Item 5: Fees and Compensation
Fees Payable to ICM:
As the investment manager of Iroquois Domestic and Iroquois Offshore (individually a “Feeder
Fund” and, together, the “ICM Feeder Funds”), ICM receives management fees from each such
Feeder Fund. Each of the Feeder Funds pays ICM an annual management fee which is deducted
from the client accounts quarterly in advance based on the net assets of such Fund as of the close
of business on the last day of the prior quarter after adjustment for any contributions to, or
withdrawals from, such Fund. This management fee is pro- rated for any period that is less than
a full fiscal period. The management fee is equal to an annualized rate of 2.0% (0.5% quarterly)
of such Feeder Fund’s net assets. The management fee for Iroquois Domestic is subject to
increase or decrease in the sole discretion of the General Partner, provided that no such increase
or decrease shall be effective unless notice of such intended change is given to the limited
partners and the limited partners are afforded an opportunity to redeem their interests prior to
such change becoming effective. The General Partner in its sole discretion, may waive or reduce
the management fee for limited partners that are members, affiliates or employees of the General
Partner or ICM and for certain large or strategic investors. Likewise, the management fees
charged to one or more of the shareholders of Iroquois Offshore may be modified by ICM. To
date, only one large, strategic and early seed investor has been charged a reduced fee pursuant to
a side letter arrangement.] All other investors including the principals and employees of ICM
pay the 2.0% management fee. Investors are credited with any management fees paid in advance
for any period in which they no longer have capital invested in the Feeder Fund. This
credit/refund is made at the time an investor redeems (either in whole or in part) from the Feeder
Fund.
In consideration for the management fees it receives, ICM provides certain services and pays
certain overhead expenses of an ordinary and recurring nature including, but not limited to, rent,
supplies, secretarial expenses and stationary, charges for furniture and fixtures and compensation
of analysts, professionals and administrative personnel. All other expenses such as commissions,
interest on margin accounts, custodial fees, clearing and settlement charges, transfer
agent/registrant fees, printing expenses and all expenses reasonably related to the organization
and operation of the Fund including research, legal, accounting, auditing and other professional
expenses are borne on a pro rata basis by the investors in the Feeder Funds in accordance with
their capital accounts.
In addition to these management fees, at the end of each fiscal year, the Iroquois Domestic and
Iroquois Offshore are each obligated to pay the General Partner and ICM respectively, an
incentive allocation or performance fee based on the performance of the applicable Feeder Fund
during such calendar year. The performance fee/incentive allocation Is 20% of the increase, if
any, in the net asset value of the relevant shares or capital account, subject to a “loss carry
forward” which means that no performance fee/incentive allocation is earned until after any
decline in the net asset value of such shares or capital account in any prior calendar years (on a
cumulative basis) is offset by subsequent increases in the net asset value of such shares or capital
account. This is commonly referred to as the “High Water Mark”.
ACTIVE/71988126.8
In instances where ICM takes the lead on an investment or with respect to the restructuring of an
investment made by an unrelated syndicate of funds/investors, ICM has the right to receive a fee
from the target company and/or other funds. This fee is intended to compensate the professional,
investment and legal team at ICM for going beyond their regular scope in evaluating, leading,
negotiating, structuring, restructuring and closing the relevant investment. In such a situation,
management fees would not be offset or reduced by these fees. The receipt of such fees creates a
potential conflict of interest whereby ICM is incentivized to engage in a transaction with a
portfolio company for reasons other than the investment merit of the particular investment. ICM
is aware of the existence of this potential conflict yet believes that it only performs such
functions and takes such fees in connection with transactions that it deems its extra-ordinary
involvement to be in the best interest of the Fund.
Fees Payable to IEA:
As the investment manager of IEF, IEA receives a management fee from IEF at the rate of
0.375% per calendar quarter (1.5% per year), which is deducted from the client accounts
quarterly in advance based on the net assets of IEF as of the close of business on the last day of
the prior quarter after adjustment for any contributions to, or withdrawals from, IEF. This
management fee is pro-rated for any period that is less than a full fiscal period. The managing
member of IEF in its sole discretion, may waive or reduce the management fee for members that
are members, affiliates or employees of the managing member or IEA and for certain large or
strategic investors. To date, only three large, strategic and early seed investors have been
charged a reduced fee pursuant to side letter arrangements. All other investors including the
principals and employees of IEA pay the 1.5% management fee. Investors are credited with any
management fees paid in advance for any period in which they no longer have capital invested in
IEF. This credit/refund is made at the time an investor redeems (either in whole or in part) from
IEF.
In consideration for the management fees it receives, IEA provides certain services and pays
certain overhead expenses of an ordinary and recurring nature including, but not limited to, rent,
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