Item 5 – Fees and Compensation
From each of the Funds, pursuant to the applicable Partnership Agreement, the Management
Company receives a management fee in connection with advisory services provided to such Fund, and
the General Partner receives a carried interest, if any, upon the sale or disposition of investments.
Portfolio companies owned by the Funds generally compensate the Management Company via
transaction fees for performing certain business consulting and other services through closing and/or at
exit and monitoring fees for advisory services during the time period of the Fund’s investment (together,
“Advisory Fees”), and such additional compensation from portfolio companies paid to the Management
Company will offset in whole or in part any management fees otherwise payable to the Management
Company by the Funds, as specified in the applicable Partnership Agreement and Memorandum. LinCap
Management Company receives a management fee from LinCap VI and Advisory Fees from portfolio
companies of LinCap VI. LCM is compensated by LinCap Management Company for the advisory services
it provides to Funds and/or portfolio companies. LCM provided advisory services to LinCap V through
December 21, 2020 (the date of dissolution); however, LCM has not received any compensation from
LinCap V or any related portfolio companies since June 1, 2019. See “Management Fees” for further
detail. Investors in each Fund also bear certain fund expenses.
Management Fees
From each of the Funds, pursuant to the applicable Partnership Agreement, the Management
Company receives, monthly in advance, a management fee (the “Management Fee”) generally equal to
2% per annum based on aggregate Fund investor capital commitments during a Fund’s investment
period and generally 2% of invested capital after the investment period for the remaining term of the
Fund. Investors participating in a closing after a Fund’s initial closing date bear the Management Fee
from such initial closing date plus interest. Installments of the Management Fee payable for any period
other than a full month are generally adjusted on a pro rata basis according to the actual number of
days in such period. LCM has entered into an advisory agreement with the General Partner and the
Management Company to perform investment advisory services and is compensated for these services
out of the Management Fees paid to the Management Company. Upon termination of an advisory
agreement, appropriate treatment will be given to all management fees collected in advance.
The Management Fee will be reduced by a specified percentage of each Fund’s Advisory Fees
paid by portfolio companies to the Management Company, as specified in the relevant Partnership
Agreement. The Management Company will be permitted to retain the remaining portion of such fees
(“Supplemental Fees”) not offset against the Management Fee. The amount of Advisory Fee offset
retained may be substantial. LinCap and/or its affiliates generally have discretion over whether to
charge transaction fees, monitoring fees or other compensation to a portfolio company and, if so, the
rate, timing and/or amount of such compensation. The receipt of such compensation may give rise to
Linsalata Capital Management, LLC
conflicts of interest between the Funds, on the one hand, and LinCap and/or its affiliates on the other
hand. To the extent that such an offset credit would reduce the Management Fee for a given period
below zero, the credit would be carried forward for future application against payable Management
Fees. It is possible that the credit will not be fully realized by investors in a Fund, resulting in a net
additional benefit to the Management Company or an affiliate.
Additionally, as further described below, certain operating executives, consultants, industry
experts or advisers, who are not employees and who provide services to (or with respect to) certain
portfolio companies in which one or more Funds invest, may receive compensation, including, but not
limited to, transaction fees, and such compensation will not result in additional offsets to the
Management Fee. See “Operating Partners” for further detail.
Carried Interest
The General Partner will receive a carried interest with respect to the relevant Fund generally
equal to 20% of all realized profits subject to an 8% cumulative, non-compounded preferred return, as
more fully described in the respective Partnership Agreement. The carried interest distributed to the
General Partner is subject to a potential clawback at the end of the life of the relevant Fund if the
General Partner has received excess cumulative distributions. The audited financial statements for the
respective Fund discloses potential clawback amounts, if any, in the footnotes to the financial
statements. Amounts restored under this provision cannot exceed the after-tax amount of carried
interest distributed to the members of the General Partner.
Other Information
The Funds invest on a long-term basis. Accordingly, investment advisory and other fees are
expected to be paid, except as otherwise described in the Partnership Agreement, over the term of the
relevant Fund, and investors generally are not permitted to withdraw or redeem interests in a Fund.
Principals or other current or former employees of LinCap may receive a portion of the
Management Fee, carried interest or other compensation received by LinCap, the General Partner or
their affiliates.
In addition to the Management Fee paid to the Management Company and the carried interest
payable to the General Partner, each Fund bears certain expenses. As set forth in the relevant
Partnership Agreement, each Fund generally bears all Fund expenses, including, but not limited to,
organizational expenses up to the expense cap specified in a Fund’s partnership agreement, expenses
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