Item 5: Fees and Compensation
The fees applicable to each of the Funds are set forth in detail in each Client’s corresponding
Offering Documents. A brief summary of such fees is provided below.
Management Fee
Ararat is paid an investment management fee (“Management Fee”) on a percentage of the
net asset value of the Funds as set forth in the applicable Offering Documents. The
Management Fee is normally charged on the first day of each month and is paid in advance
based on each Fund’s net asset value on the first day of such month.
The Management Fee will range from 1.25% to 1.75% per annum.
Ararat, in its sole discretion, may reduce, waive, assign, participate or otherwise share the
Management Fee payable with respect to any Investor (including the General Partner and any
affiliates) without the consent of, or notice to, any other Investor.
Other Types of Fees or Expenses
Ararat is authorized to incur and pay in the name and on behalf of the Funds all expenses
which they deem necessary or advisable.
The Firm is responsible for all ordinary overhead expenses, including rent, furniture, fixtures,
equipment, office supplies, computer equipment, clerical expenses and all salaries, bonuses
and benefits paid to, or on behalf of, analytical and support personnel. The Funds do not have
their own separate employees or offices, and do not reimburse the General Partner or Ararat
for salaries or office rent.
Organizational Expenses
The Feeder Funds will bear all of their organizational expenses and offering expenses and will
each bear a pro rata share of the organizational and offering expenses of the Master Fund, up
to a maximum as set forth in the Offering Documents, and will reimburse the General Partner
and/or the Firm, as applicable, to the extent that either of them bears organizational or
offering expenses on behalf of the Funds. Organizational and offering expenses in excess of
such amount will be borne by Ararat.
Operating Expenses
The Feeder Funds will bear all of their expenses relating to its ongoing structure and operation,
including, without limitation, all costs and expenses relating to the Feeder Funds’ (and the
Feeder Funds’ pro rata share of the Master Fund’s) activities and operations (to the extent not
reimbursed in connection with an investment), including, without limitation, all fees, costs
and expenses associated (directly or indirectly) with the negotiation, financing, sourcing,
acquiring, holding, monitoring, hedging, settling and disposing of investments or proposed
investments; other transaction costs, including, without limitation, transaction fees, custodial
fees, brokerage fees, commissions, consulting, advisory, due diligence, investment banking,
legal, financial, auditing, accounting, research, third-party consulting and other professional
fees and expenses related to investments and proposed investments, as well as all fees,
expenses, interest payments and principal payments due to any lenders, investment banks
Ararat Capital Management LP Form ADV Part 2A Brochure
and/or other financing sources in connection with the financing, sourcing, acquiring, holding,
monitoring, hedging and disposing of investments or proposed investments; custodial fees,
appraisal fees and expenses; all investment-related travel expenses and travel expenses
related to the purchase, sale or transmittal of Feeder Fund and/or Master Fund assets; all
entity-level taxes, fees and other governmental charges (including any withholding not due to
the status or non-compliance by any particular Investor); the costs of any insurance (including,
without limitation, general partner liability insurance, errors and omissions insurance,
directors and officers insurance, if any, and other insurance policies with respect to the Feeder
Funds’ business and affairs); directors’ fees; expenses incurred in the collection of monies
owed to the Feeder Funds (or to the Master Fund, as applicable); Management Fees; expenses
related to mixed-use hardware and software and other technology and services; legal,
regulatory, compliance, auditing, research and accounting fees and expenses (including,
without limitation, fees and expenses of any administrator of the Funds (including the
Administrator, as defined within the Offering Documents)); expenses associated with the
preparation and delivery of financial statements and tax returns, if any; extraordinary
expenses (including, without limitation, litigation related and indemnification expenses,
whether payable in connection with a proceeding involving the Funds or otherwise, and
including the amount of any judgment or settlement paid in connection therewith); the costs
of any reporting to Investors; reasonable expenses incurred in connection with any meetings
of Investors and reasonable expenses of the members and meetings of any committee of the
Funds; any “broken deal” or failed transaction expenses; expenses incurred in connection with
the dissolution, liquidation and termination of the Funds; and expenses incurred in connection
with the preparation of amendments to the Offering Documents.
From time to time, the General Partner, the Firm and/or their affiliates may elect to bear
certain expenses on behalf of the Funds that would otherwise be Fund expenses. The General
Partner, the Firm and/or their affiliates will not have any obligation to bear such expenses and
may elect at any time (in whole or in part) to no longer bear such expenses on behalf of the
Funds.
In general, each Investor will bear its proportionate share of the expenses of the Funds on a
pro rata basis with respect to the size of its Capital Account (for the Onshore Fund) or value
of its Shareholder Shares (for the Offshore Fund). The General Partner may, however, allocate
expenses on another basis, including by allocating certain expenses to certain (but not all)
Investors, if the General Partner determines that such an allocation is more equitable.