Sunstone Partners Management LLC

ITEM 5 – FEES AND COMPENSATION

A.      Advisory Fees and Compensation

The Firm is compensated for its advisory services through asset-based management fees (“Management
Fees”) and performance-based profit distributions (commonly referred to as “Carried Interest”), which
are paid by Fund I, Fund II and Fund III (the “Fee-Paying Funds”) to our Advisory Affiliates. A summary of
Fund I, and Fund II and Fund III’s anticipated fees and expenses follows, but investors should review the
applicable Fund’s Governing Documents for details regarding fee structure and expenses.

The Fund I Co-Invest Vehicle does not pay Management Fees or Carried Interest.

Management Fees for Fund I, Fund II and Fund III

Management Fees are payable either directly by each Investor or indirectly through a Fund for a specified
period over the life of the Fee-Paying Funds. The scheduled fee structure for each such Fund is set at the
establishment of each respective Fund pursuant to negotiations with the investors in such Fund and is set
forth in its Governing Documents. The Management Fees are payable quarterly in advance, as of the first
day of the calendar quarter, and are pro-rated for any partial calendar quarter. Management Fees
generally are determined as follows: (i) Commencing with the effective date of the Fund, the quarterly
Management Fee payable by each Investor not designated as “affiliated partners” by the General Partner
is equal to the capital committed to the Fund by such Investor times 0.5% (representing an annual fee of
two percent (2.0%)); (ii) Upon a date specified in the Governing Documents (the “Stepdown Date”), the
quarterly Management Fee payable by each Investor is equal to the capital committed to the Fund by
such Investor times a fee percentage that steps down incrementally over a period of years from 0.5%
(2.0% annually) to 0.25% percent (1.0% annually); and (iii) at such later time as is specified in the
Governing Documents of the Fund, the quarterly Management Fee payable by a Fund in respect of each
Investor is equal to such Investor’s proportionate share of invested capital under management
(determined in accordance with the Governing Documents of the Fund) times 0.5% (2% annually).
Investors participating in a subsequent closing after the initial closing date generally will be assessed
Management Fees retroactive to the beginning of the effective date of the Fund, with interest.

As is generally the case in private investment funds, the Governing Documents provide that a Fund’s
Management Fees will be calculated and charged on a basis that generally is not tied to the Fund’s then-
current net asset value. As further specified in the Governing Documents, from the effective date of the
relevant Fund until the Stepdown Date, Management Fees generally will be charged based on a formula
tied to the amount of the relevant Fund’s aggregate capital commitments. Further, for certain Funds, after
the Stepdown Date, Management Fees generally will be charged and calculated based on a formula tied
to the amount of investment contributions (including, where applicable, a Fund borrowing component)
made by the relevant Fund relating to the Fund’s aggregate investment(s) in its Portfolio Companies that
have not been realized or written down (which shall be excluded in respect of any Portfolio Company to
the extent written down below the total amount of investment contributions in such Portfolio Company)

(such investments, “Impaired Value Investments”).

Under the Governing Documents, where the fair market value of an investment exceeds the total amount
of investment contributions relating to such investment, post-Stepdown Date Management Fees will not
be calculated based upon such appreciated value, and will instead continue to be calculated based on the
amount of such investment contributions. Conversely, the Governing Documents do not require
Management Fees to be reduced or refunded following the occurrence of a write-down, decrease
(including a significant decrease) in fair value or other event not constituting a complete realization, such
as a reorganization, roll-over investment in connection with a sale or dividend distribution, except in the
case of investments meeting the relevant Impaired Value Investment standard under the Governing
Documents. For the avoidance of doubt, following the Stepdown Date, if the fair market value of an
Impaired Value Investment is less than the total amount of investment contributions relating to such
Impaired Value Investment, then the amount of Management Fees otherwise payable relating to such
investment will be reduced solely to the extent the aggregate fair market value of all remaining
investment(s) in such Portfolio Company is less than the amount of total aggregate investment
contributions relating to all existing and former investments in such Portfolio Company.

As a result, and as is generally the case for private investment funds, the amount of Management Fees
generally will not correspond with fluctuations in the net asset value of individual investments or of a
Fund, including following the relevant investment period, and will not be reduced in connection with any
write downs (whether temporary or permanent), except in the case of Impaired Value Investments.
Except where the Governing Documents expressly provide to the contrary, Management Fees will not be
reduced (in whole or in part) in the case of partial distributions (e.g., those resulting from a dividend
recapitalization) or reorganizations, restructurings, roll-over investments, extraordinary dividends or
similar transactions or in circumstances where one or more other Fund(s) divest their respective
investment(s) (including credit investments) in the relevant Portfolio Company, whether in whole or in
part, in each case in circumstances that do not result in the complete disposition of the relevant Fund’s
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ITEM 7 – TYPES OF CLIENTS

Sunstone Partners provides investment advisory services to the Funds described in Item 4 above. All
Investors in the Funds generally must be “accredited investors” (as defined in Regulation D under the
Securities Act), and, unless waived in the discretion of the General Partner, “qualified clients” (as defined
in Rule 205-3 under the Investment Advisers Act of 1940, as amended (the “Advisers Act”)) and “qualified
purchasers” (as defined in section 2(a)(51)(A) of the Investment Company Act).

The Funds are permitted to include alternative investment vehicles established in order to permit one or
more investors to participate in one or more particular investment opportunities in a manner desirable
for tax, regulatory or other reasons. Alternative investment vehicles are subject to the provisions of
Governing Documents of the Funds to which they relate. The Funds are also permitted to include certain
co-investment vehicles, including the Fund I Co-Invest Vehicle, which invest side-by-side with the relevant
Fund.

A minimum investment commitment is typically established for Investors in each Fund as set forth in the
Fund’s Governing Documents. The Advisory Affiliate of each Fund is able, in its sole discretion, permit
investments below the minimum amounts set forth in the Governing Documents of such Fund.