Item 5: Fees and Compensation
The Funds
Argonaut receives an asset-based management fee from each Fund that is payable quarterly, as
further described in each Fund’s Governing Documents. If Argonaut’s advisory agreement with a
Fund is terminated, any management fees paid in advance will be charged on a pro rata basis through
to the date of termination, and any remaining fees will be refunded. The general partner of each Fund
generally makes capital calls on the Fund’s investors for the amount of Argonaut’s management fees
and pays the amounts received to the Company. In addition to the management fees described above,
Argonaut is entitled to receive a carried interest allocation from each Fund after certain performance
hurdles have been met, as further described in the Fund’s Governing Documents. Such carried
interest represents a portion of the Fund’s net investment profits. The management fees and carried
interest are generally subject to waiver or reduction by the general partner with respect to some or
all of a Fund’s limited partners in the general partner’s sole discretion, as further described in the
Fund’s Governing Documents.
Each Fund bears all costs and expenses incurred in connection with the organization of the Fund and
general partner entities (including, without limitation, any holding vehicles of any of the foregoing),
including third party legal and accounting fees, printing costs, travel (at rates not exceeding a first-
class equivalent fare) and out-of-pocket expenses, and all costs and expenses incurred in connection
with the offering of interest in a Fund (but excluding any placement fees); provided that
organizational expenses payable by a Fund are subject to caps, as set forth in the applicable Fund
Governing Documents. Organizational expenses in excess of such caps and any placement fees are
paid by the Fund but borne by Argonaut through a 100% offset against the management fee.
In addition, each Fund is responsible for all expenses relating to its own operations, including
(i) all out-of-pocket costs of the administration of the Fund, including administrative, tax,
accounting, audit, legal, custody, depositary, safekeeping and other professional and
service fees and expenses, costs of holding any meetings with partners, costs of any
liability insurance obtained with respect to any indemnified persons, costs associated
with reporting and providing information to existing and prospective limited partners,
and expenses associated with maintaining the books and records of the respective Fund;
(ii) all investment banking and consulting expenses;
(iii) all appraisal and valuation expenses;
(iv) all taxes, governmental charges, registrations, fees and duties payable by the Fund or its
subsidiary investment vehicles, including those expenses incurred in connection with any
investigation or review of the Fund or any settlement entered into by the Fund;
(v) all unreimbursed fees, costs and expenses incurred in connection with the collection of
amounts due to the Fund from any source;
(vi) all fees, costs and expenses incurred in connection with any restructuring or amendment
to the governing documents of the Fund;
(vii) all fees, costs and expenses relating to the limited partner Advisory Committee, including
the reasonable out-of-pocket expenses incurred by members thereof and any reasonable
and customary fees and expenses of retained advisors;
(viii) all fees, costs and expenses (and damages) related to regulation, disputes, litigation,
government inquiries, investigations or proceedings or compliance with applicable law,
in each case related to the Fund or its investments, including regulatory expenses of the
General Partner and the Manager relating to the Fund and any other expenses related to
compliance with and filings under applicable laws, rules and regulations;
(ix) all liabilities for indemnity, giveback or contribution to any person;
(x) all expenses incurred in connection with administrative proceedings relating to the
determination of Fund items at the Fund level undertaken by the partnership
representative, and any audit with respect to taxes;
(xi) all expenses incurred in connection with the dissolution and liquidation of the Fund;
(xii) all fees, costs and out-of-pocket expenses and liabilities directly related to investments or
prospective investments (including unconsummated investment expenses and expenses
incurred in relation to prospective investments prior to the initial closing of the Fund)
and follow-on investments;
(xiii) all fees, costs and out-of-pocket expenses relating to unconsummated investments,
including all fees, costs and expenses incurred in the formation of any related co-
investment vehicle and any other amounts that otherwise may have been borne directly
or indirectly by potential co-investors were such investments consummated, without
regard to whether a determination has been made as to the identity of any such potential
co-investor or the allocation of the potential investment opportunity prior to the time
that it is determined that the prospective investment will not be consummated;
(xiv) all principal, interest, fees, costs, expenses and other amounts payable in respect of or in
connection with borrowings, indebtedness, financings, guaranties or derivative
transactions;
(xv) all fees, costs and expenses incurred for research or obtaining information for the Fund;
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