ITEM 5 – FEES AND COMPENSATION
Item 5.A Describe how you are compensated for your advisory services. Provide your
fee schedule. Disclose whether the fees are negotiable.
JHP is compensated through the payment of management and performance
allocation by the Funds. The specific terms relating to the fees paid by each Fund,
summarized below, are negotiated by the Investors in such Fund at the time of its
formation and, as such, may vary from Fund to Fund. The Co-Investment
Vehicles and HoldCo’s do not charge a management fee but may include a
performance allocation.
JHP or the Affiliated General Partners are generally compensated for advisory
services through asset-based management fees (the “Management Fee”). The
Affiliated General Partners generally receive a Management Fee from the Funds
in an amount equal to 2.5% per annum of total capital commitments to such Fund.
Following the end of a Fund’s investment period or upon the organization of a
successor Fund, the Management Fee transitions to a percentage of the Fund’s
invested capital, which is determined by reference to the cost of assets remaining
under management that have not been written off. The Management Fee is
payable semi-annually, but less than six-months in advance on January 1 and July
1. JHP or the Affiliated General Partner may waive, defer, or reduce the
management fee or performance allocation in its sole discretion.
In addition, as described in more detail in Item 6 below, the Affiliated General
Partners receive a performance allocation (commonly referred to as “Carried
Interest”), in each Fund once all capital contributions plus a preferred return
thereon have been returned to the Investors in the Fund (pursuant to the terms in
each Fund Agreement).
In addition, JHP, the Affiliated General Partners or their members, employees or
other affiliates may receive certain transaction fees in connection with Portfolio
Company investments of the Funds as compensation for financial advisory and
similar services provided to such Portfolio Companies. Generally, JHP ensures
that all such fees are paid to the Funds. However, on occasion the Management
Fees payable by the Funds may be offset by the amount of such other fees (for e.g.
break-up fees or director’s fees) pursuant to the terms of the applicable Fund
Agreement. These fees, and the associated conflicts of interest they present, are
further described in Item 11 below.
It is important that Investors refer to the governing documents of the
respective Fund for a complete understanding of how JHP (or its affiliates)
are compensated for advisory services. This is particularly true with respect
to performance-based compensation. The information contained herein is a
summary only and is qualified in its entirety by such documents.
Item 5.B Describe whether you deduct fees from clients’ assets or bill clients for fees
incurred. If clients may select either method, disclose this fact. Explain how
often you bill clients or deduct your fees.
JHP, or the Affiliated General Partners, deduct Management Fees applicable to
the appropriate Fund directly from the Fund’s assets.
Performance fees described in Item 6 below are paid to the relevant Affiliated
General Partner when earned.
Funds do not have the ability to choose to be billed directly for fees incurred.
It is important that Investors refer to the relevant governing documents for a
complete understanding of how fees are paid to JHP, or an Affiliated General
Partner. The information contained herein is a summary only and is
qualified in its entirety by such documents.
Item 5.C Describe any other types of fees or expenses clients may pay in connection
with your advisory services, such as custodian fees or mutual fund expenses.
Disclose that clients will incur brokerage and other transaction costs, and
direct clients to the section(s) of your brochure that discuss brokerage.
The Affiliated General Partners or JHP will pay out of its respective Management
Fee the ordinary operating expenses of JHP and the respective Affiliated General
Partners (including expenditures on account of salaries, wages, benefits, and other
expenses of the Affiliated General Partner’s (or its designee’s) members, agents
and employees, rentals payable for space and equipment used by the Affiliated
General Partner (or its designee) or the Funds).
Each Fund will bear all other expenses, including expenses related to the
investigation (whether or not consummated), purchase, holding and sale of
portfolio company securities, investment-related travel, legal, accounting,
investment banking, research, brokerage and finders’ fees, custody, transfer,
registration, advisory board, interest, taxes and extraordinary expenses, and other
similar fees and expenses.
Each Fund will bear the organizational and startup expenses of the Fund and the
Affiliated General Partner, up to a maximum amount equal to the amount detailed
in the respective Fund’s offering documents. The Affiliated General Partner shall
bear all such organizational costs, fees and expenses in excess of such maximum
amount as well as any private placement fees or finders’ fees for the placement of
limited partner interests.
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