Item 5: Fees and Compensation
A. Interests in the Funds are only offered to “qualified purchasers” as defined in the
Investment Company Act. Halyard is compensated for advisory services by a fee based on its
assets under management (the “Management Fee”) and by a share of capital appreciation
(“Carried Interest”) with respect to realized investments. This compensation is negotiated
separately with each Client but is charged pro rata to all investors. Investors and prospective
investors should refer to the Funds’ offering documents for a detailed description of the fees
associated with investments in the Funds. Fees are non-negotiable but may be waived or reduced
in the Firm’s discretion.
B. The Firm bills Clients for the Management Fee on a quarterly basis. As a private equity firm,
the Carried Interest is billed as investments are realized and not on any set schedule.
C. As described more fully in Item 6 herein, Halyard typically is entitled to receive a
performance-based fee from its Clients. Further, Halyard’s Clients are responsible for all other
expenses attributable to their activities including, without limitation:
i. Expenses incurred in connection with the evaluation, acquisition or disposition of
investments (whether or not consummated), including private placement fees, sales
commissions, appraisal fees, taxes, brokerage fees, underwriting commissions and
discounts, and legal, accounting, investment banking, consulting, information services and
professional fees;
ii. Expenses incurred in connection with carrying or management of investments,
including custodial, trustee, recordkeeping and other administrative fees;
iii. Expenses incurred in connection with the applicable Fund’s financial statements, tax
returns and K-1’s;
iv. Attorneys’ and accountants’ fees and disbursements;
v. Taxes and other governmental charges levied against the applicable Fund;
vi. Insurance (including in respect of errors or omissions of Halyard, its affiliates and
related entities, and any other persons acting on behalf of the applicable Fund), regulatory or
litigation expenses (and damages), including regulatory expenses of the Firm;
vii. Expenses incurred in connection with the winding up or liquidation of the applicable
Fund;
viii. Expenses relating to defaults by the applicable Fund’s investors in the payment of
any capital contributions;
ix. Out-of-pocket expenses for transactions not consummated;
x. Expenses incurred in connection with any restructuring or amendments to the
constituent documents of the applicable Fund and related entities, including Halyard;
xi. Expenses incurred in connection with the formation of special purpose investment
vehicles to the extent permitted by the applicable Fund’s partnership agreement; and
xii. Expenses incurred in connection with distributions to the applicable Fund’s investors
and in connection with any meetings with investors.
To the extent that Halyard’s Clients may incur brokerage fees or other transaction costs, such
costs will be borne by the respective Client. Please see Item 12 for further information
regarding Halyard’s brokerage procedures.
D. The Management Fee is paid quarterly in advance. In the extremely unlikely event that
an advisory contract is terminated before the end of a billing period, Halyard will refund the
overpayment of the Management Fee pro rata.
Performance-based fees are not paid in advance.
E. Neither Halyard nor any of its supervised persons accepts compensation for the sale of
securities or other investment products.