Item 5: Fees and Compensation
Item 5.A. Compensation for Advisory Services
Commencing on the date as of which the General Partner notifies the Limited Partners that the General
Partner has commenced identifying and investigating new investment opportunities for the Fund (the
“Effective Date”) and during the period commencing on the initial closing date and ending on the fifth
anniversary of the later of the final closing date and the Effective Date (the “Investment Period”), as such
terms are defined in the governing documents, the Fund will pay the General Partner an annual
management fee (the “Management Fee”), payable quarterly in advance, equal to 2% of aggregate
commitments held by Partners not designated as “affiliated partners” by the General Partner. Commencing
with the first Management Fee due date after the expiration of the Investment Period or earlier upon the
occurrence of certain events as set forth in the limited partnership agreement of a Fund (the “Partnership
Agreement”), the Management Fee will equal 2% of (i) the aggregate investment contributions (including,
where applicable, a borrowing component (including interest expenses) and the amount of any capitalized
Transaction Fees (as defined below) or expenses) made by the Fund relating to the Fund’s aggregate
investment(s) in its portfolio companies, less (ii) the aggregate amount of investment contributions with
respect to the portion of each investment that has been disposed of or completely written-off for U.S.
federal income tax purposes, in each case with respect to Partners not designated as “affiliated partners”.
In general, the fees for the Fund are not negotiable. However, the Firm may in the future enter into side
letters or similar arrangements with certain investors that grant different terms (including lower fees) to
such investors than the terms generally applicable to other investors in the Fund. Details regarding Park
Road’s Management Fees are set forth in the applicable Fund governing documents.
In addition to Management Fees, the Firm or affiliated General Partner generally will receive carried
interest, as described in Item 6 – Performance-Based Fees. Any performance-based compensation will be
paid in accordance with Section 205(3) of the Advisers Act and the rules promulgated thereunder, which
specify certain qualification thresholds for investors being assessed such a fee.
Item 5.B. Payment of Management Fees
Pursuant to the terms of each Fund’s governing documents, Park Road is authorized to deduct Management
Fees on a quarterly basis. The Management Fee may be paid (i) from capital contributions of Limited
Partners or (ii) from current income or disposition proceeds of the Fund.
Item 5.C. Other Fees & Expenses
The Management Fee will be reduced by an amount equal to 100% of Transaction Fees attributable to
Partners not designated as “affiliated partners” by the General Partner, as set forth in the Partnership
Agreement. “Transaction Fees” include 100% of any: (i) directors’ fees, financial consulting fees or
advisory fees paid to the General Partner with respect to any Fund investment; and (ii) transaction fees
paid to the General Partner with respect to any Fund investment, in each case net of any related expenses
incurred in connection with generating such fees as set forth in the Partnership Agreement; but not
including, in any event, any amount received by the General Partner, the Operating Partners (as described
in Item 10.C. - Material Relationships below) or other person from a portfolio company (A) as
reimbursement for expenses directly related to such portfolio company, (B) as payment for services
provided to any portfolio company in the ordinary course of such portfolio company’s business, (C) as
compensation for services provided by the General Partner or other person as an employee of or in a
similar capacity for such portfolio company or (D) as compensation, including fees, incentive equity or
other stock awards, for services rendered by the Operating Partners to a portfolio company or prospective
portfolio company.
The Management Fee offset described above is intended to prevent Park Road or its affiliates from
receiving duplicative compensation in connection with services provided to the Fund or their portfolio
companies.
Any break-up fees with respect to transactions not consummated by the Fund, and any commitment fees
or other amounts received in connection with the Fund making capital available for any consummated or
unconsummated transaction, will be paid to the Fund (or an entity owned by the Fund), in each case net
of certain expenses as set forth in the Partnership Agreement. Because these amounts are paid to the Fund
rather than to the General Partner, they do not reduce the Management Fee. Certain out-of-pocket costs
and expenses incurred by the General Partner in connection with consummated or unconsummated
transactions — including travel expenses — will reduce the amount of Transaction Fees that offset the
Management Fee and will also reduce the net breakup and commitment fees received by the Fund.
In addition to any Management Fees and performance-based compensation paid to the Firm, each Fund is
responsible for its own organizational, investment, and operating expenses (“Fund Expenses”). These
Fund Expenses may be paid directly by the Fund or may be reimbursed to the Firm or its affiliates for
expenses incurred on the Fund’s behalf.
Fund Expenses are described more fully in each Fund’s governing documents, but generally include,
without limitation, all costs relating to or attributable to:
• Activities with respect to the origination, identification and sourcing of investment opportunities
for the Fund, including attending and sponsoring industry conferences and events, meeting with
consultants, finders, broker-dealers, investment banks and other sources of investments and
developing and maintaining an investment pipeline;
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