Item 5 – Fees and Compensation
Generally, investors in Irradiant’s closed-end funds are charged annual management fees based on
capital commitments (which are expected to significantly exceed portfolio assets early on in the
life of the funds) or invested capital, calculated and payable quarterly or semi-annually in arrears.
After the investment commitment period, the management fee is typically based on the lower of
aggregate net asset value or net invested capital. Irradiant or an affiliated company is generally also
entitled to receive a “carried interest” equal to a percentage of realized profits after a preferred return
to limited partners. This carried interest is based on realized gains and received income only, and
is payable as proceeds are distributed, subject, in some cases, to a reserve or claw-back
arrangement to account for possible or actual losses subsequently incurred.
As portfolio holdings are sold in a closed-end fund, the proceeds received (as well as cash interest
dividends received) are generally distributed to limited partners. However, limited partners in these
funds generally may not otherwise reduce or withdraw their investments until the fund’s maturity
without the consent of Irradiant (or a controlled subsidiary) in its capacity as general partner. Such
consent, if given, may require that the withdrawing partner be penalized for such early withdrawal.
Separate Accounts
The separate accounts managed by Irradiant Partners are generally charged management fees and
in some cases performance compensation similar to (but not necessarily the same as) those
applicable to Irradiant’s closed-end funds. A separate account Client may generally terminate its
investment advisory contract with Irradiant subject to a specified notice period.
Separate accounts may also be structured as “parallel vehicles” to closed-end funds to
accommodate legal, tax, regulatory, or other considerations for investors. Such parallel vehicles
are generally expected to (i) co-invest with the closed-end fund in each investment in proportion
to the respective available capital commitments, (ii) make each investment at the same time and
on substantially the same terms as the closed-end fund, and (iii) sell each of their respective
interests at the same time and on the same terms.
Additionally, Irradiant Partners manages traditional separately managed accounts and single investor
funds for large institutional investors. The fees for these cross-platform strategy vehicles are
negotiated directly with such Client and vary depending on the structure of the vehicle, the size of
the investment, and other relevant factors.
Fee Arrangements and Payments
With respect to private commingled funds, Irradiant is generally authorized to charge and deduct
advisory fees directly from the assets of the applicable funds at times and in an amount set forth
in governing fund documents. Separate account fees are billed directly to the Client. Irradiant
generally does not negotiate different fee arrangements with investors in its pooled investment
vehicles but is permitted to do so at the sole discretion of such general partner or manager. Irradiant
may waive all or a portion of fees with respect to commitments made by Irradiant personnel and
certain investors in its pooled investment vehicles.
Separate account fee structures are determined through negotiation.
Irradiant’s fees are charged separately net of any brokerage commissions, transaction fees, fund
fees, or other fund or separate account related costs and expenses (which are incurred by the fund
or separate account Client, including legal and accounting costs).
Additional Fees and Expenses
Generally, each investor in a private fund will bear its pro rata share of all costs and expenses
relating to the organization, operation and administration of such fund or managed account,
including, without limitation, (i) administration fees and expenses, whether provided by a third
party or by Irradiant or an affiliate of Irradiant; (ii) audit fees; (iii) consummated and broken deal
expenses; (iv) brokerage commissions, clearing and settlement charges; (v) prime brokerage fees,
custodial fees, and other bank service fees; (vi) interest and other expenses incurred in respect of
borrowings, if any; (vii) due diligence related expenses, including, without limitation, third party
consultants and related travel; (viii) out-of-pocket expenses incurred by members of the advisory
boards in connection with the fulfillment of their duties to the applicable funds and expenses of
periodic meetings of limited partners; (ix) expenses associated with communication and periodic
reportingto investors; (x) expenses incurred in connection with legal and regulatory compliance
with U.S. federal, state, local and non-U.S. or other law or regulation; (xi) financial statements,
tax returns and Schedules K-1; (xii) insurance premiums; (xiii) legal fees, including costs of
litigation involving the funds or accounts and the amount of any judgments or settlements paid in
connection therewith; and (xiv) marketing expenses incurred in connection with fundraising
activities in each case subject to the organization expense cap for the applicable fund.
Joint venture or portfolio company arrangements may provide for an incentive fee or ownership
interest in the portfolio company to be granted to such joint venture partner or management team
of the portfolio company. Such compensation would be ultimately borne by the Client.
Irradiant seeks to ensure that expenses are paid and allocated correctly and all travel related
expenses incurred by Irradiant’s personnel are subject to Irradiant’s Employee Travel & Expense
Policy. In determining an equitable allocation of shared expenses among Clients, Irradiant will
take into account all factors deemed relevant. Where one or more Clients to which an expense
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