ITEM 5 - FEES AND COMPENSATION
For providing its management services, Mason Wells Partners III is entitled to receive from
Fund III both management and growth-based fees, as described in this Item and Item 6 below.
Fees are established by the terms of Fund III’s Partnership Agreement, and are deducted from
Fund III’s assets as they become due (in the case of the Management Fees, quar terly in
advance). The managing members of Executive Fund III also receive certain Management Fees
from Executive Fund III, in accordance with its Operating Agreement , and assign such
Management Fees to Mason Wells, Inc.
Management Fees - Management Fees are paid by Fund III to Mason Wells Partners III
quarterly in advance, and are currently 1% of Net Invested Capital. The Management Fee
percentage may vary as follows:
Until the earlier of the dissolution or termination of Fund III, the Management Fee sh all
be 1% of the Net Invested Capital.
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Form ADV Part 2A Brochure
If Fund III’s term continues after August 1, 2020, then the Management Fees will be
reduced to 0.25% of Net Invested Capital, unless the Fund III limited partners approve
the continuation of a higher fee.
Mason Wells Partners III may waive the payment of some or all of the Management Fees by
providing Fund III with at least 60 days prior written notice. Any Management Fees that are
waived by Mason Wells Partners III will be used to offset the capital contributions Mason
Wells Partners III would otherwise be required to make to Fund III.
As used above, “Net Invested Capital” means the aggregate amount of money invested by
Fund III in portfolio companies (less dividends which constitute a return of capital) which ar e
still owned by Fund III as of the date of determination, excluding any portfolio company
investments which have been completely written off the financial books and records of Fund
III.
Executive Fund III currently pays a Management Fee to the managing members of Executive
Fund III, who assign such Management Fees to Mason Wells, Inc. , at the negotiated rate of
$200,000 per year; however, the managing members of Executive Fund III may unilaterally
increase or decrease the amount of the management fee (but not above 2% of the capital
contribution obligations of investors in Executive Fund III).
In accordance with common industry practice, Mason Wells Partners III has entered and may
in the future enter into letter agreements with certain investors pursuant to which it grants the
investors specific rights, benefits or privileges that are not made available to investors
generally, which typically include rights, benefits, or privileges that are more favorable than
those given to other investors.
Transaction Fees - Mason Wells Partners III (and its officers, members, and affiliates, and
Mason Wells and its employees) may receive, and has in the past received, transaction fees
from portfolio companies. These fees include any directors, monitoring, investment,
placement, closing, consulting or advisory fees, or other fees or compensation (but not
including reimbursements of out-of-pocket expenses). All such fees received in any quarter
will be credited against the Management Fee otherwise payable by Fund III to Mason Wells
Partners III for the following quarter.
Break-up Fees - In addition, Mason Wells Partners III (and its officers, members, and affiliates,
and Mason Wells and its employees) may, and expects from time to time to, receive
commitment fees, breakup fees and litigation proceeds resulting from the fact that one or more
transactions were not consummated by Fund III. All such fees received by Mason Wells
Partners III (and its officers, members, and affiliates) (net of expenses) will be 100% credited
against the Management Fee.
Except as described above, Mason Wells Partners III does not receive any other form of
compensation from Fund III or Executive Fund III other than the growth participation
described in Item 6. However, Fund III is responsible for reimbursing Mason Wells Partners
III for expenses incurred on behalf of Fund III. Further, each of Fund III and Executive Fund
III absorbs all of its own operating expenses, such as those for accounting, administrative,
legal, insurance, and management expenses, and reimburses the General Partner and the
Advisory Board (in the case of Fund III) and the managing members for the benefit of Mason
Wells, Inc. (in the case of Executive Fund III) for out-of-pocket expenses incurred to third
parties in conjunction with such operation and private placement, including such out -of-
pocket costs incurred in connection with the investigation of potential investments by the
Fund. In addition, as described in Item 11, amounts received by executive ope rating partners
of the Fund do not offset the Management Fee.
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Form ADV Part 2A Brochure