Steamboat Capital Partners LLC

Fees and Compensation

         We will receive a quarterly management fee calculated at an annual rate of 1.50% (0.375% per
quarter) of each investor’s investments in the Funds (the “Management Fee”). The Management Fee will
be calculated and paid quarterly in advance, as of the beginning of the calendar quarter. We or an affiliated
entity serving as general partner of a Fund, may elect to reduce, otherwise modify, or waive the
Management Fee with respect to any investor and have done so in certain cases. If investments are made
at any time other than at the beginning of a calendar quarter, a pro rata portion of the Management Fee
will be paid in respect of such investment (based on the actual number of days remaining in such partial
quarter). If a withdrawal is made at any time other than at the end of a calendar quarter, a pro rata portion
of the Management Fee (based on the actual number of days remaining in such partial quarter) will be
refunded to the investor for such partial quarter.
         An affiliate of ours (Steamboat Capital Partners GP, LLC, which we refer to as the “General Partner”),
which serves as the general partner of Steamboat Capital Partners Fund, LP, the 3(c)(1) Fund, and the Master
Fund, receives an allocation, generally on an annual basis as of the end of each fiscal year, equal to 17.50%,
above a “hard” 5% non-compounding hurdle rate, of the net income allocated to each investor in the Funds
(the “Incentive Allocation”). An Incentive Allocation is also made as to amounts withdrawn, as of the
effective time of the withdrawal or upon termination of the Fund.

        Incentive Allocations are subject to a “high water mark” provision. That is, the General Partner
will be eligible to receive an Incentive Allocation only to the extent net income allocated to an investor

exceeds any net losses allocated to it that have not been recovered (subject to adjustment for partial
withdrawals). The “high water mark” provision prevents our affiliate from receiving an Incentive
Allocation on net income that simply restores previous net losses. We have reduced, modified or waived
the Incentive Allocation with respect to certain investors.

        Management and performance fees for the separately managed accounts have been individually
negotiated and certain investors in Funds have also negotiated fees.
         Each Fund bears its own expenses (and the Feeder Funds bear a proportionate share of the
expenses of the Master Fund), including, but not limited to, investment related expenses such as the
Fund’s brokerage commissions, research expenses and interest on margin accounts and other
indebtedness, custodial fees, bank service fees, withholding and transfer fees, fund registration expenses
and taxes, systems and technology expenses, corporate licensing fees, legal and auditing expenses,
accounting and fund administration, outsourced risk management advisory and software, investment
related consultants and travel costs that are research related, expenses incurred with respect to the
preparation, duplication and distribution to investors and prospective investors of Fund offering
documents, annual reports and other financial information, advisory committee expenses, insurance
(including directors and officers liability), indemnification and litigation expenses, and any other services
or service provider expenses deemed necessary by the General Partner or us on behalf of the Fund.
Expenses generally will be shared by all of the investors of the Fund, pro rata in accordance with their
investments.
         Expenses borne by the managed accounts are individually negotiated but in all cases include
brokerage commissions, interest on margin accounts and other indebtedness, custodial fees and bank
service fees.
        Brokerage expenses are discussed further under the section of this brochure entitled “Brokerage
Practices”.
        We do not deduct fees from the SMA, the owners of which (or their agents) normally calculate
fees and remit them to us, though we will bill them if requested; in one case, we calculate the fees, though
the owner’s other service providers do so as well. Management fees are paid quarterly and incentive fees
are generally paid annually.
         With respect to the Other IA Client, we are entitled to a portion of the realized net profits made
by them from each idea we suggest and they accept, once such idea has been fully exited. These fees will
only be paid to the extent that the Other IA Client has achieved a cumulative realized profit (less unrealized
losses) on all ideas suggested by us and accepted by them.
        Performance-Based Fees and Side-by-Side Management

        The Incentive Allocation (and performance-based fees paid by the SMA) create an incentive for
us to make investments that are riskier or more speculative than would be the case in the absence of such
performance-based fees. In addition, such fees provide an incentive to make different decisions regarding
the timing and manner of the realization of such investments than would be the case in the absence of
such performance-based fees. To the extent that performance-based fees for some accounts are lower
than performance-based fees for other accounts, we have an incentive to allocate investments we believe
to be profitable to those accounts which are subject to higher performance-based fees.
         From time to time the investment manager may cause clients to engage in non-agency cross
trades (i.e. to trade with each other). While such trades haven’t been and aren’t expected to be
significant, to the extent they occur they pose a conflict as clients have adverse interests in such a

situation. If one client pays a greater performance fee than the other, we have an incentive to benefit the
client paying the higher fee at the expense of the client paying the lower fee. In order to mitigate this
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Types of Clients

        We provide investment advisory services to pooled investment vehicles including the Funds. We
are currently accepting new clients though we reserve the right to cease to do so in the future and the
Funds remain open to investment on the terms and subject to the conditions outlined in the offering
memoranda of the Funds. We also provide investment advisory services to the Other IA Client which is
another investment adviser.
        Methods of Analysis, Investment Strategies and Risk of Loss

Methods of Analysis and Investment Strategies.
         Our primary investment methodology is a value-oriented investment program using fundamental
research to identify and exploit temporary mispricing of listed equity and debt securities. We believe that
capital markets can be significantly mispriced at times in certain circumstances, but are generally efficient
in the long term. We look to exploit the temporary mispricing that occurs due to technical, institutional,
information, liquidity or other factors.

         We seek to invest in “intrinsic value” securities priced at a material discount to their
conservatively appraised business value (and short securities price materially above their appraised
value). We will also target “event-driven” situations involving certain corporate events (such as an
acquisition, liquidation, reorganization, litigation, spin-off or other situation).

       In the absence of attractive investment opportunities described above our strategy may hold a
substantial proportion of cash or cash equivalents.

         We believe that a flexible mandate is an essential part of a successful investment program and,
therefore, there will be no limitation on the market capitalizations, industries or sectors or countries of
organization or domicile of portfolio companies. Additionally, while we expect to invest a majority of
assets in equity and debt securities that are publicly traded in developed markets, we may also invest and
trade in any other securities, derivatives or investments, but we will not invest more than 50% of assets
in corporate debt securities.

       Net market exposure may vary significantly depending on our assessment of shifting economic
and market conditions as well as particular long and short investing opportunities.

        Investment Process

       We source potential investment opportunities from both ad-hoc and systematic methods. Ad-
hoc methods include relationships with select market participants, conversations with management
teams and other industry members and reading of various financial publications and other materials.

Systematic approaches include regular screens for corporate activities including insider transactions, new
high and low lists and corporate transactions, along with other algorithmic screening techniques.

        The evaluation process involves a detailed assessment of corporate financial statements and
accounting practices, the business model, industry conditions, management capability and other factors.
In addition, we may also have discussions with suppliers, competitors, customers and other primary
sources as part of the research process, where necessary.

        The execution phase of the investment process involves our determining the capital commitment
for each investment (with consideration given primarily to risk of loss but also to liquidity and other
parameters) and regularly assessing the evolution of the investment.

       Concentration. We believe while diversification may reduce investment risk, it may also dilute
investment return and accordingly we may have a relatively concentrated investment portfolio.

        Short Selling. Short selling will be employed where we believe the security sold short is materially
overvalued relative to its intrinsic value and likely to decline in price, and may also be employed in hedging
situations, where the position is intended to wholly or partially offset another position in a related
security.

        Hedging. Where we believe that it is both prudent and cost-effective to do so, we may seek to
hedge certain market and macroeconomic risks on a portfolio-wide basis and/or risks related to certain
individual positions. However, some or all market and other risks will be unhedged.

         Leverage. We may utilize leverage (i.e. hold positions which on a net or gross basis exceed the
capital in or allocated to an account) through traditional margin or loan arrangements, or through
derivatives or other synthetic methods. Leverage may also be employed “synthetically,” through
derivative instruments such as (without limitation) options, swaps and forwards. There is no fixed
limitation on the Funds’ use or extent of leverage (though we may impose internal guidelines from time
to time), other than applicable regulatory requirements and except to the extent provided in the relevant
investment management agreements the SMA are similarly subject to no fixed limits. The use of leverage
can increase both the proportionate amount of potential gain, as well as of potential loss. If, however,
the value of the portfolio declines, the securities (or cash) serving as collateral for such margin position
may be liquidated, resulting in a loss proportionately greater than would be the case absent such use of
leverage.

        Holding Periods. In view of our investment strategy, the typical holding periods for positions may
vary substantially, with holding periods for core “intrinsic value” positions ranging from months to
possibly years and “event-driven” positions being held for as little as days. The primary focus will be the
potential returns and relative risks of the investment and not on the holding period, which may introduce
increased trading and transaction costs and tax inefficiencies.

         Restricted Securities. We may invest in so-called “restricted securities” (securities as to which the
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