ITEM 5 – FEES AND COMPENSATION
Fees Generally. We charge asset-based investment advisory fees (which in other contexts we refer
to as “services fees”) to the Fund. Advisory fees paid by the Fund are indirectly borne by its
investors. Such investment advisory fees are deducted from the Fund’s assets and generally
payable annually or semi-annually in arrears. The amount of any investment advisory fee is
prorated for periods of less than a full billing cycle at the beginning or end of our provision of
investment advisory services, and any prepaid amount in excess of the prorated fee will be returned
upon termination of our investment advisory services.
We establish and negotiate with investors in the Fund the precise amount of, and the manner and
calculation of, the advisory fees. The Fund’s Limited Partnership Agreement, any applicable side
letters, and/or other documentation received by each investor prior to its investment in the Fund,
which we refer to collectively as the “Governing Documents,” set forth the precise amount of, and
the manner and calculation of, the advisory fees.
Certain investors in the Fund, including, for example, us, our affiliates and certain “friends and
family,” pay reduced or no advisory fees at our discretion (though such investors generally pay
their pro rata share of certain Fund expenses).
Please see Item 6 for more information on incentive compensation.
Expenses. In addition to the investment advisory fees described above,
the Fund pays or reimburses us or our affiliates for certain organizational expenses that are
incurred in connection with the formation of the Fund and the offering of interests in it to
potential investors (“Organizational Expenses”), including
o fees and expenses of counsel, including for preparing offering materials and
preparing and negotiating the Governing Documents;
o travel expenses incurred in connection with meetings with prospective investors
regarding possible investments in the Fund; and
o other expenses related to the Fund’s formation;
the Fund also bears all of the expenses relating to its activities, operations, meetings and
eventual liquidation (other than expenses resulting from our fraud, gross negligence or
willful misconduct), including, without limitation and to the extent provided in the Fund’s
Governing Documents,
o out-of-pocket expenses, costs and liabilities incurred in connection with the
identifying, evaluating, structuring, negotiating, making, holding, monitoring,
development, ownership, operation, management, financing, sale, proposed sale,
other disposition or valuation of the Portfolio Company (including due diligence in
connection therewith), including, but not limited to, underwriting commissions and
discounts, research expenses, legal, administrative, research, accounting, audit,
investment banking, consulting, professional fees, appraisal, travel and other
expenses (to the extent not subject to reimbursement, including in connection with
any meetings of the Fund’s limited partner advisory committee);
o expenses and costs incurred as a result of a proposed transaction or investment by
the Fund in the Portfolio Company that is not consummated (i.e., a proposed
follow-on investment), to the extent not reimbursed by a third party (i.e., broken
deal expenses), provided, that a limited partner who is not participating in such
follow-on investment shall not bear such expenses and costs;
o all expenses, costs and liabilities incurred in connection with litigation (including
damages), investigations, settlements or reviews of the Fund or other extraordinary
events, and the amount of any judgments or settlements paid in connection
therewith, insurance expenses and indemnity expenses and advances;
o brokerage commissions, custodial expenses, appraisal fees and other investment
costs actually incurred in connection with the Portfolio Company;
o all expenses and costs incurred in connection with any follow-on investments,
provided, that a limited partner who is not participating in such follow-on
investments shall not bear such expenses and costs;
o all expenses (including interest payments) incurred in connection with any
indebtedness of the Fund, guarantees or other credit arrangement (including any
line of credit, loan commitment or letter of credit for the Fund or related to Portfolio
Company (or any underlying asset));
o the organization of any alternative investment vehicle or holding vehicle, including
documentation related thereto;
o all expenses and costs relating to defaulting limited partners;
o expenses incurred in connection with any restructuring or amendments to the
Fund’s constituent documents;
o any non-routine fees or imposts of a governmental authority imposed in connection
with the books and records and statements, and all expenses incurred in connection
with any tax audit, investigation, settlement or review of the Fund;
o expenses and costs of winding up or liquidating the Fund and its subsidiaries;
o insurance and legal expenses;
o expenses incurred in connection with the employment of any selling agent, broker,
placement agent, or finder (other than placement agent fees payable in connection
with the sale of interests in the Fund); and
o any other expense not specifically identified in the Governing Documents as being
borne by us; and
the Fund bears all of the expenses relating to its ordinary operating expenses (“Ordinary
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