Item 5 – Fees and Compensation
Compensation and Fee Schedules
For Caprock Management investment advisory services, Caprock Management may receive
advisory fees (management fees). Subject to Caprock Management’s discretion, advisory fees
may be negotiated with prospective investors in a Partnership, including waiving
management fees for investors who are advisory clients of Caprock Management’s affiliate,
The Caprock Group, LLC. If an advisory client of the Caprock Group, LLC terminates its
advisory agreement, it will then become subject to the same management fees as non-
advisory investors.
The amount of advisory fees varies by Partnership. Typically, a Partnership has an
investment period, during which the advisory fee is determined by applying a fixed
percentage to the amount of the Partnership’s capital commitment or committed capital.
After the end of the investment period, either the same percentage or a different percentage
is applied to a base representing the amount of the Partnership’s reported value or invested
capital, depending on the Partnership.
Please refer to the Governing Documents of the Partnership for complete information on the
management fee payments.
Other Fees and Expenses
In addition to the advisory fees payable to Caprock Management, the Partnerships will bear
all expenses related to its operations, including the Underlying Expenses (as defined below);
fees paid to any third party administrator (including for middle and back office services);
interest on margin accounts and other indebtedness and borrowing charges; legal,
compliance, audit, and accounting fees and expenses (including third party accounting
services); all federal, state and local taxes and foreign taxes assessed against the
Partnerships or its investments or for which a Partnership is required to withhold, and the
costs of determination, challenge and compliance, if applicable, and any interest and
penalties thereon (certain withholding taxes, and any interest and penalties thereon, will be
allocated to and deducted from the Capital Accounts of the Limited Partners where such
withholding is required); Organizational Expenses and Start-up Expenses; insurance
premiums; regulatory filing fees and custodial fees; fees and expenses of consultants and
advisors; distribution expenses, including, Blue Sky costs, if any; fees for bookkeeping,
record keeping, auditing, tax preparation and other similar services relating to the affairs of
the Partnership, and as may be incurred with respect to the affairs of the Partnerships;
expenses related to the acquisition, holding or sale of portfolio investments that are
consummated; costs and fees of evaluating potential investments to be made by the
Partnership, due diligence costs (including travel expenses) incurred in researching
potential investment opportunities, brokerage commissions payable to third parties, fees of
consultants, brokers or other professionals or advisors who provide research, advice or due
diligence services with regard to actual or potential investments and any other expenses
reasonably related to the purchase, sale or transmittal of Partnership assets; valuation
related expenses; salaries and benefits of personnel hired by the Partnership on a full or part
time basis; costs associated with pricing services; costs related to the Partnership’s
indemnification of the General Partner, Caprock Management and their respective affiliates
and/or the purchaser of a portfolio investment and all extraordinary expenses, including
without limitation, litigation fees, judgments, penalties and expenses in connection with any
legal action for or against the Partnership (and the General Partner, Caprock Management
and their respective affiliates, to the extent arising out of the affairs of the Partnership),
director and officer liability or other insurance and indemnification relating to the affairs of
the Partnership, each as the General Partner determines in its sole discretion.
Partnership “Underlying Expenses” means the Partnership’s share of all costs, fees and
expenses associated with Underlying Partnerships, which include the Partnership’s share of
the offering, operation, management, and administration expenses of the Underlying
Partnerships (such as, incentive allocations or fees, and management or advisory fees, paid
to the Portfolio Managers, and the Underlying Funds’ research expenses, interest expense,
brokerage commissions, bookkeeping expenses, taxes and interest on and penalties assess
against such Underlying Fund with respect to taxes, amortization of formation and
organizational costs, if any, administrative expenses, and certain third party expenses, etc.).
The General Partner and Caprock Management, as the case may be, shall pay expenses, such
as salaries and benefits of personnel of the General Partner and/or Caprock Management
assigned to a Partnership, costs associated with office space, telephone, utilities and
computer equipment/support, and costs associated with news, quotation and similar
information. The General Partner in its sole discretion may liquidate investments held by a
Partnership or establish cash reserves to pay management fees and other costs and expenses
incurred by or on behalf of the Partnership.
The formation and related startup expenses associated with the creation of TCG PSP and TCG
PSP II were paid by Caprock Management’s affiliate, The Caprock Group, LLC.