Item 5 - Fees and Compensation
A. Management Fees
As described in the Fund Agreement, JWLMP generally will receive a management
fee (the “Management Fee”) from each Fund for which it will serve as investment
adviser. The Management Fee for each Fund will be a percentage per annum of
capital contributions made into each Fund (but generally excluding certain capital
contributions for expenses) or the value of Fund assets under management and
will not include a performance based fee or share of the profits of the Fund assets.
Management Fees are expected to be paid annually or quarterly in advance
following the calculation of the Management Fee. However, the method of
payment of any Management Fee may vary from the foregoing as determined by
the terms of the Fund Agreement of each Fund. The Management Fee will
generally not be reduced or waived in connection with the receipt by JWLMP or
its related persons of various fees paid by actual or prospective Portfolio
Companies. The Management Fee of any Fund is also expected to be generally
subject to waiver or reduction by the JWLI GP, in its sole discretion, in connection
with investments made in any Fund by JWLMP or certain affiliated or related
parties (including any family members) thereof. JWLMP currently intends to offer
its Non-Managing Investors (but not necessarily other investors, if any), to the
extent reasonably applicable to such Non-Managing Investors, any preferential
terms (excluding certain reporting obligations, special notice provisions, and
transfer rights) granted to any third party investor.
The Funds will also allocate a portion of their investment profits to JWLI GP (or
an affiliated thereof) as a “carried interest”, as discussed in Item 6 below.
B. Expenses
In addition to the management fee and carried interest payable to JWLMP and
JWLI GP, respectively, each Fund will bear certain expenses. As set forth more fully
in the applicable Fund Agreement of each Fund, each Fund is expected to bear all
expenses relating to such Fund’s activities, investments and business to the extent
not reimbursed by a Portfolio Company, including fees, costs, expenses, liabilities
and obligations attributable to structuring, organizing, acquiring, financing, re-
financing, holding, managing, operating, valuing, dissolving, winding up,
liquidating, restructuring, taking public or private, selling or otherwise disposing
of such Fund’s investments, interest, legal, auditing, consulting, research,
accounting, administration, brokerage, depositary, custody, account, finder fees
and expenses, insurance, preparation and filing of financial statements, tax
returns, reporting, registration, certain regulatory filings, advisory board, limited
partner meetings, travel, extraordinary expenses and other similar fees and
JW LEVIN MANAGEMENT PARTNERS LLC
expenses. Each Fund also will bear expenses indirectly to the extent a Portfolio
Company pays expenses, including certain expenses of JWLMP and/or its affiliates
and fees for Related Services (as defined below) which fees may, in certain
circumstances, be subject to a cap (and in such case any expenses in excess of such
cap will be borne by JWLMP). JWLMP generally will pay all ordinary
administrative and overhead expenses incurred in connection with maintaining
and operating its office(s), including employees’ salaries, rent, utilities, marketing,
etc., as specified in the applicable Fund Agreement. Additionally, any fees and
expenses or other liabilities or obligations incurred for transactions not
consummated will, unless otherwise chargeable to an applicable Fund (e.g. in the
event a Fund seeks to make a follow-on Investment that is not consummated or if
a Fund is already established with Capital Commitments before an Investment is
not consummated), generally be borne by JWLMP. As is typical for private equity
funds, the Funds likely bear additional and greater expenses, directly or indirectly,
than many other pooled investment products, such as mutual funds.
In certain circumstances, one Fund may pay an expense common to multiple
Funds (including without limitation fees or expenses in connection with services
the benefit of which are received by other Funds over time), and be reimbursed
by the other Funds by their share of such expense. While highly unlikely, it is
possible that one of the other Funds could default on its obligation to reimburse
the paying Fund. JWLMP may also advance amounts related to the foregoing and
receive reimbursement from the Funds to which such expenses relate.
JWLMP may permit certain investors to co-invest in Portfolio Companies
alongside one or more Funds. If a co-invest vehicle is formed by JWLMP, such
entity is expected to bear expenses related to its formation and operation, many
of which are similar in nature to those borne by the Funds, but might not
necessarily bear its share of all expenses borne by a Fund.
When JWLMP may utilize the services of broker-dealers for limited purposes
relating to transaction-related services, the applicable Fund will incur brokerage
and other transaction costs. For additional information regarding brokerage
practices, please see Item 12 below.
C. Fees for Related Services; Affiliated Transactions
JWLMP and/or its affiliates (i.e. the Managing Members) may, and currently
intend to, perform management, advisory, transaction-related services,
consulting, financial advisory and other services (including serving as officers and
directors) (“Related Services”) for, and will receive related fees from, actual or
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