ITEM 5 - FEES AND COMPENSATION
In general, Tidemark receives a management fee (the “Management Fee”) and a carried
interest in connection with advisory services provided to the Funds. Tidemark and/or its affiliates
also receive compensation from portfolio companies in connection with services provided by
Tidemark and/or its affiliates to such portfolio companies, and, except to the extent such amounts
are subject to any offset provisions as outlined in the applicable Governing Documents, are in
addition to the Management Fee or carried interest discussed therein. A summary of the Funds’
anticipated fees and expenses follows, but investors should review the applicable Fund’s
Governing Documents for details regarding fee structure and expenses.
Management Fees
Each Fund (excluding the Executive Fund I LP and Kai Opportunity Fund LP) pays a
Management Fee equal to 2% on an annual basis of aggregate capital commitments
(“Commitments”) of investors that are not designated as “affiliated partners” by Tidemark.
Payments are made quarterly in advance. Commencing with the first Management Fee payment
date after the expiration of the investment period or earlier upon the occurrence of certain events
as set forth in the Governing Documents and through the final distribution of the Fund’s assets,
the Management Fee will equal an amount of (i) the aggregate unrecouped bridge financing and
investment contributions with respect to the portion of each investment that has not been disposed
of or completely written-off, less (ii) the aggregate amount of permanent write-downs of
investments that have not been disposed of, in each case with respect to investors not designated
as “affiliated partners” by Tidemark; provided that investments (other than bridge financings) in a
portfolio company will be treated as having been disposed of, completely written off or
permanently written down only to the extent that, as of the date of any such disposition, write-off
or write-down, the aggregate fair market value of all remaining Fund investments (other than
bridge financings) in such portfolio company is less than the Fund’s aggregate investment
contributions made with respect to all existing and former investments in such portfolio company.
Tidemark reserves the right, in its sole discretion, to exempt “affiliated partners” as designated by
Tidemark from all or some portion of the Management Fee. Installments of the Management Fee
payable for any period other than a full three month period are adjusted on a pro-rata basis
according to the actual number of days in such period.
Each Fund’s Management Fee is expected to be reduced, but not below zero, by an amount
equal to 100% of Transaction Fees (as defined below) attributable to investors not designated as
“affiliated partners” by Tidemark. “Transaction Fees” include: (i) closing fees, commitment fees,
monitoring fees, director’s fees, financial consulting fees or advisory fees paid to Tidemark with
respect to any Fund investment; (ii) transaction fees paid to Tidemark with respect to any Fund
investment; and (iii) break-up fees with respect to Fund transactions not completed that are paid
to Tidemark, in each case net of certain expenses (including those described below) as set forth in
the Governing Documents; but they do not include, in any event, any amount received by
Tidemark, the Tidemark Ecosystem or a member thereof or any other person from a portfolio
company, prospective portfolio company or other person (A) as reimbursement for expenses
directly related to such portfolio company or prospective portfolio company, (B) as compensation
for services provided to or in respect of any portfolio company or prospective portfolio company
in the ordinary course of such portfolio company’s or prospective portfolio company’s business,
(C) as compensation for services provided by Tidemark or other person as an employee of or in a
similar capacity for such portfolio company or prospective portfolio company,
(D) as compensation, including fees, incentive equity or other stock awards, for services rendered
by the Tidemark Ecosystem or a member thereof to such portfolio company or prospective
portfolio company or (E) any other amounts that the advisory board otherwise approves as not
constituting Transaction Fees.
Various costs and expenses will reduce Transaction Fees (and therefore such amounts will
not reduce the Management Fee), including out-of-pocket costs and expenses (including
unreimbursed travel expenses) incurred by Tidemark in connection with any consummated or
unconsummated transaction or in connection with generating any such Transaction Fees.
Any Transaction Fees with respect to an investment or potential investment (including a
transaction not consummated) shall be applied to the Management Fee offset described above only
to the extent of the Funds’ relative ownership (or anticipated ownership) of such investment or
potential investment on a fully diluted basis. Accordingly, each Fund will, in most cases, only
benefit from the Management Fee reduction described above with respect to its allocable portion
of any such Transaction Fee and not the portion allocable to any other person that holds an
economic interest in (or, in the case of a transaction not consummated, would have held an
economic interest in) the applicable investment (e.g., co-investors). For the avoidance of doubt,
any other fees earned with respect to any co-investment vehicle will not reduce the Management
Fee payable by each Fund.
Carried Interest
As more fully described in the Governing Documents, Tidemark generally will receive
carried interest with respect to each Fund (excluding the Executive Fund I LP) equal to 10-20% of
all realized profits. The carried interest distributed to the applicable General Partner is subject to a
potential clawback at the end of the Fund’s life if such General Partner has received excess
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