ITEM 5 – FEES AND COMPENSATION
AIM is compensated through the payment of management fees and performance-based
compensation by the Funds. The specific terms relating to the fees paid by each Fund, summarized
below, are negotiated by the Investors in such Fund at the time of its formation, and as such, may
vary from Fund to Fund. Following the formation of a Fund, fees are generally not negotiable.
Management Fee
AIM receives an annual management fee (“Management Fee”) from each Fund that is paid
quarterly in advance, with fees for any period shorter than a full quarter being prorated for such
quarter. With respect to the Gen I Funds, Management Fees are no longer charged to Investors.
With respect to the Gen II Funds, Management Fees are no longer charges to Investors.
Investors are generally not permitted to withdraw from a Fund prior to such Fund’s dissolution,
and may not transfer any of their interest, rights or obligations under the Fund without the prior
written consent of the respective GP. The Management Fee obligation of a Fund may be terminated
only in connection with the dissolution of that Fund. Pursuant to the Management Agreements, in
the event of an early termination of a Fund mid-quarter, a pro-rated portion of the Management
Fee paid in advance of the fiscal quarter in which such termination occurs would be returned to
the applicable Fund.
Carried Interest Allocation
In addition, as described in further detail in Item 6 below, the GPs receive a performance allocation
(commonly referred to as “carried interest”) in the form of a portion of the Funds’ investment
profits (generally 20%) once all capital contributions have been returned to the Investors (pursuant
to the detailed terms as described in each Fund’s Governing Documents). The carried interest is
generally paid to the relevant GP when earned. The carried interest allocations with respect to the
Gen II Funds are also subject to an 8% preferred return which each Investor must receive prior to
the GP being eligible to receive any carried interest allocations, as more fully described in the
relevant Governing Documents of the Gen II Funds.
Currently, none of the Co-Investment Vehicles pay management fees or performance fees to AIM
or any of its affiliates. It is possible in the future that a Co-Investment Vehicle may pay
management fees and/or performance-based fees.
Other Fees and Expenses
AIM, the GPs or their members, employees, or other affiliates may receive certain transaction fees,
advisory fees, director’s fees, break-up fees or other similar fees in connection with portfolio
investments or proposed portfolio investments of the Funds as compensation for financial advisory
and similar services provided to portfolio companies (“Fee Income”).
In the case of advisory fees, the terms of the related agreements may in certain instances provide
for an acceleration of fees paid to AIM or its affiliates upon termination of the agreement following
certain milestones, such as an initial public offering or sale and where the lump-sum termination
fee may be calculated as the present value of hypothetical foregone payments in the future. There
is an inherent conflict of interest when AIM accelerates its advisory fees. Accelerated advisory
fees may minimize or reduce any potential benefit of an advisory fee offset and may also reduce
the amounts available for distribution to the investors. To address this conflict, AIM’s Advisory
Boards serve to offer advice and counsel to the General Partner on issues relating to conflicts of
interest and any other matters as requested by the GP in connection with investments and other
partnership and/or Fund matters.
A portion (typically 50% of net break-up fees and net transaction/advisory fees (in the case of the
Gen I Funds) and typically 100% of net break-up fees and 80% of net transaction/advisory fees (in
the case of the Gen II Funds)) of Fee Income may be used to offset and reduce the amount of the
Management Fee otherwise payable by a Fund in accordance with the terms of the Governing
Documents of such Fund. As noted above, the Gen I Funds, the Gen II Funds and the Co-
Investment Vehicles do not pay management fees, and as a result, there is no Management Fee
offset with respect to Fee Income attributable to portfolio investments held by the Gen I Funds,
the Gen II Funds or the Co-Investment Vehicles. These fees, and the associated conflicts of interest
they present, are further described in Item 11 below.
AIM and its affiliates engage and retain certain senior executives, advisors, consultants, and other
similar professionals, who are not employees or affiliates of AIM, but provide advice and
assistance with respect to identifying, analyzing, and working with the companies in which the
Funds invest, and who may receive payments from the Funds and/or portfolio companies. These
payments will not be subject to the Management Fee offset described above. Please refer to Item
10 for additional information relating to the conflicts of interest presented by such arrangements.
In addition, the Advisory Clients pay a variety of expenses attributable to their ongoing activities
and operations, including, but not limited to, the following costs and expenses related to the
acquisition, ownership, and disposition of investments:
• brokerage fees and commissions;
• general research expenses and other expenses relating to the investigation and evaluation
of investment opportunities (whether or not consummated);
• fees and charges incurred in connection with the maintenance of bank or custodian
accounts;
• interest on margin accounts and other indebtedness;
• withholding and transfer fees;
• clearing and settlement charges;
• professional fees and expenses of consultants, experts and other persons engaged to provide
advice relating to investments (including senior advisors and other consultants who are not
...