EC Management Services Inc

FEES AND COMPENSATION

         In general, Escalate Management receives management fees (the “Management Fees”)
in connection with its advisory services. Escalate Management, the General Partners and/or their
affiliates may receive certain additional fees in connection with management and other services
performed in relation to portfolio companies of the Funds and such additional fees will offset in
whole or in part the Management Fees otherwise payable by the Funds. Limited partners in the
Funds also bear certain expenses as further described below. Additionally, each of Fund I GP
and Fund III GP is entitled to receive certain performance-based compensation, as described
below under “Performance-Based Fees and Side-by-Side Management.”

Management Fees

       Fund I

         Fund I pays Escalate Management a Management Fee, in advance on a quarterly basis, in
an amount equal to 0.5% of the lesser of (x) the carrying value of debt securities shown on Fund
I’s most recent quarterly balance sheet and (y) the aggregate capital contributions to Fund I as of
a date set forth in Fund I’s Limited Partnership Agreement. Each quarterly Management Fee
otherwise payable by Fund I is reduced by an amount equal to one-third of the Management Fee
payable by Fund II in respect of the same quarterly period. Additionally, if the aggregate
Management Fees payable by Fund I and Fund II in any year exceed a threshold set forth in Fund
I’s Limited Partnership Agreement, the payment of such fees are subject to approval by Fund I’s
advisory board (which is comprised entirely of representatives of investors in Fund I and not
affiliates of Escalate).

        Fund I portfolio companies may pay to Escalate Management, the General Partners
and/or their affiliates certain loan fees, restructuring fees, prepayment fees and/or annual fees
(collectively, “Loan Fees”). The Management Fees otherwise payable by Fund I are reduced
(on an annual basis) by 100% of the amount of Loan Fees. If Loan Fees exceed the Management
Fee, such excess is applied to succeeding Management Fees (on an annual basis) for up to three
years.

        Fund I also bears all fees and expenses incurred in investigating and evaluating
investment opportunities and in the purchase, holding or sale of investments and in arranging for
management assistance to portfolio companies and other costs associated with maintenance and
management of investments; fees and expenses relating to federal and state regulatory
compliance; costs of reporting to limited partners; auditing and bookkeeping costs and costs of
preparing the Fund’s tax returns; certain indemnification expenses (if any); and certain other
costs and expenses pursuant to Fund I’s Limited Partnership Agreement.

       Fund II

        Fund II pays Escalate Management a Management Fee, in advance on a quarterly basis,
in an amount equal to 0.5% of the aggregate cost basis of all of Fund II’s investments in “active”
portfolio securities (i.e., investments that have not been written off and where the issuer remains
a going concern, in each case subject to confirmation by the SBA). As noted above, the
aggregate Management Fees payable by Fund I and Fund II annually are subject to approval of
Fund I’s advisory board if they exceed a specified threshold set forth in Fund I’s Limited
Partnership Agreement.

        The amount of any fees paid by a portfolio company that are received by Escalate
Management or any of its affiliates is applied by Escalate Management first to reimburse Fund II
for all expenses previously paid by it with respect to unconsummated investments and then any
excess amount is applied to reduce the Management Fee otherwise payable by Fund II.

        Additionally, Fund II is responsible for certain expenses, including all interest and
expenses on any borrowing or leverage of Fund II; expenses related to Fund II’s status as an
SBIC; any taxes payable by Fund II; expenses incurred in the actual or proposed acquisition or
disposition of assets; any legal, insurance, accounting and auditing expenses; and certain other
expenses pursuant to Fund II’s Limited Partnership Agreement.

       Fund III

       Fund III pays Escalate Management a Management Fee in advance on a quarterly basis.
During Fund III’s investment period, the quarterly Management Fee is equal to 0.4375% of the
sum of Fund III’s Unreduced Regulatory Capital (as defined in SBIC TechNote 7A (Revised
April 2008), Part A.1(2)) and Assumed SBA Leverage in the amount of $150 million. Following
Fund III’s investment period, the quarterly Management Fee will be equal to 0.4375% of the
aggregate cost basis of all of Fund III’s investments in “active” portfolio securities (i.e.,
investments that have not been written off and where the issuer remains a going concern, in each
case subject to confirmation by the SBA).

        The amount of any fees paid by a portfolio company that are received by Fund III GP
either (i) will be immediately paid to the Fund III GP and, unless otherwise permitted under the
SBIC Act, shall be credited against future Management Fees, and in the event that such fees
exceed the amount of Management Fees due at the beginning of the following fiscal quarter,
Fund III GP will refund the difference to Fund III at the beginning of the following fiscal
quarter; or (ii) will be immediately paid to Fund III. In the event that, upon termination of the
Fund, any such fees remain unapplied to Fund III’s obligations with respect to the Management
Fee, Fund III GP will refund such unapplied amount to Fund III for distribution to Fund III’s
limited partners.

       Additionally, Fund III is responsible for certain expenses, including all interest and
expenses on any borrowing or leverage of Fund III; organization expenses; expenses related to
Fund III’s status as an SBIC; any taxes payable by Fund III; expenses incurred in the actual or
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TYPES OF CLIENTS

        Escalate Management provides investment advice to the Funds and may provide
investment advice to other investment partnerships or other investment entities formed under
domestic or foreign laws and operated as exempt investment pools under the Investment
Company Act of 1940, as amended. The investors participating in the Funds and such other
private investment funds may include individuals, banks or thrift institutions, other investment
entities, pension and profit-sharing plans, trusts, estates or charitable organizations or other
corporations or business entities and may include, directly or indirectly, principals or other
employees of Escalate Management and its affiliates.

      The Funds are closed to new investors subscribing for new interests. Interests in the
Funds were offered and sold solely to accredited investors within the meaning of the rules
promulgated under the U.S. Securities Act of 1933, as amended.

               METHODS OF ANALYSIS, INVESTMENT STRATEGIES AND RISK OF LOSS

        The Advisers provide investment advisory services to the Funds, as applicable, and share
common owners and personnel. Accordingly, the Advisers’ investment methodology is
described below. There can be no assurance that Advisers will achieve the investment objectives
of the Funds and a loss of investment may be possible.

         Fund I executes its investment strategy primarily by investing its assets in and through
Fund II, and from time to time by making investments directly in portfolio companies, as more
fully described below. Fund II and Fund III each operates as an SBIC and obtains financing
from the SBA in the form of debentures to finance investments. Fund II and Fund III are
mezzanine funds that provide loans to, and acquire warrants from, privately-held expansion and
later-stage companies primarily backed by equity sponsors within the technology and
technology-enabled services industries.

Investment Approach

       Escalate’s investment strategy includes the following:

           •     Investment Security: Loans take the form of amortizing senior secured loans or
                 senior secured subordinated loans. Loans generally range from $3 million to $15
                 million and amortize after an interest-only period. Interest is payable in arrears on
                 a monthly basis. Warrants generally take the form of the right to purchase
                 preferred or common shares. Additionally, Escalate will from time to time take
                 an equity interest in conjunction with its debt investment.

           •     Covenant Structure: Working closely with the borrower, Escalate structures a
                 covenant package that may be based on a combination of operating performance,
                 asset coverage, cash flow and/or other milestones. In situations where the
                 portfolio company has outstanding debt from a senior lender, the Fund typically
                 receives cross-default rights with existing senior loan covenants.

           •     Expansion- and Later-Stage Focus: Escalate seeks to invest in target companies
                 that offer a product or service that is commercially available, demonstrate
                 significant revenue growth, and are on a path to profitability within the term of
                 the loan. Target companies also have potential future exit alternatives that may
                 provide liquidity to the Fund’s equity position via the warrant component of the
                 investment.

           •     Equity Sponsorship: Target companies generally are equity-sponsored by one or
                 more firms. Escalate believes that target companies with institutional sponsorship
                 represent a lower risk profile and a higher marginal upside opportunity than those
                 without such backing. In certain situations, compelling, non-equity-sponsored
                 companies may be considered for investment if other criteria are met.

           •     Deal Flow: Escalate generates deal flow from (i) relationships with equity
                 sponsors, (ii) direct calling on prospective companies within certain target

               industries and geographies, (iii) referrals from other senior technology and life
               science lenders, (iv) referrals from key “centers of influence” (e.g., investment
               bankers, lawyers, accountants) and (v) conferences.

           •   Geographic Focus: The Fund’s investment activities are focused exclusively on
               companies based in the U.S.

Due Diligence & Investment Decision Process

       Escalate’s due diligence and underwriting process are as follows:

           •   Preliminary Evaluation of Borrower. After identifying a company that merits
               further investigation, Escalate evaluates the prospective borrower. One or more
               investment professionals meet with the borrower and perform a preliminary
               investigation of the borrower’s management and operations. Escalate generally
               seeks other sources of information to assess the prospects of the borrower and its
               industry. If Escalate is satisfied with a preliminary investigation of the borrower
               and after reaching an agreement on terms, Escalate will commence due diligence.

           •   Due Diligence. Escalate’s due diligence initially focuses on the borrower’s
               management team. The Fund will conduct on-site visits to the borrower’s
               headquarters and certain other facilities. Interviews with key management and
               board members and discussions with customers, suppliers, and industry research
               analysts will be conducted as appropriate. Escalate will collect specific
               information, including the history of the borrower, detailed historical and
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