ITEM 5 – FEES AND COMPENSATION
Fees: AIP and its affiliates, as applicable, are generally entitled to receive a management fee and/or
monitoring fee (collectively, “Management Fee”) and carried interest allocation (“Carried
Interest”). Fees related to Carried Interest charged are individually negotiated on a transaction-
by-transaction basis. AIP, and as applicable, its affiliates, shall be entitled to receive monitoring
fees and transaction fees from its portfolio companies in accordance with each advisory agreement
negotiated between AIP and each portfolio company. Subject to the terms of each Fund’s
Governing Documents, AIP may offset Management Fees and other expenses by monitoring fees
received. The percentage of the Management Fee ranges between 1.8% and 2% per annum of the
aggregate commitments of limited partners. Each year, AIP charges Management Fees quarterly
in advance of each quarter. Please refer to the applicable Governing Documents executed between
each of the Funds for a complete discussion of fees paid by Investors related to each such vehicle.
AIP is permitted to exempt certain Investors in the Funds from payment of all or a portion of
Carried Interest or, to the extent applicable, Management Fees, including AIP and any other
persons designated by AIP, such as “friends and family” of AIP or its personnel, Service Providers
or other Investors as determined by the relevant general partner based on commitment size or other
strategic or relationship factors. AIP reserves the right to make any such exemption from
Management Fees and/or Carried Interest by a direct exemption, a rebate by AIP and/or its
affiliates, or through other Funds which co-invest with a Fund. For example, in instances where
an AIP professional (or an affiliated entity thereof) invests in a Fund, such professional (or such
affiliated entity) generally will be exempt from payment of Management Fees to the extent
applicable, and/or Carried Interest with respect to such Fund. Additionally, to the extent permitted
by the Governing Documents, AIP has the right to permit Investors, affiliated with AIP or
otherwise, to invest through an affiliate or other vehicles that do not bear Management Fees, to the
extent applicable, and/or Carried Interest.
Partnership Expenses: In addition to the Management Fee and Carried Interest payable to AIP,
the Funds typically bear certain out-of-pocket expenses incurred by AIP and its affiliates in
connection with the services provided to the Funds. Such expenses are set forth in each Fund’s
Governing Documents and/or Side Letters entered into between AIP and each Investor. The
individual Fund, each a partnership, shall pay all such partnership expenses or reimburse AIP,
affiliates of AIP, or any person advancing payment of such expenses. In addition, the Funds also
bear fees and expenses indirectly to the extent a portfolio company (or intermediate entity) pays
fees and expenses, including fees and expenses of AIP and/or its affiliates and company-level fees
and expenses not covered by the list of permissible expenses set forth in the Governing Documents.
AIP, affiliates of AIP, or any person advancing payment of such expenses may charge the portfolio
company for any expenses to the extent the general partner determines such expenses are
attributable to the portfolio company or an investment therein or liquidation thereof. The relative
percentage of these expenses that are borne by various stakeholders (including the relevant Fund,
any co-investors, portfolio company management and other persons) is expected to depend upon
the level at which such expenses are charged or incurred, and as a result some stakeholders are
expected to bear an amount of fees or expenses disproportionate to the benefits they receive, or in
some cases without receipt of any direct benefits. Fees and expenses charged at the level of a
portfolio company or intermediate entity, or capitalized into the cost of a transaction, generally
will not be reflected as partnership expenses in calculating the gross and net performance of the
relevant Fund, and so AIP expects to be subject to potential conflicts of interest in determining
whether certain expenses should be charged to the portfolio company or intermediate entity or
capitalized into transaction costs.
Ordinary Operating Expenses: AIP or its affiliates shall pay all ordinary overhead and
administrative expenses of the partnership incurred by the general partner, the ultimate general
partner or AIP in connection with maintaining and operating their respective offices (including
salaries, rent and equipment expenses) to the extent not borne or reimbursed by the portfolio
company, but not including any partnership expenses.
Transaction Fees: To the extent provided in a Fund’s Governing Documents, AIP is permitted to
receive transaction fees (“Transaction Fees”) from portfolio companies. These fees relate to
payment for services provided to portfolio companies in connection with certain transactions.
Other Information: AIP and its affiliates generally have discretion over whether to charge
Transaction Fees or other compensation to a portfolio company and, if so, the rate, timing and/or
amount of such compensation. The receipt of such compensation generally will give rise to
potential conflicts of interest between a Fund, on the one hand, and AIP, including one or more of
its affiliates, on the other hand.
Special Consultants: AIP, the Funds, or a portfolio company expects to retain other companies
and individuals (the “Special Consultants”), including industry advisors and others that are
affiliated or associated with AIP, the Funds, their respective affiliates and their respective
employees, partners, members, shareholders, officers, directors, managers, contractors, and
advisors (collectively, “AIP Personnel”), a portfolio company, third party consultants (including
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