ITEM 5 – FEES AND COMPENSATION
Fund Management & Co-Investment Fees
Upper Bay charges an annual fee (the “management fee”) as described in the Governing Documents of each
Upper Bay Fund. Typically, management fees are based on total capital commitments and/or net invested
capital, depending on the particular Upper Bay Fund.
For Fund I, the management fee is generally 1.25% of each investor’s capital commitment (during the
investment period) and net invested capital (after the end of the investment period).
The timing of fee payments is set forth in the Governing Documents of the applicable Upper Bay Fund.
Generally, management fees are payable by Fund I quarterly in advance.
Upper Bay may issue capital calls from investors to fund investments, fees and expenses (including
management fees and amounts reimbursable to Upper Bay under the applicable Governing Documents).
The General Partner generally issues capital calls to investors on a pro rata basis (based on capital
commitments) upon not less than ten business days’ notice.
Upper Bay also charges fees with respect to Co-Invest Vehicles which may be paid by the Co-Invest
Vehicle, individual co-investors and/or the underlying portfolio company, depending on each Co-Invest
Vehicle’s Governing Documents and agreements with co-investors and portfolio companies. Such fees
include or may include an acquisition fee, monitoring fees, and/or a multiplier of the amount of transaction
costs, fees and expenses incurred by Upper Bay with respect to the particular investment.
Acquisition fees and/or transaction cost multipliers with respect to Co-Invest Vehicles are generally paid
to Upper Bay initially upon completion of the investment transaction. Monitoring fees are generally not
accrued or paid until the transaction is completed and are generally payable quarterly thereafter.
Upper Bay Fund investors and co-investors have negotiated different management and other fee
arrangements, rebates or offsets in side letters or other agreements. Investors and prospective investors
should refer to the Governing Documents of each Upper Bay Fund for a detailed description of fees. Upper
Bay owners, employees and affiliates generally are not subject to management fees or Co-Invest Vehicle
fees.
Similar advisory services may be available from other investment advisers for higher, similar or lower fees.
JV Partner Fees
In consideration for investment management services provided to JV Partners, Upper Bay receives or may
receive management fees or other fees related to the particular portfolio company investment(s), and/or
may receive a profits interest or carried interest with respect to such investment(s). Such fee arrangements,
including the frequency and payment terms, are established in the investment management agreement or
other Governing Documents with such JV Partner.
Portfolio Company Fees
In accordance with applicable Fund Governing Documents, throughout the term of a portfolio company
investment, from its acquisition and continuing through its management and ultimate sale, the Managing
Partners or other supervised persons have assumed and may assume in the future directorship, managerial
or other executive positions within or on behalf of such portfolio company for which Upper Bay may be
compensated. This compensation may include but is not limited to directors’ fees, monitoring fees,
management fees, advisory fees, structuring fees, success fees, financing fees, commitment fees, closing
fees or other fees from portfolio companies and prospective portfolio companies, or break-up fees in
connection with unconsummated investments (collectively referred to as portfolio company fees). Pursuant
to provisions in applicable Governing Documents, and side letters with individual investors, management
fees may be offset to portfolio company fees paid to Upper Bay, an affiliate or related persons. Portfolio
company fees attributable to co-investors’ investment in a portfolio company may offset any management
fees paid by such co-investor, subject to provisions in the governing documents for the respective Co-Invest
vehicle and any side letter provisions with co-investors. Portfolio company fees may be retained by Upper
Bay or an affiliate with respect to any co-investment in a portfolio company that is not subject to
management fees, or consistent with applicable governing documents.
In limited circumstances, upon approval by the Managing Partners in consultation with the CCO, an
individual may receive director fees when such individual’s position as a director precedes a Fund’s
investment in such company. Upper Bay received accelerated fees upon the occurrence of certain
transactions by a portfolio company in accordance with the relevant agreement between Upper Bay and the
portfolio company. Such accelerated fees were applied to reduce the management fee, to the extent required
under applicable governing documents.
Fee Offsets
Upper Bay generally applies 100% of (i) all transaction fees received by Upper Bay in connection with
Fund I’s investments in portfolio companies and (ii) placement fees paid by Fund I in connection with the
offering of its limited partnership interests (“Placement Fees”) to reduce the management fee owed to Upper
Bay by Fund I. However, transaction fees received in connection with Fund I’s initial portfolio company
investments made prior to the acceptance of any third-party capital commitments by Fund I did not offset
any Fund I management fees as well as the fees received after the expiration of the Investment Period of
the Fund I.
In addition, Upper Bay generally offsets the monitoring fee owed to Upper Bay by each Co-Invest Vehicle
by the amount of any acquisition fees received with respect to such Co-Invest Vehicle’s portfolio company
transactions, subject to any exceptions established in side letters with co-investors.
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