ITEM 5 - FEES AND COMPENSATION
For providing its management services, Mason Wells Partners IV is entitled to receive from
Fund IV both management and growth-based fees, as described in this Item and Item 6 below.
Fees are established by the terms of Fund IV’s Partnership Agreement, and are deducted from
Fund IV’s assets as they become due (in the case of the Management Fees, quarterly in
advance). The managing members of Executive Fund IV, who are affiliated with Mason Wells
Partners IV, receive certain Management Fees from Executive Fund IV in accordance with its
Operating Agreement.
Management Fees - Management Fees are paid by Fund IV to Mason Wells Partners IV
quarterly in advance, and are currently 2% of the aggregate Capital Contribution Obligation.
“Capital Contribution Obligation” means the obligation of each limited partner in Fund IV to
contribute cash to Fund IV, not including interest or adjustments. The Management Fee
percentage may vary as follows:
From and after the earlier of: (a) the Final Call Date; or (b) the creation and funding of a
Successor Fund and until the earlier of (i) the dissolution or termination of Fund IV; (iii)
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Form ADV Part 2A Brochure
the creation and funding of a Successor Fund (if after the Final Call Date) or (iv) the Final
Call Date (if after the creation and funding of a Successor Fund), the Management Fee
shall be 2% of the Net Invested Capital.
From and after both the Final Call Date and the creation and funding of a Successor Fund
and until the earlier of the dissolution or termination of Fund IV, the Management Fee
shall be 1% of the Net Invested Capital.
If Fund IV’s term continues after the eleventh anniversary of the Commencement Date ,
then the Management Fees will be reduced to 0.25% of Net Invested Capital, unless the
Fund IV limited partners approve the continuation of a higher fee.
As used above, “Final Call Date” generally means the sixth anniversary of the date as of which
Mason Wells Partners IV informed the Fund IV limited partners that its members ha d
commenced identifying, investigating, and negotiating investment opportunities for Fund IV
that were expected to lead to its initial investment in a portfolio company (the
“Commencement Date”), but it may occur on an earlier date in certain limited circumstances
described in Fund IV’s Partnership Agreement. “Net Invested Capital” means the aggregate
amount of money invested by Fund IV in portfolio companies (less dividends which constitute
a return of capital) which are still owned by Fund IV as of the date of determination, excluding
any portfolio company investments which have been completely written off th e financial books
and records of Fund IV and with respect to which the General Partner is no longer devoting
any time and attention. “Successor Fund” means any new investment partnership managed by
Mason Wells Partners IV or its affiliates and having the same or similar private equity
investment strategies as Fund IV; provided that in no event shall Executive Fund IV or any co-
investment vehicles relating to the co-investment of capital in a Fund IV portfolio company as
permitted by the Partnership Agreement be deemed to be Successor Funds.
Executive Fund IV currently pays a management fee to the managing members of Executive
Fund IV, who are affiliates of Mason Wells Partners IV, at the rate of 1% of the capital
contribution obligations of investors in Executive Fund IV; however, the managing members of
Executive Fund IV 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 IV).
In accordance with common industry practice, Mason Wells Partners IV 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 IV (and its officers, members, and affiliates, and
Mason Wells and its employees) may, and expects to, receive transaction fees from portfolio
companies. These fees include any directors fees, monitoring or management fees (not
including the Fund IV Management Fee), 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 IV to Mason Wells Partners IV for the following
quarter.
Break-up Fees - In addition, Mason Wells Partners IV (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 net litigation proceeds resulting from the fact that one or
more transactions were not consummated by Fund IV. All such fees (net of expenses) will be
100% credited against the Management Fee.
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Form ADV Part 2A Brochure
Except as described above, Mason Wells Partners IV does not receive any other form of
compensation from Fund IV or Executive Fund IV other than the growth participation
described in Item 6. However, Fund IV is responsible for reimbursing Mason Wells Partners IV
for expenses incurred on behalf of Fund IV. Further, Fund IV absorbs all of its own operating
expenses, such as those for accounting, administrative, advisory board, legal, valuation,
insurance, investment study, and management expenses, expenses of third-party advisors,
consultants, executive operating partners, business brokers, finders, and similar persons to
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