies and restrictions.
 Investors in a Fund are required to complete and submit a subscription agreement binding them to the
 terms of the applicable Offering Documents. The Funds may admit both sophisticated U.S. taxable and
 non-U.S. investors as well as U.S. tax-exempt investors that are generally both “accredited investors,” as
 defined in Rule 501(a) of Regulation D under the Securities Act of 1933, and “qualified clients” (or
 “knowledgeable employees”), as defined in the Advisers Act and the Investment Company Act and the
 rules thereunder. Typically, the minimum initial investment in a Fund is $500,000. Solas may waive this
 minimum in its discretion.
 For Clients other than the Funds, we generally impose a $25,000,000 minimum dollar value of assets in
 order to open or maintain an account. The minimum requirement may be waived at our discretion. Clients
 generally are expected to be “accredited investors” and “qualified purchasers” as those terms are defined
 in Rule 501 under the Securities Act of 1933 and Section 2(a)(51) of the Investment Company Act,
 respectively. Clients (other than the Funds) are required to sign an investment advisory agreement that
 sets forth the terms under which we will provide our services.