The midbrace with the different hole pattern gets notched out for the gunwales. Here I balanced one of the midbraces on the other so I can mark where I want the notch to be. I think the gunwale is supposed to lay flat and square to the ground. 
Here is the midbrace marked and ready to cut.
The midbraces have been cut. I just stacked the two of them together and cut them both at the same time.
Here you can see that the gunwales set flat, parallel to the ground. I had to disconnect one side of the gunwales from the other in the middle so I could put the brackets back on. I cut the other end of the boat, and then re-assembled the gunwales in the middle. The boat folds up a lot easier with these notches cut in too.
