Watermark Group Inc

FEES AND COMPENSATION

A. Advisory Fees and Compensation

The fees applicable to the Feeder Funds are set forth in detail in each Feeder Fund’s respective
confidential private placement memorandum. A summary of such fees is provided below and is
qualified in its entirety by the actual terms and conditions set forth in each Feeder Fund’s respective
offering document.

        i.      Incentive Fee

At the end of each fiscal year, each Master Fund will pay to Watermark an amount equal to 20%
multiplied by the value (after the deduction of the management fee) in excess of a high-water mark,
as adjusted by a hurdle rate, of each sub-series of such Master Fund shares corresponding, as
applicable, to: (i) each sub-series of PIF and PPIF shares; and (ii) each capital account established for
POP and PPOP limited partners. For PIF and PPIF shares denominated in a currency other than U.S.
dollars, the incentive fee will be calculated based on the U.S. dollar value of the applicable Master
Fund shares.

Class M limited partnership interests are not charged an incentive fee.

In the sole discretion of Watermark, the incentive fee, if any, may be waived, reduced, or calculated
differently with respect to a sub-series of Master Fund shares corresponding to a sub-series of Feeder
Fund shares or limited partnership interests. Investors related to Watermark, together with a retired
founder of the firm, are not charged an incentive fee.

A more detailed description of the incentive fee payable to Watermark is set forth in each Feeder
Fund’s confidential private placement memorandum.

        ii.     Management Fee

With respect to PIF shares and POP limited partnership interests, Parsec will pay Watermark a monthly
fee equal to 1% per annum of the value, calculated as of the first day of the then current month, of
Parsec shares corresponding to the applicable series or sub-series of Feeder Fund shares and to each
limited partnership capital account, in each case, before taking into account the estimated accrued
incentive fee, if any. For PIF shares denominated in a currency other than U.S. dollars, the
management fee will be calculated based on the U.S. dollar value of the applicable Parsec shares.

With respect to PPIF shares and PPOP limited partnership interests, Parsec Plus will pay Watermark
a monthly fee equal to 1.5% per annum of the value, calculated as of the first day of the then current
month, of Parsec Plus shares corresponding to the applicable series or sub-series of Feeder Fund shares
and to each limited partnership capital account, in each case, before taking into account the estimated
accrued incentive fee, if any. For PPIF shares denominated in a currency other than U.S. dollars, the
management fee will be calculated based on the U.S. dollar value of the applicable Parsec Plus shares.

Class M limited partnership interests are not charged a management fee.

In the sole discretion of Watermark, the management fee may be waived, reduced, or calculated
differently with respect to a sub-series of Parsec or Parsec Plus shares corresponding to the applicable
sub-series of Feeder Fund shares or limited partnership interests. Investors related to Watermark,
together with a retired founder of the firm, are not charged a management fee.

A more detailed description of the management fee is set forth in each Feeder Fund’s confidential
private placement memorandum.

B. Payment of Fees

Each Master Fund will pay the incentive fee, if any, at the end of each fiscal year. The incentive fee
will also be paid with respect to amounts redeemed or withdrawn and to amounts transferred (provided
that such transfer results in a change in the beneficial ownership of the shares or limited partnership
interests transferred). Watermark’s shareholders (subject to certain limitations and conditions) have
reinvested and will reinvest a portion of the incentive fee, if any, earned by Watermark in Class M
interests.

The Master Fund will pay the management fee promptly after the last day of each month.

C. Other Fees and Expenses

Each Feeder Fund will bear its own expenses and its share of the applicable Master Fund’s expenses,
including, the following: (i) the management fee; (ii) the incentive fee; (iii) expenses related to the
research and the consummation of the applicable Master Fund’s trades, including the following:
brokerage and futures commission merchant fees, commissions and expenses; clearing and settlement
charges; custodial fees and expenses; bank service fees; interest expenses and fees related to financings
or refinancings; (iv) initial offering and organizational expenses; and (v) operational expenses,
including the following: fees and expenses of third-party risk management products, models and

services; third-party administrative fees and expenses; fees and expenses of third-party professionals,
including valuation service providers, attorneys, tax advisers and accountants; the costs of any
litigation or investigation involving activities of the applicable Feeder Fund or the applicable Master
Fund; third-party audit and tax preparation expenses; insurance expenses; fees and expenses (including
director registration fees) of a Feeder Fund’s board of directors (if applicable) and a Master Fund’s
board of directors; fees and expenses of an advisory committee; costs of preparing and distributing
reports and notices; taxes; expenses incurred in connection with negotiating and complying with
provisions of any side letter agreement; fees and expenses related to compliance with the rules of any
self-regulatory organization or applicable law in connection with the activities of the applicable Feeder
Fund or the applicable Master Fund, including any governmental, regulatory, licensing, filing or
registration fees or taxes; expenses incurred in connection with the offering and sale of shares or
limited partnership interests, as applicable, and other similar expenses related to a Feeder Fund
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TYPES OF CLIENTS

As stated in Item 4.B. above, Watermark provides investment advice to the Funds. Watermark and its
employees may, in the future, provide investment advisory services to other clients.