FEES AND COMPENSATION
A. Advisory Services and Fees.
Management Fee and Incentive Allocation—LCP
With respect to LCP, Adviser generally is paid a semi-annual management fee equal to 0.88%
of the lesser of each limited partner's cost basis in, or the fair market value of, the Client’s
portfolio investments that have not been disposed of. With respect to LCP, an Affiliate is
generally entitled to an incentive allocation equal to 20% of the excess proceeds, if any, that exceed
the sum of all contributed capital, plus an 8% annual preferred return on limited partner’s
investment.
Management Fee and Incentive Allocation--LRHZII
With respect to LRHZII and any co-investments in affiliated entities, Advisor generally is paid
a semi-annual management fee equal to 0.50% of the lesser of each limited partner's cost basis
in, or the fair market value of, the Client’s portfolio investments that have not been disposed of.
In addition, an Affiliate that serves as the general partner of LRHZII, is paid an incentive
allocation. With respect to LRHZII, an Affiliate is generally entitled to an annual
performance-based allocation equal to 15% of the excess proceeds if any, that exceed the
sum of all contributed capital plus 8% annual preferred return on limited partner’s investment
is achieved; thereafter an Affiliate is generally entitled to an annual performance-based
allocation equal to 30% of the excess proceeds if any, that exceed the sum of all contributed
capital plus a 30% annual preferred return.
Management Fee and Incentive Allocation--LRCPIII
With respect to LRCPIII, Advisor generally is paid a quarterly management fee equal to 0.5%
of the assets under management of LRCPIII, payable in advance at the beginning of each
quarter. In addition, an Affiliate that serves as the general partner of LRCPIII, is paid an incentive
allocation. With respect to LRCPIII, an Affiliate is generally entitled to an incentive allocation equal
to 20% of the excess proceeds, if any, that remain from disposition of an investment, after
allocating to each limited partner's capital account a) such limited partner’s contributions used to
fund the investment (and all other realized investments), b) the portion of such limited partner’s
contributions to fund organizational expenses and Management Fees, and c) an 8% annual
preferred return on limited partner’s investment.
Management Fee and Incentive Allocation—HOP
HOP is a co-investment vehicle, and no separate management fees or incentive fees are charged by
Advisor.
B. Payment of Fees.
Management fees, incentive allocations, incentive fees and carried interest are deducted directly
from the Clients.
C. Additional Expenses and Fees.
A Client may bear the following expenses: investment-related expenses (e.g. costs and
expenses associated with the investigation of investment opportunities (whether or not
consummated), negotiating, financing, sourcing, acquiring, holding, settling and disposing of
its investments or proposed investments and other transaction costs, including travel
expenses, transaction fees, consulting, advisory, investment banking, legal and other
professional fees relating to investments or contemplated investments, brokerage
commissions, information-related expenses, clearing and settlement charges, custodial fees,
interest expenses, appraisal fees and expenses and certain expenses of the operations team as
described below), expenses incurred in collection of monies owed to the Client, legal,
auditing and accounting expenses (including expenses associated with the preparation of
Client financial statements, tax returns and schedules K-1), reasonable expenses of such
Client's advisory board and its members, insurance expenses (including directors' and
officers' insurance, errors and omissions insurance and other similar policies), fees and
expenses of such Client's administrator, if any, any entity-level taxes, fees or other
governmental charges levied against the Client or any special purpose vehicle or alternative
investment vehicle, all litigation-related and indemnification expenses, wind-up and
liquidation expenses, extraordinary expenses and expenses comparable to any of the
foregoing.
D. Prepayment of Fees.
Please see responses to Item 5A above.
E. Additional Compensation and Conflicts of Interest.
Neither the Adviser, its Affiliates, nor any of their Supervised Persons accept compensation for
the sale of securities or other investment products.