Heartwood Partners LLC

Item 5 – Fees and Compensation
Fees

The limited partnership agreement for the Funds (the “Limited Partnership Agreement”) generally entitles

us to management fees and/or performance-based compensation from our clients. Per the Limited
Partnership Agreements, the Funds would generally pay us management fees quarterly in advance in an
amount equal to 2% of the capital commitment of each investor in the Funds (except for the General Partner
and its affiliates) until the end of such Funds’ commitment period and, thereafter through the initial life of
the Funds, 2% per year on such investor’s share of the cost basis of portfolio investments then held by the
Funds, less any write-offs (management fees would step down further during any extension periods). The
management fees we receive from the Funds are subject to reduction in proportion to certain fees we receive
from the portfolio companies in which the Funds are invested.

Per the Limited Partnership Agreements, we are also entitled to receive performance-based compensation
from the Funds in the form of a carried interest equal to 20% of distributions in excess of (i) capital
contributed in respect of each portfolio investment that has been disposed of at the time of distribution, (ii)
capital contributed for management fees and entity expenses and (iii) a preferred return of 8% per annum,
compounded annually, on the foregoing amounts. The carried interest is subject to a claw back. The above
is a simplified explanation; please review the Funds’ offering documents, including the Limited Partnership
Agreements, for full details.

The fees described above represent our typical compensation rates. However, we may enter into negotiated
agreements with one or more investors which provide for the waiver or modification of certain terms of the
offering of Funds interests, or certain rights and obligations of investors, including fees, otherwise applicable
to such interest(s). Further detail regarding calculation of the Funds’ fees can be found in the Funds’ offering
documents, including the Limited Partnership Agreements, which are provided to potential investors.

Generally, co-investment vehicles do not pay management fees, although the portfolio companies in which
they invest may compensate Heartwood Partners as discussed in the next paragraph. Investors in co-
investment vehicles are generally subject to performance-based compensation similar to that of the Funds
as outlined above.

In addition to fees and compensation received from our clients, we also generally receive fees from the
companies in which our clients invest in exchange for the management, financial and industry expertise we
provide. This fee is generally based on a percentage of earnings before a reduction for interest, income
taxes, depreciation and amortization; a portion of this fee is generally used to partially or wholly offset the
management fees payable by the Funds. Please review the Limited Partnership Agreements for full details.

Expenses

The Funds bear the organizational and offering expenses incurred in its formation. We bear the cost of any
placement fees payable to agents in connection with the Funds. We are responsible for all customary
overhead expenses of managing the Funds, including compensation for its employees, rent, utilities and
other overhead expenses. The Funds pay or reimburse us for all of its expenses for which we are not
reimbursed by portfolio companies, including expenses associated with financial statements, tax returns and
K-1’s; fees and expenses of accountants, valuation consultants and counsel; expenses for transactions not
consummated; other expenses associated with the acquisition, holding and disposition of investments,
including extraordinary expenses (such as litigation costs); costs and expenses associated with the Funds’
advisory board (the “Advisory Board”) and the annual meeting; the cost of insurance, including errors and
omissions insurance; and any taxes, fees or other governmental charges.

Item 7 – Types of Clients
Our clients are the Funds and the co-investment vehicles. The minimum amount which may be committed
to a Fund is one million dollars, although the general partner of each of the Funds may accept lesser amounts
in its discretion. The Funds’ investors are typically high net worth individuals, institutional investors and
pension plans, insurance companies, endowments and foundations. Investors in the co-investment vehicles
are usually the same or similar investors in the Funds (including members of our investment team).