5. Fees and Compensation
For SPVs, EIG charges a quarterly management fee (the “management fee”) generally ranging
from 1% to 2% of assets under management, and an EIG affiliate charges a performance-based
fee generally ranging from 15% to 20% of the increase in the account’s net asset value, in
accordance with the terms described in the SPV’s LPA. For SMAs, EIG charges a quarterly
management fee ranging from 0% to 2% of assets under management, and a performance-based
fee generally ranging from 15% to 20% of the increase in the account’s net asset value, in
accordance with the terms described in the SMA’s IMA. EIG does not charge its current SMA
client a management fee for the investment management services it provides with respect to the
account. EIG does receive a performance-based fee equal to 15% of the increase in the net asset
value of the account, in accordance with the terms described in the SMA’s IMA.
EIG’s fees are generally not negotiated although EIG may agree to reduce the management fee
(as it has done for its current SMA client), the performance-based fee or any other amounts due
to EIG for certain clients.
Certain expenses, including brokerage commissions and other transaction costs incurred in
connection with securities transactions, may be paid by the SPV or EIG and allocated to clients in
proportion to their respective account value at the time of the allocation. Generally, the prime
brokers and custodians used by EIG do not charge the SPVs and SMA accounts a custody fee.
Neither EIG nor its affiliates is a broker/dealer and, consequently, none receive any commissions
or other compensation in connection with the purchase or sale of securities.
Additional operating expenses, such as administration, legal, accounting, auditing and other
professional fees and expenses, are paid by the SPV or EIG and are allocated to the clients in the
manner described above. The clients do not pay any of EIG’s or its affiliates’ internal expenses
such as salaries, bonuses or office rent.
EIG generally charges management fees in advance, at the beginning of each quarter. If a client
redeems its investment before the end of the quarter, EIG will refund to the client the pro-rated
portion of the management fee based on the number of days remaining in the quarter.
Neither EIG nor any of its officers, partners or directors accepts compensation for the sale of
securities or other investment products.