Harren Equity Partners LLC

FEES AND COMPENSATION

       In general, Harren ultimately receives a management fee in connection with advisory
services it provides to each Fund pursuant to the applicable Management Agreement. Each
General Partner receives a carried interest. Harren and/or its affiliates receive additional
compensation in connection with management and other services performed for portfolio
companies of each Fund and such additional compensation will offset in whole or in part the
Management Fees (as defined below) otherwise payable to Harren to the extent provided by the
relevant Partnership Agreement. Investors in each Fund also bear certain fund expenses. A
summary of each Fund’s fees follows. Fund investors should refer to each Fund’s Partnership
Agreement for the detailed fee provisions.

Management Fees

        Fund III pays Harren (via GP III) a Management Fee payable semi-annually, partially in
arrears and partially in advance. The Fund III Management Fee was initially calculated as a
specified percentage of aggregate non-affiliated investor Commitments, but, in connection with
the termination of Fund III’s investment period, is now calculated as a specified percentage of an

amount equal to the aggregate amount of invested capital with respect to investments that have not
been disposed of or completely written off for U.S. federal income tax purposes, as determined in
accordance with Fund III’s Partnership Agreement. The Fund III Management Fee is reduced
upon the occurrence of certain events as set forth in its Partnership Agreement and, in certain cases,
a portion of Management Fees received will reduce the amount paid to GP III as carried interest.

         Investors participating in a closing after a Fund’s initial closing date bear the Management
Fee from the initial closing, generally in addition to an interest component payable to Harren or an
affiliate. The Management Fee will be payable until proceeds from all portfolio investments are
distributed. Installments of the Management Fee payable for any period other than a full six-month
period are adjusted on a pro rata basis according to the actual number of days in such period. As
a general matter, Management Fees will be payable during term extensions unless otherwise
agreed with investors.

        Upon a date specified in the governing documents (the “Stepdown Date”), the Management
Fee will be reduced. In many circumstances, the post-Stepdown Date Management Fee base will
include capitalized transaction-specific fees and expenses of unrealized investments, including
certain fees and expenses paid to Service Providers, operating executives, Harren, or its affiliates.

        The governing documents set forth the full list of terms under which Management Fees
will be reduced, offset or otherwise be limited, and consequently investors should expect to bear
the full specified Management Fee rate in the governing documents until they are reduced in the
circumstances and on the date(s) specified therein.

        Each Fund’s Management Fee is reduced by a percentage of any breakup fees and
transaction and monitoring fees earned by the Advisers or their affiliates and attributable to such
Fund’s investment in the applicable portfolio company, as set forth in the applicable Partnership
Agreement. In addition, the Management Fee is also offset by any private placement and finders’
fees paid and organizational fees in excess of the cap stated in the Partnership Agreement, to the
extent any such fees are incurred. Furthermore, as described in the applicable Partnership
Agreement, Harren also receives amounts from portfolio companies as compensation for services
(the Fund’s allocable portion of which is typically offset against the Management Fee to the extent
specified in the Partnership Agreement) or as reimbursement of expenses (which is typically not
offset against the Management Fee).

        Certain Partnership Agreements permit the applicable General Partner to waive or agree to
reduce the Management Fee. Certain waived portions of the Management Fee are treated by the
Partnership Agreement as a deemed capital contribution by the relevant General Partner, which is
effectively invested in the relevant Fund on such General Partner’s behalf and operate to reduce
the amount of capital such General Partner would otherwise be required to contribute to such Fund.
The limited partners of a Fund would, in such circumstances, be required to make a pro rata
contribution according to their respective Commitments to fund any contribution that would
otherwise be required of each Fund’s General Partner in connection with any such waiver or
reduction as described above, and, as a result, the exercise of such waiver may result in an
acceleration of investor capital contributions.

Carried Interest

        Each General Partner is entitled to receive a carried interest with respect to each Fund equal
to 20% of realized profits after distributing a preferred return, subject to a General Partner catch-
up provision as more fully described in the applicable Partnership Agreement. The carried interest
distributed to each General Partner is subject to a potential clawback or giveback if the General
Partner has received excess cumulative distributions as determined at the end of each Fund’s life,
as determined in each case in accordance with the applicable Partnership Agreement.

Other Information

        Harren is permitted to exempt certain “affiliated partner” investors in each Fund from
payment of all or a portion of Management Fees and/or carried interest, including the relevant
General Partner, its affiliates and any other person designated by the relevant General Partner. The
relevant General Partner reserves the right to make any such exemption from Management Fees
and/or carried interest by a direct exemption or through the Co-Invest Fund or another investment
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TYPES OF CLIENTS

         Harren provides investment advice solely to the Funds, including the Co-Invest Funds, and
references throughout this Brochure to “clients” and to Harren’s related duties to and practices on
behalf of its clients and/or investors should be construed accordingly. The Funds generally include
investment partnerships or other investment entities formed under U.S. or non-U.S. laws and
operated as exempt investment pools under the Investment Company Act of 1940, as amended.
The investors participating in the Funds generally include individuals, banks or thrift institutions,
other investment entities, university endowments, sovereign wealth funds, family offices, pension
and profit-sharing plans, trusts, estates or charitable organizations or other corporations or business
entities and from time to time include, directly or indirectly, principals or other personnel or former
personnel of Harren and its affiliates and members of their families, or other Service Providers
retained by Harren and its affiliates or a Fund, as well as executives of portfolio companies.

       The relevant General Partner also generally is permitted from time to time to establish
Funds that are alternative investment vehicles in order to permit certain investors to participate in
one or more particular investment opportunities in a manner desirable for tax, regulatory or other
reasons. Alternative investment vehicle sponsors generally have limited discretion to invest the
assets of these vehicles independent of limitations or other procedures set forth in the
organizational documents of such vehicles and the related Fund.

        Each Fund generally has a minimum investment amount of $2,500,000 to $5,000,000 for
third-party investors, which minimum the General Partner is generally permitted to waive. Each
Fund’s interests are offered and sold solely to qualified purchasers (or qualified knowledgeable
Harren personnel).

             METHODS OF ANALYSIS, INVESTMENT STRATEGIES AND RISK OF LOSS

General

       The General Partner has selected Harren to provide day-to-day investment advisory
services to each Fund, subject to the General Partner’s supervision. The Advisers share common
owners and personnel. Accordingly, the Advisers’ investment methodology is described below.

        The Advisers focus primarily on making investments of up to $60 million in companies
with enterprise values that range from $30 million to $300 million (the “Lower Middle Market”).
The Advisers seek to take majority equity positions in Lower Middle Market Companies through
leveraged acquisitions and recapitalization transactions with participation by management. The
Advisers maintain a broad industry focus, although the Advisers may occasionally target
opportunities in a particular industry in which they believe the fundamentals are particularly
attractive or in which the Advisers’ principals have experience or expertise. The Advisers take a
hands-on approach with the management of portfolio companies. The Advisers also concentrate
on making operational improvements through work with portfolio companies.

        There can be no assurance that Harren will achieve the investment objectives of each Fund
and a loss of investment is possible.

Investment and Operating Strategy

        Investment Evaluation. Day-to-day responsibility for each acquisition candidate is
typically assigned to a team of two to four of the Advisers’ investment professionals. This team
updates the entire investment team at a weekly deal meeting and more frequently on an informal
basis. For candidates that progress toward acquisition, the evaluation process eventually
culminates in an investment committee meeting in which the team must defend all aspects of the
diligence process and its investment conclusions. The evaluation process begins with an
assessment of the company, its industry and management team. In addition to due diligence
undertaken by the Advisers’ professionals, the Advisers typically engage third party advisors to
provide analysis on potential areas of substantial risk to the company, the business prospects of
the company and issues related to the structure of a transaction. As part of this process, the
Advisers seek to develop a strong working relationship with management in order to create a
strategic plan for the business, which will serve as the basis for the initiatives to be pursued during
the investment period.

        Investment Acquisition. Prior to acquiring a company, the investment team will consider,
among other factors, (i) identifiable growth potential, (ii) quality of the management team, (iii)
scalability of the business model, (iv) the ability of the Advisers and management to address
existing operational issues effectively, and (v) the presence of an agreeable strategic plan
developed in partnership with management during due diligence. The Advisers prefer to utilize
simple transaction structures that typically include only one class of stock in order to promote
transparency and alignment of interests among all shareholders, including the managers of a
business, who typically maintain a significant equity interest in the company. In general, the
moderate amount of leverage utilized by the Advisers often allows for greater investment in growth

capital to further accelerate growth. The Advisers attempt to maximize the utility of tax structuring
and other financial instruments that can positively impact risk-adjusted returns to each Fund.

        Ownership Activity. The Advisers work with management post-acquisition to implement
the strategic plan that was developed during the investment evaluation process. The Advisers
employ their operations focus and spend time on-site as necessary to support management. An
annual strategic assessment is conducted to measure progress versus the original plan and to
evaluate areas for continued improvement.
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