Item 5: Fees and Compensation
The fees applicable to the Funds are set forth in detail in the corresponding Fund’s Offering
Documents. A brief summary of such fees is provided below.
Management Fee
With respect to the Hill City Master Funds, Hill City Capital is paid an investment management
fee (“Management Fee”) for management services for each fiscal quarter. The Management
Fee will be payable quarterly in advance in an amount ranging from 0.25% to 0.375%
(approximately ranging from 1.00% to 1.50% annualized) of the net asset value of each
Investor’s capital account as of the beginning of the then-current calendar quarter, computed
prior to the payment or accrual of any Management Fee or Incentive Allocation (as defined
below).
With respect to the Hill City Funds, Hill City Capital is paid a Management Fee for management
services for each fiscal quarter. The Management Fee will be payable quarterly in advance in
an amount ranging from 0.125% to 0.250% (approximately ranging from 0.50% to 1.00%
annualized) of each Investor’s aggregated Capital Contributions to the Company, less any
distributions to such Investor in respect of the Portfolio Company that represent Capital
Distributions.
The capital account of an Investor admitted other than on the first business day of a calendar
quarter (and the capital account of an Investor that makes an additional capital contribution
on a day other than the first business day of a calendar quarter) will be subject to a pro rata
portion of the Management Fee charged for such quarter based upon the portion of the
quarter for which it is an Investor. No portion of the Management Fee will be refunded if an
Investor is permitted to withdraw on a date other than the end of a calendar quarter.
Hill City Capital LP Form ADV Part 2A Brochure
Hill City Capital, in its sole discretion, may elect to reduce, waive or calculate differently the
Management Fee with respect to any Investor. However, no such waiver, reduction or rebate
will adversely impact any other Investor or cause them to bear a higher portion of the
Management Fee than they would bear absent such waiver, reduction or rebate.
Incentive Allocation
With respect to the Hill City Master Funds, the Fund General Partner is generally entitled to
receive an incentive allocation (“Incentive Allocation”). Generally, at the end of each fiscal
year (or other accounting period when a calculation of the Incentive Allocation is required) of
the Hill City Master Funds, the Fund General Partner will have reallocated to its capital account
in the Hill City Master Funds an amount equal to a portion of the Net Increase attributable to
each Investor’s capital account maintained for its Interests for such fiscal year, provided that
no Incentive Allocation shall be made for a given fiscal year (or other accounting period), from
such Investor unless the Net Increase equals or exceeds the Hurdle Amount (as defined below)
for the applicable fiscal year (or other accounting period). The “Hurdle Amount” for each fiscal
year (or other accounting period) shall be the amount equal to the return that would have
accrued had an Investor’s capital contribution achieved a five percent (5%) annual rate of
return. The Incentive Allocation will generally be 20%.
The Fund General Partner, in its sole discretion, may elect to reduce, waive or calculate
differently the Incentive Allocation with respect to any Investor. However, no such waiver,
reduction or rebate will adversely impact any other Investor or cause them to bear a higher
portion of the Incentive Allocation than they would bear absent such waiver, reduction or
rebate.
With respect to the Hill City Funds, the Hill City Fund Manager is generally entitled to receive
carried interest (“Carried Interest”). The Hill City Fund Manager will apportion each Investor’s
share of distributable assets of the Company between Net Profit Distributions and Capital
Distributions.
I. first, amounts constituting Capital Distributions shall be distributed one hundred
percent (100%) to such Investor until it has received cumulative distributions equal to
the aggregate Capital Contributions made by such Investor (less any previously
returned Capital Contributions);
II. second, all amounts (i.e., Net Profit Distributions and Capital Distributions) shall be
distributed one hundred percent (100%) to such Investor until such Investor has
received cumulative distributions pursuant to this Section II and Section IV equal to
the Unpaid Priority Return;
III. third, all amounts shall be distributed one hundred percent (100%) to the Hill City
Fund Manager until the Hill City Fund Manager has received cumulative distributions
pursuant to this Section III and Section IV with respect to the applicable Investor an
amount equal to fifteen percent (15%) of the sum of the aggregate amount distributed
to such Investor pursuant to Sections II and IV and the aggregate distributions to the
Hill City Fund Manager pursuant to this Section III and Section IV;
IV. thereafter, all amounts shall be distributed eighty-five percent (85%) to such Investor
and fifteen percent (15%) to the Hill City Fund Manager.
The Hill City Fund Manager, in its sole discretion, may elect to reduce, waive or calculate
differently the Carried Interest with respect to any Investor. However, no such waiver,
reduction or rebate will adversely impact any other Investor or cause them to bear a higher
portion of the Carried Interest than they would bear absent such waiver, reduction or rebate.
Hill City Capital LP Form ADV Part 2A Brochure
Payment of Fees
Fees and compensation paid to Hill City or its affiliates by the Funds are generally deducted
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