Kinderhook Industries LLC

FEES AND COMPENSATION

        In general, Kinderhook receives management fees (“Management Fees”) in connection
with the provision of advisory services to its clients. Kinderhook or its affiliates receive
additional compensation in connection with management and other services performed for
portfolio companies of the Funds, and such additional compensation will generally (subject to
certain exceptions as discussed herein and set forth in the Partnership Agreements) offset in
whole or in part the Management Fee otherwise payable to the extent provided by the relevant
Partnership Agreement. Portfolio Company Fees (as defined below) from time to time will also
include amounts prepaid in anticipation of future services to a portfolio company or that are
otherwise accelerated, which will be offset against the applicable Management Fee to the extent
set forth in the relevant Partnership Agreement. Limited partners in the Funds also bear certain
Fund expenses. Where the relevant Partnership Agreement calculates Management Fees based
on the amount of commitments or the amount of investment contributions, the amount of
Management Fees generally will not be reduced based on reductions in investment value, except
where specified by the relevant Partnership Agreement. As a general matter, Management Fees
will be payable during term extensions unless otherwise agreed with investors.

Management Fees

        Certain Funds do not pay Management Fees and those Funds generally pay all fees, costs,
expenses (other than the relevant general partner’s or any of its affiliates’ ordinary administrative
and overhead expenses (other than Management Fees) of managing a Fund), liabilities and
obligations attributable to a Fund’s (and its subsidiaries’ and intermediate entities’) activities,
including, but not limited to, taxes, legal, auditing, accounting and consulting expenses
(including any such fees and expenses, break-up or topping fees or other liabilities or obligations

associated with investment and disposition opportunities not consummated, “Broken Deal
Expenses”), expenses associated with the preparation of a Fund’s financial statements, tax
returns and Schedule K-1s and other similar reports, out-of-pocket expenses of the advisory
board of such Fund and annual meetings of the limited partners; insurance; other expenses
associated with the acquisition, holding and disposition of its investments, including
extraordinary expenses, Management Fees, and other expenses associated with such Fund
(including extraordinary expenses such as litigation and indemnification, if any and travel
expenses, which include expenses for first-class air travel, chartered air travel and private air
travel (including the use of private aircraft owned, partially owned or leased by Kinderhook or
any of its Principals, partners, directors, officers or employees, and including reimbursement for
expenses and overhead incurred by such persons in connection with such aircraft, including a
ratable portion of insurance premiums and expenses, hangar fees, landing fees, pilot
compensation and expenses, fuel, maintenance, technology fees, hourly engine fees and other
similar fees)).

         Certain Funds in addition to the fees, costs, and expenses described above pay a
Management Fee equal to 1.0% to 2.0% per annum of aggregate commitments, as described in
each Fund’s Partnership Agreement. Investors participating in a closing after a Fund’s initial
closing date bear the Management Fee from the initial closing date, generally in addition to an
interest component payable to Kinderhook or an affiliate. For certain Funds, Portfolio Company
Fees (as defined below) reduce the Management Fee received, directly or indirectly, by
Kinderhook. In the event that the amount of Portfolio Company Fees to be applied against the
Management Fee exceeds the Management Fee for the immediately succeeding three-month
period, 100% of such excess is carried forward to reduce the Management Fee payable in the
following three-month periods. Any Break-Up and Commitment Fees and any Management Fee
offsets remaining at the end of the life of a Fund will be retained by the relevant Kinderhook
affiliate, subject to certain exceptions.

        As is generally the case in private equity funds, the Governing Documents provide that a
Fund’s Management Fees will be calculated and charged on a basis that generally is not tied to
the Fund’s then-current net asset value. As further specified in the Governing Documents, from
the effective date of the relevant Fund until a date specified in the Governing Documents (the
“Reduction Period”), Management Fees generally will be charged based on a formula tied to
the amount of the relevant Fund’s aggregate commitments. Further, after the Reduction Period,
Management Fees generally will be charged and calculated based on a formula tied to the
amount of investment contributions (including, where applicable, a Fund borrowing component
(including interest expenses) and the amount of any capitalized fees or expenses, including the
costs of Operating Partners (as defined below)) made by the relevant Fund relating to the Fund’s
aggregate investment(s) in its portfolio companies that have not been realized or written-off for
U.S. federal income tax purposes (such investments, “Impaired Value Investments”). Due to
differences in the criteria set forth in their respective Governing Documents, in the event where
more than one Fund participates in an investment, there is the possibility that an investment will
become an Impaired Value Investment for purposes of one Fund’s Governing Documents but not
those of one or more other Funds.

        Under the Governing Documents, where the fair market value of an investment exceeds
the total amount of investment contributions relating to such investment, post-Reduction Period

Management Fees will not be calculated based upon such appreciated value, and will instead
...

TYPES OF CLIENTS

       Kinderhook provides investment advice solely to its Fund clients, and references
throughout this Brochure to “clients” and to Kinderhook’s related duties to and practices on
behalf of its clients and/or investors should be construed accordingly. Funds may 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 often include, directly or indirectly, the Principals or other personnel of
Kinderhook and its affiliates and members of their families, Operating Partners or other service
providers retained by Kinderhook or a Fund, as well as executives of portfolio companies.

        The Funds generally have a minimum investment amount of between $5 million and $20
million, as further described in the Funds’ respective Memoranda, for third-party investors, but
allow lesser amounts if waived by Kinderhook. The Fund interests are offered and sold solely to
a limited number of “accredited investors” as defined in Regulation D promulgated under the
Securities Act of 1933, as amended. The Funds will accept commitments only from persons who
are “qualified purchasers” as that term is defined under the U.S. Investment Company Act of
1940, as amended, and the rules and regulations promulgated thereunder (or qualified
knowledgeable Kinderhook personnel).

    METHODS OF ANALYSIS, INVESTMENT STRATEGIES AND RISK OF LOSS

General

       Kinderhook seeks to partner with management to make equity and equity-like
investments in companies in the lower middle market. Kinderhook is focused on acquiring and
growing non-core divisions of corporate parents, entrepreneurial businesses in transition and
family-owned businesses seeking liquidity. Kinderhook seeks to acquire companies that are, or
have the potential to become, market leaders through investment or add-on acquisitions under
Kinderhook’s ownership.

        Kinderhook seeks to develop a disciplined and repeatable approach to investing in the
lower middle market. Once an investment opportunity has been identified, Kinderhook seeks to
implement an effective operating strategy to improve the performance of the acquired company
by (i) partnering with the management team to drive operating efficiencies and organize growth
and (ii) providing significant financial and management resources where needed and (iii)
identifying additional follow-on acquisitions to drive scale.

       There can be no assurance that Kinderhook will achieve the investment objectives of the
Funds and a loss of investment is possible.

Investment and Operating Strategy

        Lower Middle-Market Focus. Kinderhook believes that this market contains a large
target universe of acquisition prospects with less sophisticated intermediation, is characterized by
a favorable ratio of capital to investment opportunities, and is comprised of a significant number
of sound businesses that are under-managed and/or under-capitalized.

        Close Network of Sourcing Relationships. Kinderhook targets transactions sourced
through a network of business brokers, managers, advisors, lawyers, accountants, bankers,
lenders and other intermediaries. This approach has enabled Kinderhook to build strong
relationships within the broker community and allowed Kinderhook to identify proprietary
transactions early in their scale processes.

        Build Management Team. Kinderhook seeks to partner with executives who possess
superior talent on a relative basis in the markets in which they compete and who can add value
both pre-and post-investment. In order to cultivate strong management partnerships in successful
investments, Kinderhook attempts to bring high-quality executives down market to lower middle
market businesses. Kinderhook maintains a network of senior executives across various
industries and geographies who may ultimately source deals, serve as portfolio company
directors, serve in direct management roles, invest in portfolio companies alongside Kinderhook
and/or invest in the Funds.

       Follow-on Acquisitions. Kinderhook invests substantial resources in identifying and
executing on follow-on acquisitions which drive scale and internal operating efficiencies. To
date, Kinderhook has completed more follow-on acquisitions than platform investments.

         Post-Acquisition Value Creation. Kinderhook pursues investment opportunities in which
it believes it can create value by implementing strategic and operational changes. After the
acquisition of a portfolio company, Kinderhook focuses on organic growth. This growth may be
achieved through improved marketing, product line extensions, geographic expansion, better
supply chain management or more efficient distribution. In some instances, Kinderhook may
acquire companies with one or more deficiencies, such as an inadequate existing management
team, customer concentration or poor management information systems. Kinderhook attempts to
utilize the due diligence process to identify and understand the risks to which its capital may be
exposed during the investment and then tries to work with management pre-acquisition to
develop plans to correct, diversify or mitigate these risks post-acquisition. As part of
Kinderhook’s investment strategy, it believes that assuming these risks present Kinderhook with
opportunities to pay a lower multiple at the time of acquisition and, after correcting them, realize
a higher multiple upon exit.

Risks of Investment and Conflict of Interest

        Each Fund and its investors bear the risk of loss that Kinderhook’s investment strategy
...