Item 5. Fees and Compensation
As compensation for investment advisory services provided to the H EALTHPOINTCAPITAL Funds,
HEALTHPOINTCAPITAL receives from each HEALTHPOINTCAPITAL Fund an annual management
fee that initially is a percentage of the amount that the fund’s limited partners, other than certain
individuals or entities affiliated with HEALTHPOINTCAPITAL, have committed to invest in the
HEALTHPOINTCAPITAL Fund and that subsequently is reduced after the commitment period of a
HEALTHPOINTCAPITAL Fund. The management fee is payable less than semi-annually in
advance, funded by drawdowns of unfunded capital commitments of limited partners in
accordance with the applicable HEALTHPOINTCAPITAL Fund’s limited partnership agreement.
The calculation of the fee is described in the applicable fund documents. The potential for a
refund is governed by the respective limited partnership agreement.
HEALTHPOINTCAPITAL or its affiliates typically perform management, advisory, transaction-
related, financial advisory and other services (“Related Services”) for, and will sometimes
receive fees from, actual or prospective portfolio companies or other deal-related investment
vehicles of the HEALTHPOINTCAPITAL Funds. Related Services fees may include fees paid in
connection with mergers, acquisitions, add-on acquisitions, refinancings, public offerings, sales
and similar transactions. Fees for Related Services may be significant. Payment of such fees
may be in the form of cash, securities of portfolio companies or investment vehicles (or rights to
such securities) or other assets.
Pursuant to the terms of the limited partnership agreements of the various H EALTHPOINTCAPITAL
Funds, the management fee may be reduced by a portion of other compensation received for
Related Services by HEALTHPOINTCAPITAL, managing members of the general partners, and
certain related persons from actual and prospective portfolio companies. These reductions in
management fees are described in detail in the applicable fund documents.
Under the limited partnership agreements of certain of the H EALTHPOINTCAPITAL Funds,
HEALTHPOINTCAPITAL may waive a portion of its management fees from such
HEALTHPOINTCAPITAL Funds and apply such waived management fees toward satisfying the
investment commitments to the HEALTHPOINTCAPITAL Funds by the members of, and other
persons related to, the general partners of such HEALTHPOINTCAPITAL Funds.
To the extent provided in the fund documents of the HEALTHPOINTCAPITAL Funds,
HEALTHPOINTCAPITAL will pay out of its management fees operating costs and day-to-day
expenses in managing the HEALTHPOINTCAPITAL Funds, including general office rents and
expenses and compensation of employees. Each HEALTHPOINTCAPITAL Fund will bear all other
expenses relating to it to the extent not borne by its portfolio companies, including, without
limitation, indemnification expenses and third-party costs such as legal, accounting, investment
banking and consulting fees. Some of these expenses borne by the H EALTHPOINTCAPITAL Funds
may relate to costs and expenses for transactions that are not consummated.
Although HEALTHPOINTCAPITAL does not generally utilize the services of broker-dealers for
transactions in portfolio securities of the HEALTHPOINTCAPITAL Funds, in situations where it
does, a HEALTHPOINTCAPITAL Fund incurs brokerage and other transaction costs. For additional
information regarding brokerage practices, please see Item 12 below.
The HEALTHPOINTCAPITAL Funds do not have a fee schedule. Instead, the limited partnership
agreement of each HEALTHPOINTCAPITAL Fund includes provisions setting forth the management
fees the fund pays. The HEALTHPOINTCAPITAL Funds may also pay a performance-based carried
interest, which is described in Item 6 below.
None of HEALTHPOINTCAPITAL’s supervised persons receive compensation in connection with
the sale of securities or other investment products to the H EALTHPOINTCAPITAL Funds.