Jefferies Capital Partners LLC

Item 5. Fees and Compensation

Generally, each of the JCP Funds pays its Manager an asset management fee as follows: (1) the fee
is typically calculated as 2% per annum of the aggregate capital commitments until the earlier to
occur of (i) five years after the final closing date, and (ii) one year after the date on which 75% of
the commitments have been invested or committed for investment; and (2) thereafter, until the last
day of the fund’s investment term, the fee is typically 1.75% per annum of the carrying value (the
lower of cost or fair value) of the fund’s portfolio investments. The management fee is reduced, but
not below zero, by a portion (80% to 100%) of fee income we receive from portfolio companies.
The fee income we receive from portfolio companies is described more fully below.

Investors in the Institutional Funds are obligated to pay management fees directly to the Managers
(as opposed to paying indirectly via the JCP Fund). We are required to provide to the investors a
management fee notice including information regarding the nature and amount of the fees billed.
For all other JCP Funds, the funds themselves are obligated to pay management fees directly to the
Managers, and the investors bear those fees indirectly through their capital contributed to the funds.

Investors in JCP Fund IV no longer pay a management fee. For JCP Fund V, management fees are
determined and billed semi-annually, due February 1 (for the period January 1 to June 30) and
August 1 (for the period July 1 to December 31) of each year. The specific payment terms and
other conditions of the management fees paid are set forth in the relevant Fund Documents. Excess
management fee prepaid will be returned to clients.

We may receive fee income from portfolio companies whose securities are held by the JCP Funds.
This fee income is consideration for certain services we provide to the portfolio companies, such as
consulting, management and advisory services, for which we devote significant internal resources in
an effort to improve the business and management of such companies. In addition, we may receive
other associated fees such as directors’ fees. A portion of this fee income, as described above, is
applied to reduce management fees payable to us by the relevant JCP Funds. To the extent the
portion of fee income reducing management fees exceeds management fees billed, the excess is
carried over to succeeding management fee billing periods.

In addition, entities affiliated with us serve as the general partners or managing members of the JCP
Funds and are entitled to receive carried interest distributions from the respective JCP Funds.
Carried interest distributions are payable and deducted from distributable proceeds of JCP Funds at
the direction of the fund’s general partner or managing member. The carried interest distribution is
generally an amount equal to 20% of the profits from portfolio investments made by the JCP Fund
in excess of invested capital and paid after the return of such capital and a preferred return to
investors. For Leveraged Fund, all proceeds from portfolio investments are first used to repay the
amount of leverage outstanding, together with any accrued interest, before any distributable
proceeds are allocated to investors. The specific payment terms and other conditions of the carried
interest distribution are set forth in the relevant Fund Documents.

Generally, carried interest distributions from funds whose waterfall is calculated on a “deal-by-
deal” basis are subject to clawback. Upon termination of the fund, the general partner or managing
member will be required to restore an amount to the fund to the extent that it may have received
cumulative distributions in excess of amounts otherwise distributable to it pursuant to the
distribution calculation set forth above, applied on an aggregate basis covering all transactions of
the fund, but no more than the cumulative distributions received by the general partner or managing
member with respect to its 20% carried interest, less income taxes thereon.

The management fees and carried interest distributions described above are our typical fee rates.
We may, in our sole discretion, waive or defer all or a portion of the fees due to us. Each fund has
the right to enter into agreements with one or more of its investors providing for a waiver or
modification of certain terms of the fund. Under certain circumstances we may agree to different
fee terms from those described above. Such arrangements are documented in the Fund Documents
or side letter agreements with particular investors in certain funds. We may waive all fees and
carried interest allocation for investments made by our Managing Principals and employees and
their family members.

The JCP Funds generally bear all expenses related to their operations, including, by way of
example, fees, costs and expenses directly related to the purchase and sale of their investments,
unconsummated transaction expenses, bank and brokerage expenses, taxes, professional fees of
auditors, counsel, and consultants, the costs of preparation and distribution of reports and statements
to investors and the expenses of annual meetings. Organizational expenses, subject to a cap as
defined in the relevant Fund Documents, are also borne by the JCP Funds.

Item 7. Types of Clients

We generally provide investment advice to private equity funds formed as limited partnerships or
limited liability companies. The investors in the funds we advise are primarily comprised of
pension plans, insurance companies, funds of funds, high net worth individuals and family offices.

Conditions for investing in each of the JCP Funds, such as the minimum investment amount, are
stated in each JCP Fund’s respective offering memorandum and subscription documents. The
offering memoranda note that the general partner or managing member of each JCP Fund has
discretion to reduce or waive the minimum investment amount. The minimum investment amount
for interests in the Institutional Funds was $10 million, and individual investors (including
employees of affiliates) had minimum equity investment amount between $50,000 to $1 million
based on respective Fund Documents.

Generally, each investor participating in the JCP Funds was required to meet certain suitability and
net worth qualifications. For example, the investor was required to be (i) an “accredited investor”
within the meaning of Rule 501 of Regulation D promulgated under the Securities Act of 1933, as
amended, and/or (ii) a “qualified purchaser” as defined in Section 2(a)(51) of the Investment
Company Act of 1940, as amended. With the approval of the general partner or managing member
of the respective JCP Fund, existing investors may transfer all or a portion of their interests in the
JCP Fund to others. Any new investor admitted is also required to be a “qualified client” within the
meaning of Rule 205-3 of the Advisers Act, as amended, at the time of investment.

Item 8. Method of Analysis, Investment Strategies and Risk of Loss

As noted in Item 4 above, the JCP Funds are no longer making new investments. The following is a
summary of the investment strategies and methods of analysis we employed on behalf of the JCP
Funds during their investment periods. Specific descriptions of such strategies and methods are
included in each JCP Fund’s Fund Documents. All investments in securities involve risk of loss
that investors should be prepared to bear.

Investment Strategy and Methods of Analysis

The JCP Funds seek long-term capital appreciation primarily by making control equity and equity-
related investments in middle market companies typically headquartered in the United States with
annual revenues of $500 million or less. The JCP Funds invest in management buyouts, industry
consolidations and recapitalizations of the middle market companies. The funds seek to invest in
companies with strong, proven management teams with excellent track records and with whom we
believe we can work effectively to add value. The funds generally invest between $10 to $60
million per portfolio investment in middle market companies within the focus industries where we
have considerable knowledge and experience.

We are affiliated with Jefferies LLC, a subsidiary of Jefferies. Jefferies LLC is a full service
investment banking firm focused primarily on serving middle market and growth companies and
their investors.

We perform significant research into each prospective investment and disposition. In order to
determine a prospective portfolio company’s potential for performance improvement, we typically
evaluate the underlying attractiveness of the industry, the company’s position within that industry,
the potential for consolidation and the company’s performance versus its peers. Our research
generally includes, among other things, a review of the portfolio company’s financial statements,
and we may engage the services of consultants to supplement our research. We generally assign at
least two senior investment principals to every investment opportunity that we actively pursue, and
investment decisions are reached through discussions and consensus among our investment
principals including the Managing Principals.

Focus Industries

We utilize our understanding of industry cycles, competition and business development to develop
investment themes generally within the following focus industries:
    Energy
    Manufacturing and Distribution
    Transportation and Logistics
    Consumer
    Healthcare
    Media and Telecommunications

Origination

We generate investment leads from these primary sources:
   Jefferies LLC
   Personal networks
   Management teams at current, former and prospective portfolio companies

An incentive program is in place whereby the general partners or managing members of the JCP
Funds compensate directly Jefferies LLC employees who source investment opportunities in which
the JCP Funds invest, based on profits from the investment and the overall performance of the fund.

Value-Added Role During Ownership

We generally take an active role in the portfolio companies, particularly seeking investments where
we believe we can add value by applying our resources in the form of strategic oversight and drive.
We typically invest with a thesis that certain benchmarks, strategic initiatives and growth plans can
be achieved to allow the portfolio companies to realize meaningful value. We seek to create value
in portfolio companies by generating growth in operating earnings (EBITDA), rather than relying
excessively on debt reduction or multiple expansions. We generally seek to exit from the investment
when our goals are achieved.

Our key goals include:
    Implementing a buy-and-build strategy
    Formulating strategies to improve operating performance
    Strengthening management
    Overseeing financings and providing capital markets advice

Optimization of Exit Opportunities

We seek to develop transaction structures that align our interests with the interests of management
of the portfolio companies and, through proactive exit planning, seek to ensure that portfolio
companies can take advantage of opportunities for value realization on a timely basis. We generally
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