Item 5. Fees and Compensation
A. Describe how you are compensated for your advisory services. Provide your fee
schedule. Disclose whether the fees are negotiable.
Management Fees
As compensation for investment supervisory services rendered to the Funds, Monitor Clipper
Partners receives from each such Main Fund an advisory fee (each, a “Management Fee”).
Management Fees paid by a Main Fund are indirectly borne by investors in such Main Fund, except
for Feeder Funds that invest in such Main Fund, which are generally exempted from paying a
Management Fee. Management Fees were negotiated with investors at each Main Fund’s inception,
are not subject to negotiation thereafter and are incorporated into the Governing Documents of each
such Fund.
Most Main Funds have an “investment period” of five years, during which period the Management
Fee paid by the Fund is 2.0% per annum of the aggregate amount of subscribed capital of such Fund.
Following the termination of a Fund’s investment period, the Management Fee paid by such Fund for
the balance of the term of the Fund is 1.50% per annum of the amount of capital that remains invested
in such Fund, subject to certain other factors. Feeder Vehicle Funds are not charged a Management
Fee.
For one Main Fund created to enable Fund II investors to obtain liquidity if they so desired, the
Management Fee is not determined as a percentage of assets under management, but rather is a fee
which reduces according to (1) the passage of time and (2) the participation level of certain Monitor
Clipper Partner principals. In addition, one investor in this Main Fund paid a Management Fee that
was structured as an agreed fee over a specific period of time.
Monitor Clipper Partners will reduce the amount of Management Fees paid by the applicable Main
Fund in connection with the receipt of such transaction and other fees, as described more fully below
in Item 5.C. The amount and manner of such reduction is set forth in the Governing Documents of
the applicable Fund. As the Feeder Vehicle Funds do not pay Management Fees, any such reduction
does not benefit such Funds.
Management Fees and other fees and distributions described above are generally subject to waiver or
reduction by Monitor Clipper Partners in its sole discretion, both voluntarily and on a negotiated basis
with selected investors. Employees and/or family members of Monitor Clipper Partners who invest
through a Feeder Vehicle are not charged a Management Fee. Principals of Monitor Clipper Partners
who invest through the Filing Adviser directly (the Filing Adviser is an investor in several of the Main
Funds) are also not charged a Management Fee. Principals of Monitor Clipper Partners investing
directly into a Main Fund do pay a Management Fee. Further, from time to time, Monitor Clipper
Partners has waived or reduced all or a portion of the Management Fee to be paid by a Fund in full
or partial satisfaction of any obligation of Monitor Clipper Partners and certain employees of Monitor
Clipper Partners to invest in such Fund.
B. Describe whether you deduct fees from clients’ assets or bill clients for fees incurred.
If clients may select either method, disclose this fact. Explain how often you bill clients or
deduct your fees.
Monitor Clipper Partners deducts fees from the Funds’ accounts. While the Filing Adviser is entitled
to deduct Management Fees either (1) part way into the relevant semi-annual period, partially in
advance and partially in arrears, or (2) quarterly in arrears, Management Fees are only deducted as
needed.
C. Describe any other types of fees or expenses clients may pay in connection with your
advisory services, such as custodian fees or mutual fund expenses. Disclose that clients will
incur brokerage and other transaction costs, and direct clients to the section(s) of your
brochure that discuss brokerage.
Carried Interest
The relevant Monitor Clipper Partners Fund General Partner receives a carried interest allocation
(“Carried Interest”) with respect to most Main Funds equal to 20% of all realized profits subject to an
8% annual compound preferred return that must first be returned to the investors, as more fully
described in the applicable Fund’s Governing Documents. The Carried Interest distributed to the
General Partner is subject to a potential giveback at the end of life of the Fund if the General Partner
has received excess cumulative distributions. In the case of one Main Fund, Carried Interest is
calculated on an investment-by-investment basis, with the applicable Carried Interest percentage
ranging from 4% to 9%; in this case, there is no preferred return hurdle applicable. Because of the
structure of this Main Fund, it is not possible for the General Partner to receive excess cumulative
distributions.
More information on the Filing Adviser’s Carried Interest allocation is described in Item 6, below.
Other Fees and Expenses
To the extent provided in the Governing Documents of each Fund, Monitor Clipper Partners will pay
out of Management Fees certain operating expenses, including expenses on account of rent, utilities,
office supplies, office equipment, certain travel and entertainment, compensation of its partners and
employees (other than Carried Interest described in Item 6 below) and other routine administrative
expenses relating to the services and facilities provided by Monitor Clipper Partners to the Funds.
Consistent with the partnership agreements or other Governing Documents of the Funds, each Fund
will bear all other expenses relating to it to the extent not borne by its portfolio companies, including
legal, accounting, auditing, tax preparation, investment banking, consulting (including, but not limited
to, consulting fees incurred by the applicable Fund for the benefit of its portfolio company); fees paid
to third-party valuation agents, research, brokerage, finders’, custody, transfer, registration; advisory
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