Item 5: Fees & Compensation
As compensation for investment supervisory services rendered to the Funds, Next Coast receives
an asset-based management fee (“Management Fee”) and a share of a Fund’s distributions to its
investors (a performance fee, or “carried interest”). In addition, a Fund may be subject to carried
interest distributions. The fees and expenses associated with investments in each Fund are
described in detail in the Fund’s respective Governing Documents. It is critical that all Fund
investors refer to the applicable Fund’s Governing Documents for a complete understanding of
how the Adviser and its affiliates are compensated for advisory services.
Next Coast may, in its sole discretion, manage other funds or accounts with higher or lower fees,
different fee structures and different expense payment arrangements than the Funds. Further, the
General Partner, in its sole discretion, may agree with a Limited Partner to waive or modify the
application provisions of each Funds’ Governing Documents, including the fees charged, with
respect to such Limited Partner, without obtaining the consent of any other Limited Partner.
A. Management Fee. The Adviser is generally entitled to compensation that is calculated as a
specified quarterly percentage rate (as detailed in the respective Fund’s Governing
Documents) of the aggregated capital commitments of the Limited Partners, which is
payable quarterly in advance. Management Fee installments for any period other than a full
quarterly period shall be adjusted on a pro rata basis according to the actual number of days
elapsed. Additionally, the management fee may be subject to certain offsets which include,
(i) private placement fees paid by the Funds in connection with the formation and
organization of the Funds, (ii) the amount of any cashless contributions made by a General
Partner, and (iii) the amount of any cash or other compensation paid as directors,
consulting, management service, advisory, consultant, transaction, commitment, breakup
or broken deal fees or similar fees a General Partner or certain of its affiliates, by or in
connection with an existing or prospective portfolio company.
B. Carried Interest. While certain factors that influence the amount the Adviser is entitled to
receive vary in material ways from Fund to Fund, the Adviser is generally entitled to
receive a portion of the proceeds from the disposition of a Fund’s investments, together
with any dividends, distributions or interest earned on such investments. In a typical Fund,
such proceeds are distributed (1) first, to the Limited Partners in an amount equal to such
Limited Partner’s aggregate capital contributions to date and (2) second, eighty percent
(80%) to the Limited Partners and twenty percent (20%) to the General Partner until the
aggregate net amount allocated with respect to such Limited Partners’ share is equal to two
times the sum of (a) the amounts distributed in clause (1) and (b) such Limited Partners’
Capital Commitment.
In addition, based on the performance of the partnership, the carried interest due to the
General Partner may increase beyond the initial 20% as a result of achieving certain
performance benchmarks as disclosed in each Fund’s respective Governing Documents.
Management Fees and Carried Interest are deducted directly from Fund assets and paid to the
Adviser or its affiliates in the same manner and frequency specified above.
The Funds will be responsible for all other expenses of the Funds and the General Partner,
including, but not limited to, expenses incident to the organization of a Fund and the General, costs
incurred in the investigation, purchase, holding or sale of securities (whether or not such purchases
or sales are ultimately consummated), and all legal, audit, accounting, consulting, registration,
insurance, indemnification and partner communications and meetings expenses, financial fees and
any extraordinary expenses of the Funds. (collectively, “Fund Expenses”).
All Fund Expenses will reduce the returns earned by Limited Partners and a substantial net
performance of a Fund is required in order to even cover the substantial costs incurred in
connection with investment structure. Fees and expenses generally will be paid regardless of
whether a Fund produces positive investment returns. More information about a Fund’s fees and
expenses are found in the Funds’ Governing Documents.
Neither Next Coast nor any of our officers or employees accepts any compensation for the sale of
securities or other investment products.