Item 5 – Fees and Compensation
The Adviser is compensated primarily through management fees, performance-based
compensation, and reimbursement or allocation of fund and series expenses. The fee structure
differs by vehicle and, in the case of RLH Series Fund, LP, may differ by series. Because the
Adviser’s compensation can increase with committed capital, deployed capital, capital account
balances, and net profits, the structure creates important conflicts of interest, including incentives
to raise and retain capital, to favor performance-fee-paying vehicles, to accelerate monetization or
crystallization events, and to pursue investments with greater expected upside and greater attendant
risk.
For RLH Spac Fund, LP, investors are generally charged a management fee payable in advance
each month equal to one-twelfth of 1.25% per annum of the investor’s capital account balance as
of the beginning of the month. The management fee is therefore tied to monthly capital account
value rather than to committed capital. The SPAC Fund also charges an annual performance
allocation equal to 15% of each investor’s ratable share of partnership profits, but only to the extent
such profits exceed the investor’s high-water mark.
For RLH Series Fund, LP, the governing economics are series-specific. Investors in each series
generally are subject to a management fee payable to the General Partner and also generally are
subject to an allocation of series profits to the General Partner, but the precise management fee
and carried interest terms can vary by series. In the Tactical PIPEs I Series, the management fee is
2.0% per annum during the investment period based on capital commitments and, after the
investment period, 2.0% per annum based on unreturned capital contributions. The Tactical PIPEs
I Series also uses specific capital funding mechanics relevant to the economic profile of the series.
The minimum capital commitment is generally $100,000, subject to the General Partner’s
authority to accept lesser amounts. Only 1.5% of the investor’s capital commitment is due at the
applicable closing, with the remaining capital commitments funded later pursuant to capital call
notices. The investment period runs for twelve months from the final closing date, no cost-of-carry
contribution applies, and the General Partner may not retain net cash proceeds for reinvestment
absent the written consent of each series limited partner.
The Special Opportunities I Series uses a similar 2.0% annual management fee structure during
the investment period based on capital commitments and, after the investment period, based on
unreturned capital contributions. It includes an important variation: an amount equal to the first
twelve monthly management fee payments is due upon the initial closing date in lieu of the first
twelve monthly payments that otherwise would have been owed. That front-loaded fee is
economically similar to an origination-style charge and increases the Adviser’s compensation
earlier in the life of the series.
In addition to management fees and incentive compensation, the Funds and Series bear a broad
range of operating expenses. Depending on the applicable vehicle and transaction, these expenses
may include organizational and offering expenses, legal, accounting, audit, tax, administration,
custody, financing, research, travel, due diligence, broken-deal, data-processing, and other
operating costs. A portion of a Series’ assets may remain uninvested for the purpose of paying
such expenses.
RLH Capital, LLC — Form ADV Part 2A | Page 6
For RLH Spac Fund, LP, selling commissions and referral fees may be paid in connection with the
offering of partnership interests. A portion of the management fee and/or performance allocation
may be remitted to third parties introducing limited partners to the partnership, or the General
Partner may use its own resources to compensate such introducers. In addition, brokerage from
partnership trades may be directed to broker-dealers that introduce limited partners to the
partnership, subject to applicable law.
Affiliated investment in the Funds also affects the economics. The General Partner and its
affiliates, including Louis Camhi and other affiliated persons, are permitted to make capital
commitments to the series, but are not required to do so. Partnership interests held by affiliated
persons generally are not subject to the management fee or carried interest, although those
affiliated investors share pro rata in other expenses and liabilities. As a result, the Adviser and its
affiliates may participate in the same economic upside as outside investors without bearing the
same fee burden.
The fee structures described above also interact with the funds’ liquidity arrangements. Investors
in RLH Series Fund, LP generally will not be permitted to withdraw capital from a series or redeem
interests without the consent of the General Partner. In contrast, RLH Spac Fund, LP provides
quarterly liquidity following an initial twelve-month lock-up period, subject to forty-five days’
notice and a general limit of 50% of a partner’s capital account balance as of any particular
withdrawal date. Withdrawals before the end of the lock-up period may be permitted in the General
Partner’s sole discretion, but the investor will generally be subject to an early withdrawal penalty
equal to 3.0% of the withdrawal proceeds, which penalty becomes an asset of the partnership. The
more restrictive liquidity profile of the series structure and the conditional liquidity profile of the
SPAC Fund benefit the Adviser by reducing redemptions or by imposing costs on early exits while
preserving management fee bases and, where applicable, the timing of incentive fee crystallization.
RLH Capital, LLC — Form ADV Part 2A | Page 7