15 ILPA Principles 3.0 Expenses Allocable to the Partnership In most circumstances, the following expenses should be allocable in full to the partnership: LPAC Meetings/Annual Investor Meetings—The partnership should pay for costs related to hosting LPAC meetings and annual/special meetings of the investors, including expenses associated with meeting venue, meeting materials, and meeting supplies. The costs of entertainment, including speaker fees, should not be charged to LPs. Third Party Administration—Third party administra- tor costs should only be allocated to the partnership when the GP has the approval of LPs to utilize a third party administrator. The GP should be able to justify and monitor quality and costs related to the use of outsourced resources. Allocation of a portion of the GP’s full-time staff time to administer the fund is deemed not reasonably charged to the fund, as such costs are to be covered under the management fee. Travel—Travel related to sourcing deals, networking, and preliminary due diligence should be paid by the manager out of the management fee. When a potential investment advances past the initial term sheet, then travel related to the investment should be treated as a transaction cost borne by the fund. LPs should be vigilant for excessive travel expenses and should request the GP’s travel policy, which should include parameters addressing use of non-commer- cial travel, i.e., private planes, and entertainment expenses. Interest Expenses and Fees—Costs associated with the use of subscription lines of credit and similar credit facilities drawn for the benefit of the fund should be paid by the partnership. The use of credit facilities with terms longer than one year should be subject to LPAC approval. LPs should review the terms of any credit facilities used. Audits—The partnership should bear the cost of annual fund audits as well as audits related to the Partnership or GP conducted by regulatory bodies to that specific fund, including but not limited to the cost of completing IRS audits and fees incurred for assistance in responding to such audits. Legal Expenses—Third party legal expenses incurred specifically in connection with fund matters are allocable to the partnership. In cases where the GP elects to allocate a charge for a portion of the GP’s internal legal staff’s time to the partnership, the rationale for utilizing internal resources, and the market basis applied in calculating any such charges should be provided to LPs. Legal costs associated with an investigation of the GP or any of its partners, e.g., following an examination by a regulator or government authority of the adviser to the fund, should be borne by the GP as covered by the management fee, and not allocated to the Partnership. Indemnification, Insurance, and Litigation Expenses— LPs should ensure proper standard of care limitations and confirm the GP is required to pursue alternative sources of indemnification. LPs should ensure internal disputes among GPs are excluded from coverage paid for by the partnership and ensure that obligations only extend to fund matters and not general indemnifica- tion for the manager for all manager actions. Regulatory Expenses—The cost of satisfying regulato- ry requirements and communicating with regulators at the level of the firm should be borne by the GP out of the management fee. Fund specific costs tied to transactions by the fund (e.g., regulator approval for certain deals) should be a fund expense. GP AND FUND ECONOMICS