Section Partners Management LLC

Item 5 – Fees and Compensation

A.     Fee Schedule
The fees and compensation payable to the Firm are negotiable and vary among its Funds.
However, the Firm may waive or reduce fees for certain Investors in its discretion. The
compensation is generally as follows:
       1.      Management Fee
The Firm typically receives a quarterly asset-based management fee calculated as a
percentage of each Investor’s capital account, payable quarterly in advance. The
management fee is generally 1.75% - 2%.
       2.      Performance-based Fees
Each Fund’s General Partner or Managing Member, as applicable, generally receives a carried
interest equal to a percentage of all realized profits, as described more fully in each Fund’s
Governing Documents. The carried interest amount with respect to any Investor and as of
any time shall be 20% of such Investor’s initially apportioned profit amount.
Prior to the allocation or distribution of any profits to the General Partner in respect of its
carried interest, the Investors in some of the Funds are entitled to an 8% compounded,
annualized preferred return of 8%, on their contributions (“Contributed Capital”).
With respect to any Affiliates of the General Partner, the carried interest amount shall be
between 10% to 15% of such Affiliates profit amount as of such time.
The carried interest will only be charged to accounts of those Investors who are “qualified
clients” as defined in Rule 205-3 of the Investment Advisers Act of 1940, as amended
(“Advisers Act”).
       3.      Fee Comparison
Fund expenses, including the management fee and any performance-based fees may
constitute a higher percentage of average net assets than could be found in other investment
programs.
B.     Payment of Fees
Management fees, performance-based fees, and third-party fees (discussed below) are
deducted from the applicable Funds’ assets. Management fees, which are paid in advance, are
withdrawn at the beginning of the quarter. Performance-based fees are calculated as of the
last business day of the calendar quarter but are only paid when the Funds distribute realized
proceeds pursuant to the Fund’s Governing Documents.
C.     Third-Party Fees
Expenses to be borne by each Fund typically include the following costs and expenses
associated with the formation, operation, dissolution, winding-up, or termination of such
Fund: (i) all out-of-pocket expenses associated with the organization of the General Partner

                                                                             Part 2A of ADV:
                                                   Section Partners Management, LLC Brochure

or Managing Member, as applicable, or the Fund, or the syndication of interests therein (other
than placement agent fees); (ii) legal, accounting, audit and tax, custodial and other
professional fees as well as consulting fees relating to services rendered to the Fund that
could not reasonably have been rendered by the General Partner or Managing Member, as
applicable, or their members; (iii) banking, brokerage, broken-deal, registration,
qualification, finders, depositary and similar fees or commissions; (iv) transfer, capital and
other taxes, duties and costs incurred in acquiring, holding, selling or otherwise disposing of
Fund assets; (v) insurance premiums, costs of similar risk management arrangements,
indemnifications, costs of litigation and other extraordinary expenses of the Fund; (vi) costs
of financial statements and other reports to Investors as well as costs of all governmental
returns, reports and other filings; (vii) costs of meetings of the investors and the advisory
committee (including the reasonable travel and other out-of-pocket costs incurred by the
General Partner or Managing Member, as applicable, and the advisory committee members
in attending such meetings); (viii) interest expenses related to bridge borrowing; (ix) the
management fee and all costs associated with any liquidating trust; (x) legally required
advertising and public notice costs; and (xi) any other expenses incurred on behalf of the
Fund not listed in the preceding clauses (i) through (x) that are not customarily considered
to be normal operating expenses of the General Partner or Managing Member, as applicable.
D.     Prepayment of Fees
The Funds invest in private companies on a long-term basis. Accordingly, all fees are paid
during the term of the Funds and Investors are generally not permitted to withdraw or
redeem Interests in the Funds. Fees paid at the beginning of a fiscal period (such as
management fees) will not be refunded or prorated for partial periods.
E.     Outside Compensation for the Sale of Securities
Neither the Firm nor its supervised persons accept compensation for the sale of securities or
other investment products outside of its association with the Firm.
The foregoing discussion in Items 5 represents the Firm’s basic compensation
arrangements. The management fees and carried interest described above are
structured to comply with Rule 205-3 under the Advisers Act. Fees and other
compensation are negotiable in certain circumstances and arrangements with any
particular Investor may vary. Although the Firm believes its fees are competitive,
lower fees for comparable services may be available from other investment advisers.

Item 7 – Types of Clients

The Firm provides investment advisory services to pooled investment vehicles which
generally operate as exempt investment companies under the Investment Company Act of
1940, as amended.
The Firm intends to restrict the number of Investors in the Funds and will offer Interests only
through non-public transactions in order to maintain their exclusion from “investment
company” status under the Investment Company Act of 1940, as amended (the “Investment
Company Act”).
Prospective Investors in the Funds must meet eligibility criteria and are subject to certain
withdrawal requirements and limitations. Prospective Investors are encouraged to
thoroughly review a Fund’s Governing Documents, which set forth all of the terms in detail.
Each Investor generally must be an “accredited investor” (as defined in Regulation D under
the Securities Act of 1933) and “qualified client” (as defined in Rule 205-3 under the Advisers
Act) and must meet other criteria as specified in the Governing Documents. The minimum
initial investment varies by Fund but is generally $25,000-$50,000 subject to waiver at the
discretion of the Firm.