Item 5 – Fees and Compensation:
[Please note that any summary set forth herein of the terms and conditions of an
investment in the Fund is qualified in its entirety by the actual terms and conditions of
such an investment contained in the offering documents of the Fund. These include, among
others, the Fund’s Confidential Private Placement Memorandum (“PPM”), Limited
Partnership Agreement (“Partnership Agreement”), and Subscription Agreement.]
Per the Partnership Agreement and the Management Agreement, PEM is entitled to
compensation for its services in the form of an annual management fee (the “Management
Fee”); during the initial investment period—which ended on December 12, 2014—this fee
was equal to 2% of total capital commitments, and after the initial investment period until
December 12, 2020, this fee was equal to 2% of the total capital contributions used to make
investments in portfolio companies less any distributions constituting returns of capital
contributions and certain write-offs. The Management Fee was then reduced to 0.5% of such
unrealized invested amounts for the 12 months ended December 12, 2021, at which point
PEM ceased to charge a Management Fee with respect to the Fund.
(The Management Fee was also subject to certain offsets for investment banking fees,
directors’ fees and other net fee income, and was payable by the investors in the Fund semi-
annually in advance pursuant to a capital call.)
As set forth in Item 6 below, the General Partner is eligible to receive performance allocations.
The PPM and the Partnership Agreement and Management Agreement of the Fund include
further details on fees and compensation and related matters.
Additional Fees and Expenses:
In addition to the Management Fee, investors in the Fund bear all reasonable expenses
made on behalf of the Fund, including:
• expenses associated with the acquisition, holding and disposition of proposed or
actual investments in portfolio companies, including any in connection with
unconsummated transactions;
• legal, auditing, bookkeeping and accounting fees and expenses;
• expenses of meetings of the advisory board and the investors;
• insurance and indemnification expenses;
• interest expenses, investment banking, consulting, custodial, brokerage fees, finders
fees, custody, transfer, registration, advisory board, commissions, discounts and other
similar expenses;
• extraordinary expenses, such as litigation;
• expenses of liquidating the Fund;
• taxes, fees or other governmental charges levied against the Fund and all expenses
incurred in connection with any tax audit, investigation, settlement or review of the
Fund; and
Prophet Equity Management LLC
Form ADV Part 2A – Disclosure Brochure
March 31, 2026
• subject to certain limitations, expenses incurred in connection with the organization
of the Fund, the General Partner, PEM and any alternative or parallel investment
vehicles, and the offering of the limited partnership interests in the Fund (excluding
any placement fees).
Investors in the Fund are advised to review the PPM and the Partnership Agreement for a
more extensive description of the fees and expenses associated with an investment in the
Fund.