Water Street Capital Inc

FEES AND COMPENSATION

DESCRIPTION OF COMPENSATION AND FEE SCHEDULE

We and/or certain of our affiliates generally are entitled to receive management fees and incentive-based
fees for our advisory services. The fees for each Fund are described in detail in the applicable governing
and/or offering documents. A brief summary of these fees is set forth below.

With respect to most U.S. Funds, we are entitled to receive a management fee, payable quarterly in advance,
equal to 0.25% (1.0% per annum) of the partnership’s net assets as of the first day of each fiscal quarter.

In addition, WSM is entitled to receive an incentive allocation equal to 20% of the annual increase
(including net unrealized gains and excluding contributions), if any, in the net asset value of each limited
partner’s capital account (excluding limited partnership accounts held by employees). Incentive allocations
are subject to a “high water mark” limitation, whereby a “loss recovery account” is maintained with respect
to each limited partner. Any decrease in the net asset value in a fiscal year allocated to any limited partner’s
capital account (excluding contributions and withdrawals) is carried forward in a loss recovery account so
that no incentive allocation is charged to that capital account unless the losses have been recouped in full.
For more details regarding the high water mark, please refer to the offering memorandum of each Fund.
See Item 6.

PAYMENT OF FEES

As outlined above, management fees are payable by investors and are generally deducted quarterly in
advance from the assets of the Funds. In the event that a Fund is dissolved, or our advisory services are
terminated prior to the end of any fiscal quarter, then a pro rata amount of such management fee will be
refunded to all applicable investors.

Incentive-based fees are deducted directly from the capital account of each investor generally on an annual
basis at year-end and also at such other times as set forth in the applicable partnership agreements (e.g., a
mid-year redemption).

OTHER FEES AND EXPENSES

The Funds generally pay all investment expenses, including but not limited to (i) interest, commissions and
brokerage fees, custodial fees and bank service fees (see Item 12); (ii) transfer, capital and other taxes,
duties and costs incurred in connection with the acquisition, holding and disposition of securities or other
investments and of transfers thereof; (iii) research or consulting fees to consultants or the like in connection
with evaluating investments; and (iv) legal, accounting or other professional fees and expenses related in
any way to investment decisions of the Fund. In addition, the Fund will bear the following expenses: (i)
fees and other expenses incurred in connection with the investigation, prosecution or defense of any claims
by or against the Fund; (ii) fees incurred for a third-party administrator; and (iii) insurance premiums, if
any, for insurance purchased.

WITHDRAWALS

Subject to the terms and conditions disclosed in the applicable offering documents, if an investor has owned
his interest in a Fund for at least two years, he may withdraw all or any portion of that interest as of the end
of any semiannual period ending on or after the expiration of the two-year lockup period. The investor has
to provide to the Fund a written notice of his intention at least 60 days prior to the proposed withdrawal
date. Investors in the Funds are also permitted to make withdrawals in certain other circumstances, as
described in the applicable offering documents. The Fund has the right to require any investor to withdraw
from the Fund at any time for any reason upon written notice to such investor specifying the withdrawal
date. We will use commercially reasonable efforts to cause at least 90% of any estimated withdrawal
amount to be paid within ten days of the applicable withdrawal date. Any remaining balance will be settled
not later than 30 days following the completion of the audit of the Fund’s financial statements for the
applicable fiscal year.

With respect to any limited partner permitted or required to withdraw as of any time other than the end of
a performance period, incentive allocations will be made on the basis of the proportion of net capital
appreciation (excluding contributions and withdrawals) allocated to such limited partners’ capital account
through the withdrawal date, after giving effect to any loss recovery amounts.

TYPES OF CLIENTS

The Funds, which are private pooled investment vehicles, are our sole advisory clients. Within the Funds,
investors may include high net worth individuals, pension and profit-sharing plans, trusts, estates, charitable
organizations, corporations, partnerships, endowments and employees. The minimum initial capital
contribution required from an investor is $1,000,000, although capital contributions of lesser amounts may
be accepted at our discretion.