Item 5: Fees and Compensation
A. CapGen is compensated for advisory services based on a percentage of invested capital. CapGen
is also compensated with a performance-based allocation, as described more fully under Item 6
below.
B. For the management fee, CapGen bills clients in advance on a semi-annual basis (January 31st and
July 31st). CapGen deducts its performance-based allocation directly from client assets.
C. CapGen’s clients generally bear the organizational costs associated with CapGen’s investment
program.
CapGen’s clients will also bear certain of their other expenses, which will include (but are not
necessarily limited to):
i. The client’s pro rata share of all expenses incurred in developing, negotiating and
structuring prospective or potential investments that are not ultimately made, including
any legal, accounting, advisory, consulting and financing expenses in connection therewith
(although as a matter of practice, CapGen generally absorbs these costs);
ii. Fees, costs and expenses of any administrators, custodians, attorneys and accountants
(including audit and certification fees and the costs of financial and tax reports, including
the costs of printing and distributing reports investors);
iii. All out-of-pocket fees, costs and expenses incurred in holding, developing, negotiating,
structuring and disposing of actual investments, including any financing, legal, accounting,
advisory, consulting and travel expenses in connection therewith;
iv. Brokerage commissions, registration fees and expenses, custodial expenses and other
investment costs actually incurred in connection with investments;
v. Interest on and fees and expenses arising out of all borrowings made by the clients,
including, but not limited to, the arranging thereof;
vi. The out-of-pocket costs of any litigation, D&O liability or other insurance and
indemnification expense or other extraordinary expense or liability relating to the affairs
of the client;
vii. Expenses of liquidating the client;
viii. Registration expenses and any taxes, fees or governmental charges levied against the
client and all expenses incurred in connection with any tax audit, investigation, settlement
or review of the client;
ix. The expenses of the client’s limited partner committee (although as a matter of practice,
CapGen generally absorbs these costs);
x. The expenses of any investment banking firm retained to determine the fair market value
of unrealized investments in connection with the withdrawal of an investor; and
xi. Clients should expect to incur brokerage and other transaction costs (See Item 12:
Brokerage Practices” for more information).
D. Clients must pay the management fee in advance, although CapGen may elect to bill clients for
the management fee at another time, in its sole discretion. In the unlikely event that CapGen does
not provide services for a full period, the management fee is typically required to be returned to
investors in the applicable Fund. In general, the amount of fees returned is calculated based on
the number of days remaining in the applicable period.
E. Neither CapGen nor any of its supervised persons accepts compensation for the sale of securities
or other investment products.