Item 5. Fees and Compensation
22C charges certain of the Clients an investment management fee (the “Management Fee”). The
Management Fee for each Client is provided for in such Client’s Governing Documents. The
Management Fee for certain Clients is generally payable to 22C quarterly in advance and during
the investment period is based on the commitments of the Investors and after the investment period
is based on the funded commitments of the Investors.
22C and its affiliates and their respective employees have and may in the future receive transaction,
consulting, advisory, directors’, monitoring, break-up, or similar fees (“Transaction Fees”) in
connection with portfolio investments or prospective portfolio investments of the Clients. In
addition, 22C’s employees serve, and it is anticipated that they will in the future serve on the
boards of directors or as observers to the boards of certain portfolio companies or other companies.
With respect to Transaction Fees allocable to certain Clients, 100% of each Investor’s allocable
share of any such fees will be applied, net of applicable expenses, to reduce future payments of
the Management Fee in respect of such Investor (but not below zero) (“Offset Fees”); provided,
however, that such fees and other compensation to be included in Offset Fees are subject to certain
limitations and exceptions that are further detailed in the relevant Governing Documents.
Transaction Fees received by 22C, its affiliates, and their respective employees that are not
allocable to such Clients will not offset the Management Fee and 22C, its affiliates, and their
respective employees will receive the full benefit of the allocable portion of such fees.
In addition, the Clients are generally subject to an incentive fee or incentive allocation
(collectively, the “Performance Fee”) of 20% of all income, gains, and losses derived from
portfolio investments that exceed a hurdle rate. In certain Clients, if certain Investors receive
aggregate distributions equal to four or five times their aggregate capital contributions made as of
such time, such Investors will be subject to a Performance Fee equal to 25%. 22C, or an affiliate
thereof, is paid or allocated the Performance Fee. Please refer to each Client’s respective
Governing Documents for further information and important details related to the calculation and
payment of Performance Fees, as well as the discussion of Performance Fees at Item 6 of this
Brochure. 22C is authorized to waive or modify the Management Fee and the Performance Fee for
Investors that are members, employees, or affiliates of the Adviser, relatives of such persons, and
for certain large, strategic, or other Investors.
In connection with our investment advisory services, our Clients generally bear, or have borne,
each of their own operating and investment-related expenses, including, for example: expenses
incurred in connection with the identification, structuring, negotiation, making, sourcing
(including any retainers, success and finder’s fees and other compensation paid to investment
banking consultants and senior advisors), researching, holding, monitoring, development,
ownership, operation, management, financing, sale, restructuring, proposed sale or restructuring,
other disposition, or valuation of portfolio investments and temporary investments or investments
and temporary investments considered for the Client (including due diligence in connection
therewith), including, but not limited to, legal, compliance, accounting, audit, consulting,
appraisal, brokerage, travel, lodging, transportation, meals, entertainment, hedging, and other
expenses (refer to Item 12 of this Brochure for a description of 22C’s brokerage practices), the
attendance at conferences in connection with the evaluation of potential portfolio investments or
specific sectors or industries solely to the extent that such conferences are in furtherance of Client
business, and expenses for business development and entertainment directly related to the
development and management of portfolio investments and any prospective portfolio investments,
in each case, to the extent that such fees and expenses are not reimbursed by a portfolio company
or other third party; premiums for D&O insurance and other insurance protecting the Client and
any indemnified party from liabilities; legal, trustee, paying agent, recordkeeping, auditing, and
accounting fees and expenses; expenses related to the administration of the Client or its
subsidiaries, including, but not limited to, fees, expenses, and costs of a third party administrator,
fees, expenses, and costs incurred in connection with the preparation and circulation of drawdown
notices and distribution notices (including, without limitation, fees, expenses, and costs of service
providers), the maintenance of the Client’s books of account and the preparation of audited or
unaudited financial statements required to implement the provisions of the Governing Documents
or by any governmental authority with jurisdiction over the Client (including those of independent
auditors, accountants, and counsel, those of preparing and circulating the reports called for by the
Governing Documents (including, without limitation, Schedules K-1 or other similar schedules),
and any fees or imposts of a governmental authority imposed in connection with such books and
records and statements) and other routine administrative fees, costs, and expenses, including, but
not limited to, those relating to the preparation of tax returns, and insurance and legal expenses
and other reports; auditing, investment banking, accounting, banking, and consulting fees and
expenses; appraisal expenses, including the cost of any independent valuation expert; expenses
related to the organization, documentation, and maintenance of persons through or in which
portfolio investments may be made (including, without limitation, alternative investment vehicles,
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