Item 5: Fees and Compensation
A. Wasserstein, related entities, and/or the relevant general partner are compensated for advisory
services to each Client based on a percentage of such Client’s net asset value (the “Management
Fee”). Wasserstein, related entities, and/or the relevant general partner are also compensated
with a performance-based allocation (the “Incentive Allocation”), as described below.
Compensation through fees is typically negotiated separately with each of the Clients.
Wasserstein may enter into relationships with certain investors on different investment terms.
These terms could include a reduction in the fees paid by the investor.
Client management fees vary by Client and/or investors in each Client and are generally calculated
at an annual rate that ranges from 1.0% to 2.0% of the net asset value of each Client investor’s
capital account balance.
Client incentive allocation fees vary by investor and are generally calculated at an annual rate that
ranges from 10% to 20% of the net capital appreciation of each investor’s capital account balance,
less the Management Fee paid and any loss-recovery due to such investor (the “Incentive Allocation
Fees”), as described more fully in the relevant Client’s Governing Documents. Certain officers and
directors of the Firm directly receive a portion of the Incentive Allocation Fee.
B. Management Fees are generally deducted directly from Client accounts quarterly in advance.
Incentive Allocation Fees, if applicable, are generally deducted directly from Client accounts on
the last day of the Client’s fiscal year.
C. Wasserstein and the Clients generally bear their own expenses. Expenses are allocated on a case
by case basis in accordance with each Client’s Governing Documents.
Expenses the Clients may incur generally include (but are not necessarily limited to):
i. Expenses incurred in connection with the organization of the Client and the offering of
interests, if applicable, in the Client.
ii. Expenses incurred in connection with the evaluation, acquisition, monitoring or
disposition of investments, including, without limitation, loan fees, appraisal fees, private
placement fees, sales commissions, brokerage fees and commissions, underwriting
commissions and discounts, taxes, expenses related to short sales, travel expenses and
legal, accounting, investment banking, consulting, information services and other third-
party professional fees, and travel, communications and other expenses related to the
discovery, investigation, development, making and disposition of investments (whether
or not consummated);
iii. Expenses incurred in connection with the carrying or management of investments,
including, without limitation, interest and related expenses, clearing and settlement
charges, hedging expenses, custodial, trustee, record keeping and other administration
fees and expenses;
iv. Expenses incurred in connection with any leverage or other indebtedness of the Client,
including, without limitation, interest, borrowing fees, dollar rolls, reverse purchase
agreements, credit facilities, margin financing, total return swaps, the issuance of debt
securities and other costs associated with any financing;
v. Expenses incurred in connection with the Client’s audited financial statements, tax
returns and K-1’s;
vi. Professional fees and expenses, including, without limitation, fees and disbursements of
attorneys, accountants, consultants and experts relating to Client matters, and fees and
disbursements associated with updating the subscription documents and amending or
restructuring the constituent documents of the Client or related investment vehicles,
including, without limitation, the Client’s general partner;
vii. Any costs, including, without limitation, compensation, indemnification and insurance
expenses associated with committees;
viii. Taxes and other governmental charges levied against the Client;
ix. Expenses relating to defaults by investors in the payment of any capital contributions, if
applicable;
x. Insurance premiums or expenses in connection with the activities of the Client, including,
without limitation, errors, omissions, fidelity, general partner liability, directors’ and
officers’ liability and similar coverage for any person acting on behalf of the Client, it’s
general partner or Wasserstein;
xi. Expenses (including, without limitation, legal fees and expenses) incurred to comply with any
law or regulation related to the activities of the Client (including, without limitation, the
offering of limited partnership interests in the Client, if applicable, any “blue sky” filing fees
and expenses and expenses related to the preparation and filing of Form PF and other similar
regulatory filings related to the Client) or incurred in connection with any litigation or
governmental inquiry, investigation or proceeding involving the Client, including the amount
of any judgments, settlements or fines paid in connection therewith;
xii. Expenses incurred in connection with the winding up or liquidation of the Client;
xiii. Expenses incurred in connection with computing the Client’s assets;
xiv. Expenses incurred in connection with any distributions to investors and in connection
with any meeting of investors relating to a Client;
xv. Expenses related to the Client indemnification obligations;
xvi. Administration fees payable to the Client’s administrator;
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