ITEM 5: FEES AND COMPENSATION
Lantern and its affiliates generally receive or may receive various fees and other compensation with
respect to the Lantern Funds and other clients as set forth in the applicable Governing Documents. A
summary of the fees and compensation is set forth below, which is qualified in its entirety by the
applicable Governing Documents of each client.
Management Fees & Carried Interest
With respect to each fiscal quarter commencing prior to the end of the investment period, each Lantern
Fund generally will pay Lantern or an affiliate a management fee (“Management Fee”) equal to a
percentage (typically 2.0% per annum) of the total investor capital commitments. With respect to any
fiscal quarter commencing after the end of the investment period, the Management Fee generally is equal
to a percentage (typically 2.0% per annum) of aggregate invested capital of investors. Management Fees
generally are payable quarterly in advance and may be paid from capital called from investors or other
amounts available for distribution. Management Fees with respect to LCPF I and other Lantern Funds
generally are subject to reduction with respect to Portfolio Company Fees (as defined below) and any
organizational expenses in excess of the applicable organizational expense cap and as otherwise provided
in the applicable Governing Documents.
An affiliate of Lantern generally is entitled to receive a carried interest distribution with respect to each
Lantern Fund equal to a percentage of profits derived from the disposition of investments and current
income (following a return of aggregate capital contributions and a preferred rate of return to investors)
(the “Carried Interest”), as described in the applicable Governing Documents for each Lantern Fund.
Upon final dissolution of the Lantern Fund, Lantern or an affiliate is generally required to return Carried
Interest distributions to the extent that such distributions exceed the amounts that would have been
distributed if such Carried Interest distributions were calculated on the aggregate basis covering all of the
Lantern Fund’s transactions (subject to terms and limitations set forth in the applicable Governing
Documents.) Carried Interest distributions generally are calculated upon the disposition of portfolio
investments or the receipt of current income and are distributed to Lantern or affiliate following the return
of capital contributions and a preferred return to investors. A portion of the Carried Interest otherwise
distributable to an affiliate of Lantern generally will instead be deposited into a segregated escrow account
in the name of or for the benefit of a Lantern Fund in order to facilitate the payment of any clawback
amounts.
Lantern has entered into an agreement with an initial investor pursuant to which it will have the right to
receive a portion of the compensation otherwise payable to Lantern by LCPF I. See Item 10.
Subject to the terms of the applicable Governing Documents, Lantern or an affiliate may waive or reduce
Management Fees or Carried Interest distributions for certain investors or classes of investors, in its
discretion. Additionally, Lantern and its affiliates generally will not be subject to Management Fees or
Carried Interest. Management Fees and/or Carried Interest generally are not negotiable for new investors.
Portfolio Company Fees
Lantern and its affiliates generally may from time-to-time receive arrangement, monitoring, directors’
acquisition, break-up and other fees from or with respect to Portfolio Companies or prospective Portfolio
Companies (“Portfolio Company Fees”). Such Portfolio Company Fees generally will be allocated
among LCPF I and any other entities managed or advised by Lantern or its affiliates based on their
relative amounts invested in such Portfolio Company or prospective Portfolio Company. Pursuant to
terms set forth in applicable Governing Documents, 100% of the Lantern Fund’s allocable share of any
Portfolio Company Fees will be applied to reduce future Management Fees otherwise payable by the
investors. The pro rata share of Portfolio Company Fees paid to Lantern or an affiliate that are attributable
to co-investment activities on behalf of funds or accounts other than LCPF I will not be subject to offset
of Management Fees. Moreover, an initial investor in LCPF I will be entitled to receive a portion of the
Portfolio Company Fees received by Lantern in connection with LCPF I’s activities that will not result in
an offset to the Management Fees.
Fund Expenses
Lantern or an affiliate generally is responsible for payment of its normal operating overhead, including
office rental (“Manager Expenses”).
Each Lantern Fund generally bears the legal and other expenses incurred by or on behalf of such Lantern
Fund, GP or their respective affiliates in connection with the organization and marketing of such Lantern
Fund and the offering of interests therein (the “Organizational Expenses”) up to a cap on such expenses
set forth in the applicable Governing Documents. Organizational Expenses in excess of the applicable cap
will be paid by the Lantern Fund but ultimately borne by Lantern through an amortized offset against the
Management Fee.
In addition to Management Fees, each Lantern Fund is generally responsible for all costs, expenses and
liabilities relating to its operations (“Fund Expenses”), which typically include (among other things): (i)
internal and external accounting, counsel, consulting and other out-of-pocket fees, costs and expenses
relating to the actual or proposed acquisition, holding or disposition of securities (including, without
limitation, broken deal expenses of the Lantern Fund, brokerage and custody costs and hedging costs
charged to the Lantern Fund); (ii) all expenses of the Lantern Fund relating to investigating, acquiring,
monitoring, distributing and disposing of investments (including, without limitation, travel (which may
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