ITEM 5 – FEES AND COMPENSATION
Each Fund’s Governing Documents contain a detailed description of the applicable Fund’s fee schedule.
A brief summary of such fees is provided below.
It is critical that Investors and prospective Investors refer to the relevant Fund’s Governing Documents for
a complete understanding of fees and expenses of an investment in a Fund. The information contained
herein is a summary only and is qualified in its entirety by such Governing Documents.
Generally, and in particular with respect to the Pavadi Funds, Pavadi receives a quarterly management fee
calculated at the annual rate of (i) 1.5% of each Investor’s capital account (the “Management Fee”). The
Management Fee is paid quarterly in advance, based on each Investor’s capital account value as of the
beginning of each quarter. The Management Fee will be prorated for any period that is less than a full
quarter and will be adjusted for contributions made during the quarter and paid at the time of such
contribution. Notwithstanding the foregoing, each Pavadi Fund’s general partner (the “General Partner”),
in its sole discretion, may waive or modify the Management Fee for Investors that are members, employees
or affiliates of the General Partner or Pavadi, relatives of such persons, and for certain other Investors.
Pavadi may agree to different fee terms with respect to the Pavadi Accounts.
With respect to the Pavadi Funds, at of the end of each fiscal year, the General Partner will receive an
annual incentive allocation of net profits (including net realized and unrealized gains and losses) for such
year equal to 15% of the net profits attributable to each Investor’s capital account subject to a loss
carryforward provision (sometimes referred to as a “high water mark”) in each case (the “Incentive
Allocation”). The General Partner, in its sole discretion, may waive or modify the Incentive Allocation
for Investors that are members, employees or affiliates of the General Partner or Pavadi, relatives of such
persons and for certain other Investors. As of the date of this Brochure, the Pavadi Healthcare Fund
Incentive Allocation is being waived by its General Partner for all Investors in Pavadi Healthcare Fund.
Performance-based compensation charged to the Pavadi Accounts is negotiated with respect to each Pavadi
Account individually.
To the extent an Investor in a Fund effects a withdrawal other than at the end of a fiscal year, the relevant
General Partner is entitled to receive an Incentive Allocation in connection with such withdrawal as if the
date of such withdrawal were the end of a fiscal year with respect to the amount of such withdrawal.
The fees payable by the Pavadi Funds are deducted from the assets of the Pavadi Funds and paid to the
Investment Manager or an affiliate or, in the case of the Incentive Allocation, are reallocated from the
capital accounts of Pavadi Fund Investors and into the General Partner’s capital account. Fees for the
Pavadi Accounts are typically billed to the client and paid from the assets of the Pavadi Account.
It is critical that Investors and prospective Investors refer to their respective Fund’s Governing Documents
for a complete understanding of how fees are deducted from the Fund’s assets. The information contained
herein is a summary only and is qualified in its entirety by the relevant Fund’s Governing Documents.
In addition to the Management Fee and the Incentive Allocation payable to Pavadi or an affiliate, the Funds
are expected to bear their own operating and other expenses as described below.
With respect to the Pavadi Funds, subject to certain limitations that vary as between the Pavadi Funds and
any potential future Pavadi Funds, the Pavadi Funds shall generally bear all costs and expenses incurred in
connection with their formation and organization. In addition, each of the Pavadi Funds shall bear all
operating expenses and other costs of the respective Pavadi Fund including, but not limited to: (i)
accounting, bookkeeping, tax and auditing fees and expenses (including the allocable share of the costs,
fees and expenses relating to internal accounting and tax preparation functions); (ii) legal fees and
expenses, including, but not limited to, fees and expenses incurred in connection with the Governing
Documents, any offering of interests, Pavadi Fund contracts and investments; (iii) all fees and
disbursements of the Pavadi Fund’s, the General Partner’s and the Investment Manager’s attorneys,
consultants and other third parties performing work benefiting the Pavadi Fund or otherwise in connection
with the Pavadi Fund’s investment activities (including, without limitation, the legal and other fees, costs
and expenses of such parties in or related to any proxy contest or other shareholder initiative or proceeding
and in any threatened or actual litigation or governmental investigation or proceeding, and the amount of
any judgments or settlements paid in connection with such proxy contest, shareholder initiative or
litigation, or fines or penalties levied as a result of any such investigation or proceeding); (iv) insurance
and bonding costs (including, without limitation, directors’ and officers’ insurance, errors and omissions
insurance, fiduciary insurance and other similar policies that may be obtained by the Investment Manager,
the General Partner and/or the Pavadi Fund); (v) all trading expenses and transaction costs, including, but
not limited to, brokerage commissions and expenses, clearing and settlement charges, interest on loans and
debit balances, margin interest, broker service fees and other clearing and custodial expenses; (vi) fees or
assessments in connection with any regulatory registrations, qualifications and/or approvals of the Pavadi
Fund, the General Partner or the Investment Manager and related compliance fees and expenses deemed
appropriate by the General Partner; (vii) such research and portfolio management expenses as the General
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