Verdad Advisers LP

Item 5: Fees and Compensation

   A. Funds.

Verdad does not have a general fee schedule. The fees and expenses associated
with Clients investments may vary and are  described in detail in the  Fund’s Offering
Documents. Verdad may, in its sole discretion, manage other funds or Managed Account Clients
with higher or lower fees, different fee structures and different expense payment arrangements
than the Funds. Verdad generally charges each fund an investment management fee based on the
balance of each limited partner’s capital account (the “Management Fee”). Management
Fees are generally charged each month in advance based on the opening net asset value of each
capital account on the first day of that month.

In addition to the Management Fees, Verdad is generally entitled to a performance-based profit
allocation (“Special Profit Allocation”) with respect to certain class shareholders. For investors,
these fees are generally not negotiable, though Verdad retains the right to waive, reduce, rebate
and/or calculate differently the Management Fee attributable to investments made by affiliates,
employees and/or certain other limited partners in the Fund.

Client accounts will also be subject to investment, operational and regulatory expenses related to
its investment program, including expenses related to proxies, underwriting and private
placements, research expenses, surveys, subscriptions, studies, brokerage commissions, interest
on debit balances or borrowings, custody fees and any withholding or transfer taxes imposed on
such Client. See Item 12 herein for a discussion of our brokerage practices. Client accounts also

bears all out-of-pocket costs of its administration of the Fund, including accounting, audit and legal
expenses, costs of any litigation or investigation involving the activities of the Fund, and costs
associated with regulatory compliance, the organization of the Fund, and reporting and providing
information to existing and prospective investors, as applicable.

The Funds have entered into an agreement with a third-party administrator, to perform certain
administrative and bookkeeping services which is paid as an annual fee for its administrative
services, plus additional fees for any preparation of the Funds’ tax returns. These fees may change.
Further information will be provided upon request.

In general, Verdad pays its ordinary administrative and overhead expenses, incurred in connection
with managing, originating and monitoring investments, such as employee salaries, rent and
utilities.

   B. Separate Managed Accounts

The fees and expenses associated with the Managed Account Clients will be negotiated and are
described in detail in each Managed Account Client’s investment advisory agreement. The
Management Fee may be charged quarterly or monthly and may be paid in advance or arrears
depending on the specific arrangement between the Adviser and the Managed Account Client.

Managed Account Clients will incur brokerage and other transaction costs. Item 12 of this
brochure discusses how the Adviser selects brokers and determines the reasonableness of their
compensation. Furthermore, the Adviser will refund any pre-paid Management Fees if the
advisory contract with such Managed Account Client is terminated before the end of the billing
period. Management Fee refunds are calculated on a pro-rata basis for partial periods. Other than
as described above, neither the Adviser nor any of its supervised persons receives any
compensation from the sale of securities or other investment products.

Item 7: Types of Clients

Verdad provides investment advisory services to Clients which are structured as private
funds and Managed Account Clients of unaffiliated pooled investment vehicles. Verdad may in
the future provide investment advice and other services to other clients or types of clients.

The minimum investment requirement for the Funds is $500,000, though the Adviser or
its affiliates may accept investments of lesser amounts in its sole discretion. Verdad does not have
a minimum account size for Managed Account Clients.

The Managed Account Clients are required to enter into the respective advisory agreement that,
among other things, sets forth the nature and scope of the investment advisory authority
of Verdad and the investment objectives, guidelines and restrictions applicable to the management
of any Managed Account Clients.