Item 5: Fees and Compensation
Fee Schedule
Meritage (or an affiliate) generally receives (i) an annual asset-based management fee, which is payable
monthly or quarterly, as the case may be, in advance and is charged to an Investor’s capital account and (ii)
from some of its Clients, performance-based compensation/allocations, as described in more detail in Item
6 below.
Clients pay Meritage a management fee monthly or quarterly, as the case may be, in advance. The
management fee for the Private Investment Funds generally ranges from 1.0%-1.5% per annum of the net
asset value of each Investor’s interest or net asset value attributable to such Investor’s invested capital, as
applicable, but certain Investors may be charged a different or no management fee. Management fees are
calculated as of the first day or business day of each calendar month or calendar quarter, as the case may
be. Fees for each Private Investment Fund are set forth in the offering documents for each such fund, which
are available to Investors. Certain Investors, including but not limited to supervised persons of Meritage
(collectively, “Supervised Persons”), may be eligible for fee structures that differ from, and are more
beneficial than, the standard fee structure, depending on, among other factors, the relationship between
Meritage and the Investor. Management fees are generally not refunded to Investors if withdrawals are
made prior to the end of a calendar month.
In the event Meritage and/or its affiliates receive certain fees from portfolio investments in connection with
the purchase, monitoring or disposition of investments or in connection with unconsummated transactions
that relate to certain Private Investment Funds’ share of actual or prospective investments, as determined
by Meritage in its sole discretion, such fees may be applied to reduce the management fee payable with
respect to such Private Investment Funds.
As described in Item 6 below, Investors in some of the Private Investment Funds also bear performance-
based compensation/allocations.
Other Fees and Expenses
The Private Investment Funds bear, both directly or indirectly (i) all costs and expenses associated with the
offering of interests in such funds, including, without limitation, expenses attributable to negotiating side
letter agreements with investors and compliance with anti-money laundering laws and know-your-customer
requirements in connection with the offer and sale of such interests; (ii) all transaction costs and investment-
related expenses incurred in connection with such funds’ investment and trading activities, including any
investments that are not ultimately consummated (including with respect to unconsummated transactions
intended to involve co-investors and expenses that might have been assumed by such co-investors had such
transactions been consummated), including but not limited to brokerage and other execution costs, clearing,
settlement, bank loan servicing and custodial expenses, order management system expenses, research
expenses, due diligence expenses, research related travel and associated expenses (including the cost of
business/first class travel), as well as the costs and fees of investment bankers, legal counsel, finders, any
independent accountants or other experts or consultants (including, but not limited to, persons with
particular experience or expertise and former, existing or prospective executives of operating and/or
portfolio companies, other industry executives and industry experts or other professionals) engaged by
Meritage in connection with investment-related research and/or specific transactions, including fees and
expenses of expert networks, and expenses including, but not limited to, legal expenses related to
investment-related compliance and regulatory issues incurred by Meritage or its affiliates (subject to any
limitations, restrictions or conditions imposed by applicable law or regulation); (iii) for Private Investment
Funds that are feeders in a master-feeder structure, their proportionate share of the fees, expenses and costs
Form ADV: Part 2A Page 6
associated with the operation of the master fund; (iv) subject to any limitations, restrictions or conditions
imposed by applicable law or regulation, all expenses incurred in connection with national, state, provincial
or local (U.S. or non-U.S.) government registrations and regulatory filings and reports of such Private
Investment Funds (including, but not limited to, Form PF, Form D and blue sky filings); (v) costs and
expenses related to investments in investment pools managed by External Managers (“Investment Pools”)
and managed accounts, which may include subscription or redemption charges, the Private Investment
Fund’s proportionate share of the expenses of the External Managers and management and performance
charges payable to External Managers, which will typically include a management fee as a fixed percentage
of the assets allocated to each External Manager and a performance-based fee or allocation as a percentage
of the net increase in the net asset value of such assets; (vi) expenses, including but not limited to legal
expenses incurred by the Private Investment Funds or Meritage or any of their respective affiliates in
connection with any regulatory inquiry, investigation, or audit or any judicial or administrative proceeding,
including but not limited to discovery requests, or arbitration, mediation or similar proceedings arising out
of an investment or class of investments held or proposed to be held by the Private Investment Funds (in
each case, subject to any limitations, restrictions or conditions imposed by applicable law or regulation);
(vii) any fees, expenses and costs payable to External Managers arising out of investments by the Private
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