Sterling Fund Management LLC

Item 5 - Fees and Compensation

Compensation and Fee Schedules

As compensation for investment advisory services rendered to the Main Sterling Funds, Sterling
Partners typically receives an advisory fee from each of the Main Sterling Funds (each, an
“Advisory Fee”), which is generally equal to 2% of (1) commitments during the investment period

of such Fund or (2) the active cost basis of investments thereafter, as set forth in the Governing
Documents of the relevant Main Sterling Fund. Advisory Fees payable by a Main Sterling Fund
generally are reduced by some or all of certain other fees or compensation received by Sterling
Partners or its employees that relate to such Main Sterling Fund’s activities and investments (as
described in more detail in the subsection titled “Economic Benefits Received from Third Parties”
in Item 14), by certain organizational or other expenses borne by such Main Sterling Fund (as
described in more detail below in this Item 5). Advisory Fees paid by a Main Sterling Fund are
indirectly borne by the investors in such Main Sterling Fund.

More specifically, on a date specified in the Governing Documents of a Main Sterling Fund (the
“Stepdown Date”), the Advisory Fee customarily decreases and is thereafter calculated based on
the amount of active cost basis associated with the Main Sterling Fund’s investment(s) in portfolio
companies that are not, among other things, permanently written off for tax purposes (such
investments, “Investments Written Off for Tax Purposes”) or with respect to which the Main
Sterling Fund has disposed of its securities in a portfolio investment (each a “Disposition”).
Because Advisory Fees are calculated based on active cost basis following the Stepdown Date, the
Governing Documents of the Main Sterling Funds do not require any reduction or refund of
Advisory Fees following any dividend, distribution (including those arising from dividend
recapitalizations), reorganization, restructuring, roll-over investment, or similar transactions where
the Fund has not disposed of its securities in the portfolio company, even if the value of the Fund’s
securities has been reduced (including materially reduced) (each a “Recap Distribution”) or any
decrease in value (whether temporary or permanent), in each case except to the extent such events
constitute a Disposition or Investments Written Off for Tax Purposes. As a result, the Advisory
Fees generally will not track changes in the fair value of any individual investment or of a Main
Sterling Fund.

The Governing Documents generally do not provide for the reimbursement or refund of Advisory
Fees in the event of Dispositions or Investments Written Off for tax Purposes occurring mid–
calculation period or if the methodology for calculating Advisory Fees changes during the
calculation period (e.g., because of the occurrence of a stepdown in the Advisory Fee).

Sterling Partners has previously restructured three of its Main Sterling Funds, whereby a new
investment vehicle purchased the limited partner interests of certain investors in the Main Sterling
Fund which chose to sell. Any Advisory Fees associated with a restructured fund are negotiated
with the new investors in the new vehicle and may differ from investors who did not sell and the
restructured fund fees may be higher than fees paid by limited partners who chose to not sell in the
transaction. A restructuring of an investment or portfolio company in a Fund may not however
under specific circumstances reduce the Advisory Fees borne by a Fund.

Sterling Partners generally does not receive an Advisory Fee from the Co-Investment Funds. Any
Advisory Fees received by Sterling Partners from the Co-Investment Funds are negotiated on a
vehicle-by-vehicle basis.

Upon formation of a Single Investment Vehicle, Sterling Partners can receive an Advisory Fee from
such Single Investment Vehicle or receive compensation directly from a portfolio company, which
will be negotiated on an individual basis and will be paid consistent with Governing Documents of
such Single Investment Vehicle.

In addition, a related person of Sterling Partners, as general partner of a Main Sterling Fund, will
typically receive certain allocations calculated and charged based on a share of capital gains on or
capital appreciation of the assets of such Main Sterling Fund, as negotiated and determined at the
time such Main Sterling Fund is established and as set forth in its Governing Documents. These
allocations are commonly known as “carried interest” (“Carried Interest”). The Carried Interest paid
by the Main Sterling Funds is generally equal to 20% of the Main Sterling Fund’s net profits.
Carried Interest in a restructured fund will vary on a vehicle-by-vehicle basis and may include a
tiered Carried Interest waterfall ranging from 10% to 30%, meaning a gradual increase in Carried
Interest paid to Sterling Partners by the restructured fund limited partners based on the net profits
associated with the new limited partners above certain thresholds.

A Co-Investment Fund, in some cases, allocates a share of capital gains on or capital appreciation
of the assets of such Co-Investment Fund to a related person of Sterling Partners, as determined by
negotiation at the time of formation and as set forth in the Governing Documents of such Co-
Investment Fund. To the extent paid, such Carried Interest generally ranges from 10% to 20%.

Any Carried Interest paid by a Single Investment Vehicle will be negotiated on an individual basis
at the time of formation of such Single Investment Vehicle and will be set forth in the Governing
Documents of such Single Investment Vehicle.

Because the Co-Investment Funds and Single Investment Vehicles typically invest in a single
portfolio company, the Carried Interest received by Sterling Partners from such Funds (if any) could
vary significantly from vehicle to vehicle as a result of the particular circumstances and negotiated
...

Types of Clients

Sterling Partners generally provides investment advice to pooled investment vehicles, including
the Funds. Investment advice is provided directly to the Funds (subject to the direction and control
of the general partner of each such Fund, if applicable) and not individually to investors in such
Fund. The limited partners or members of the Funds are generally limited to (1) non-”U.S.
persons”, (2) U.S. investors who are “accredited investors” as defined in Regulation D under the

Securities Act and (3) certain U.S. persons who are “qualified purchasers” or “knowledgeable
employees” as defined in the Investment Company Act and its underlying regulations. These
investors include, among others corporations, financial institutions, funds-of-funds, governmental
bodies or agencies, insurance companies, endowments, foundations, non-profits, trusts, estates,
individuals and pension and profit-sharing plans.

Opportunities to participate in Single Investment Vehicles may similarly be made available to any
person or entity, including, without limitation, those set forth in the paragraph above (which can
include investors in a Fund, Sterling Investors and/or third parties). Opportunities to invest in a
Single Investment Vehicle are determined in on an individual basis in the sole discretion of Sterling
Partners. Investment in one Single Investment Vehicle does not guarantee the right to invest in any
other Single Investment Vehicle offered by Sterling Partners.

Minimum Investment Requirements

Interests in the Funds are offered in private placements pursuant to applicable exemptions from
registration under the Securities Act and the Investment Company Act. As a result, Sterling
Partners generally offers limited partner (or equivalent) interests in the Funds to a limited number
of “accredited investors” as defined in Regulation D under the Securities Act and, in most cases,
exclusively to “qualified purchasers” as defined in Section 2(a)(51) of the Investment Company
Act.

In general, the minimum investment commitment required of an investor to participate in a Main
Sterling Fund is $1,000,000; however, the general partner of each Main Sterling Fund has
discretion to increase or reduce the minimum investment commitment. Because the Co-
Investment Funds and Single Investment Vehicles typically invest in a single specific portfolio
company, the minimum investment commitment required of an investor to participate in a
Co-Investment Fund or a Single Investment Vehicle will vary from vehicle to vehicle. Investors
and prospective investors in each Fund should refer to the Governing Documents of such Fund
for more complete information on minimum investment requirements for participation in such
Fund.