Tetragon Financial Management LP

Item 5     Fees and Compensation

Management Fees

As compensation for investment supervisory services rendered to Tetragon, TFM is entitled to
receive management fees calculated as the net asset value of Tetragon payable monthly in advance
prior to the deduction of any accrued incentive fees. The precise amount of, and the manner and
calculation of, the management fees for Tetragon are set forth in Tetragon’s Governing
Documents.

Where TFM receives management fees in advance and its services are terminated prior to the end
of the billing period, TFM would refund to the relevant client an amount of management fees
prorated from the date of its termination to the end of the period covered by the advance fee.

TFM’s compensation is subject to waiver or reduction in its discretion. TFM, its affiliates and
certain of its professionals can invest in investment vehicles advised by TFM (as of the date of this
brochure, TFM’s only client is Tetragon). Certain of TFM’s principals and employees are subject
to reduced or no management fees and/or incentive fees on their direct or indirect investment in
Tetragon.

TFM Expenses

To the extent provided in the Governing Documents and except as described herein as an expense
of Tetragon, TFM will bear certain expenses and costs associated with the performance of its
services, including expenses on account of rent, utilities, office supplies, office equipment, the
compensation and expenses of certain of its partners, officers and employees and other normal and
routine administrative expenses relating to the services and facilities provided by TFM to
Tetragon.

Tetragon Fees and Expenses

Consistent with the Governing Documents, Tetragon generally bears its own expenses, including,
without limitation, (i) the charges and expenses of all legal advisers, auditors, accountants

(including out-sourced accounting) and other professional expenses; (ii) brokers' commissions (if
any), borrowing charges on securities sold short and any issue or transfer taxes' chargeable in
connection with any securities transactions; (iii) all taxes and corporate fees payable to
governments or agencies; (iv) directors' fees (if any) and expenses; (v) interest on debt financings
of Tetragon, including borrowings from any prime broker; (vi) such expenses as may be reasonably
incurred in connection with any offering or sale of shares or interests or debt instruments in the
public or private markets; (vii) communication expenses with respect to investor services and all
expenses of meetings of shareholders and of preparing, printing and distributing financial and other
reports, proxy forms, prospectuses and similar documents; (viii) the cost of insurance (if any) for
the benefit of the directors, TFM or its affiliates; (ix) litigation and indemnification expenses and
extraordinary expenses not incurred in the ordinary course of business; (x) custodial fees (if any);
(xi) bank service fees; (xii) research expenses; (xiii) marketing and investor relations costs,
including production and distribution of investor relations materials and travel and other incidental
expenses; (xiv) travel expenses related to investments of Tetragon whether consummated or not;
(xv) other expenses related to the potential or actual acquisition or disposition of assets of
Tetragon; (xvi) all other organizational and operating expenses; (xvii) the management fee; and
(xviii) expenses associated with Tetragon, and other similar fees and expenses, as well as any other
fees or expenses incurred by TFM or Tetragon in connection with Tetragon’s operations that are
not specifically set forth above as being paid by TFM.

Tetragon generally bears all costs and expenses directly related to its investments or prospective
investments, such as brokerage commissions, interest on debt balances or borrowings, custodial
fees and legal and consultant fees. Tetragon also generally bears all out-of-pocket costs of
administration including accounting, audit, administrator and legal expenses, costs of any litigation
or investigation involving its activities, costs associated with reporting and providing information
to existing and prospective investors and the costs of liability insurance.

Brokerage Fees

When a broker is used in connection with an investment by Tetragon, Tetragon will incur
brokerage and other transaction costs. For more information on brokerage transactions and costs,
please see Item 12 Brokerage Practices.

Incentive Fees

Please see Item 6 below regarding incentive fees that Tetragon pays.

Allocation of Expenses

Pursuant to a services agreement with Tetragon Partners, TFM relies on Tetragon Partners for a
broad range of services to support its activities that include, but are not limited to, infrastructure
services such as operations, financial control, trading, marketing and investor relations, legal,
compliance, office administration, payroll and employee benefits, services relating to the dealing
in and management of certain investments, arrangement of deals and advising on certain
investments and other services.

These service arrangements present potential conflicts of interest because the costs associated with
providing services for the benefit of TFM, to the extent they are not borne by TFM, would be
borne by Tetragon Partners and therefore Tetragon, as the owner of Tetragon Partners.

From time to time TFM and its affiliates (including Tetragon Partners) will be required to decide
whether certain fees, costs and expenses should be borne by TFM, its affiliates (including Tetragon
Partners), Other Funds (as defined below), a portfolio investment of Tetragon or an Other Fund,
co-investors and/or a third party (each, an Allocable Party) and if so, how such fees, costs and
expenses should be allocated among the relevant Allocable Parties. Certain fees, costs and
expenses may be the obligation of one particular Allocable Party and may be borne by such
...

Item 7     Types of Clients

TFM currently provides investment supervisory services to Tetragon. Investment advice is
provided directly to Tetragon and not individually to Tetragon’s shareholders.