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 general
summary of the fees and compensation applicable to Lantern clients 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, LCPF I generally
pays 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 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 instead is 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 has the right to receive a
portion of the compensation otherwise payable to Lantern by Lantern Funds. 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, its affiliates and employees generally are not 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 have and 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 applicable 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, the 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. LMP currently receives management fees for management services provided to or in
connection with LEH which are reimbursable to LEH. Management fees paid to LMP related to LEH will
be offset or reduce Management Fees payable by investors in LCPF I based on their allocable share.
Fund Expenses
Lantern or an affiliate generally is responsible for payment of its normal operating overhead expenses,
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
generally are 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
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