ITEM 5 FEES AND COMPENSATION
Management Fees and Performance-Based Fees, Generally
As detailed below, Lariat receives management fees and carried interest in connection with
providing investment advisory services to the Funds. The General Partner or other Lariat entities or
affiliates receive additional compensation from portfolio companies in connection with management and
other services performed for portfolio companies of the Funds and a portion of such additional
compensation offsets in whole or in part the management fee otherwise payable to Lariat by the Funds
(“management fee offsets”). Generally, investors in a Fund pay management fees quarterly in advance
for the duration of the commitment period of the respective Fund. Investors in the Funds also bear certain
Fund operating expenses as further described below. Except as otherwise described in the applicable
offering documents, expenses and other fees are expected to be paid over the term of the applicable Fund
and investors generally are not permitted to withdraw or redeem interests in such Fund. Installments of
the management fee payable for any period other than a full quarterly period generally are adjusted on a
pro rata basis according to the actual number of days in such period.
With respect to co-investment vehicles, to the extent any fees are charged or received by Lariat,
such fees are generally negotiated on a vehicle-by-vehicle basis, but may include commitment-based fees,
performance-based fees or allocations, expense reimbursements or other administrative fees similar to
those described below relating to the Funds. Lariat also forms co-investment vehicles that are not subject
to any management fees or carried interest.
Lariat may exempt or reduce certain large or strategic investors’ payment of all or a portion of
management fees and/or carried interest, which is typically documented through Side Letters. Any such
exemption from fees and/or carried interest may be made by a direct exemption, a rebate by Lariat, or
through other Funds which co-invest with a Fund. Lariat’s Managing Partners, principals, employees and
senior advisers are not subject to management fees or carried interest on their direct or indirect investment
in the Funds. The fact that certain investors pay a reduced fee structure, or have their fees waived all
together, creates a conflict of interest as Lariat has incentive to allocate more profitable investment
opportunities to investors which pay larger fees. However, per the Funds’ offering documents, all
investors in a Fund participate equally in the entire investment program. Additionally, Lariat maintains
investment policies and procedures designed to address conflicts of interest associated with allocating
investment opportunities and a Code of Ethics requiring Lariat employees to treat all clients and investors
fairly.
As permitted under the respective offering documents, Lariat may waive or agree to reduce the
management fee. Any such waived or reduced portion of the management fee reduces the amount of
capital Lariat would otherwise be required to contribute to the respective Fund. An amount equal to
aggregate waived management fees that are not applied to capital contributions may be distributed to the
General Partner or an affiliate. Upon a waiver, the limited partners of a Fund may be required to make a
pro rata contribution according to their respective commitments to fund any such waived management
fee that Lariat elects to treat as a contribution and, as a result, the exercise of such waiver may result in an
acceleration of investor capital contributions. Waived or reduced management fees are not subject to the
management fee offsets described above. Due to waived or reduced management fees by Lariat and/or
timing of receipt of compensation subject to offsets (as described above), it is possible that management
fee offsets will not be fully realized by investors in a Fund, resulting in a net additional benefit to Lariat.
Management Fees
With respect to the main fund and the PV fund, the investors will pay an annual management fee,
funded by each limited partner quarterly in advance, equal to the budget-based approved amount of fees
required to fund the operations of Lariat Partners. The management fee will be funded in advance as of
the initial closing based on the aggregate investor capital commitments, regardless of when a limited
partner is actually admitted. Investors participating in a closing after the initial closing are still
responsible for payment of the management fee, with annual 8% interest thereon attributable to their
commitments, from the initial closing date. Following the termination of the commitment period, unless
subsequently negotiated with Fund investors, there will be no management fee payable and the operations
of Lariat Partners will be funded solely through the other fees received by Lariat or its Managing Partners
from portfolio companies.