Item 5: Fees and Compensation
Management Fees
For its investment advisory services provided to Funds, the Registrant or an affiliated
entity may receive a management fee at an annual rate of up to 2% of either the net assets
or invested capital, which may include capital borrowed from leverage providers, pursuant
to the Offering and/or Governing Documents (as defined below), which are provided to
prospective investors. Fees for the Adviser Clients are disclosed in the relevant investment
management service agreement, to which the relevant Adviser Client is a party, and in the
relevant offering documents. Fees for the Managed Accounts are disclosed in the relevant
investment management agreement, to which the relevant account owner is a party. Such
offering and/or governing documents, including the investment management agreement in
the case of an Adviser Client or a Managed Account, when applicable, will be referred to
herein as the “Offering and/or Governing Documents.” Notwithstanding this Item 5 and
Item 6 below, a Client’s Offering and/or Governing Documents may provide for a fee
structure pursuant to which the Registrant is compensated on the basis of entirely different
criteria, metrics, or circumstances than those described herein, for example by receiving
some or all of the fee income associated with a transaction in which a Client participates.
While the Registrant’s policy is that its fees are not negotiable, the Registrant reserves the
right to waive or reduce its fees for certain investors. For example, certain affiliates of
Blackstone, current or former senior advisors, officers, directors and personnel of
Blackstone, portfolio companies of Clients and Other Clients, BIS Clients (as defined below),
personnel of PJTP (as defined below), and investment funds advised by Blackstone Multi-
Asset Advisors L.L.C. (“BMAA”) (including, among other investment funds, side-by-side
vehicles sponsored by Blackstone), and/or charitable programs, endowment funds and
related entities established by or associated with any of the foregoing (including any trusts,
family members, family investment vehicles, estate planning vehicles, descendants and
other related persons or entities) and other persons related to Blackstone (collectively,
“GSO Investors”) that are investors in Clients do not pay management fees. Further, the
existence of differing management fees for Clients of the Registrant or its affiliates
investing side-by-side may create a conflict of interest for the Registrant and its affiliates
with respect to the allocation of investment opportunities. GSO’s investment allocation
policy (see Item 16 – Investment Discretion) addresses this potential conflict of interest.
Notwithstanding the foregoing, such GSO Investors will either directly pay for their pro
rata share of certain Fund expenses (as described below), or the pro rata share of such
expenses will be allocated to the relevant General Partner or its affiliates. Such pro rata
allocations of Fund expenses are calculated based on capital commitments, invested capital,
available capital or other metrics, as determined by such General Partner in good faith
pursuant to the terms of the applicable Offering and/or Governing Documents. Any such
methodology (including the choice thereof) involves inherent conflicts and may not result
in perfect attribution and allocation of expenses. In addition, certain investments in or
alongside a Fund by GSO Investors are treated as satisfying the applicable portion of any
required capital commitments of the General Partner and/or its affiliates to the Funds
(even in circumstances where any such commitments or investments are made following a
separation from Blackstone). In addition, with respect to certain investors invested in
certain Clients, in the event any such investor has a capital commitment below a certain
minimum threshold established in the applicable Offering and/or Governing Documents,
such investor will be subject to a servicing fee at an annual rate established in such Offering
and/or Governing Documents based on invested capital attributable to such investor’s
interest in the applicable Client, subject to the applicable General Partner’s right to waive
such fees.
Management Fee Offset
Generally, the management fee payable by a Client to the Registrant will be reduced by all
or a portion (as disclosed in the Offering and/or Governing Documents of the relevant
Client) of such Client’s allocable share of any origination or other transaction fees
(including commitment, closing, amendment, waiver, directors’, topping, organizational,
break-up, monitoring, exit or other disposition fees, or other similar fees in respect of such
Client’s purchase, monitoring or disposition of an investment or prospective investment by
such Client (collectively, “Other Fees”)) received by the Registrant for transactions
effected for such Client’s account.
Subject to the applicable Offering and/or Governing Documents, each Client will generally
be responsible for such Client’s organizational expenses, including, without limitation,
legal, accounting, filing, capital raising, marketing, advertising and wholesaling and other
organizational expenses, as well as organizational expenses of any related investment
vehicles and any parallel funds. However, in the case where a Client engages a placement
agent (which may be either affiliated with the Registrant or an unaffiliated third party) to
market and sell interests or shares in such Client to prospective investors, to the extent
placement agent fees are paid by such Client, the management fees payable by such Client
are expected to be reduced dollar-for-dollar by the amount of such placement agent fees
paid, as set forth in such Client’s Offering and/or Governing Documents.
Exceptions to Management Fee Offset
The Registrant and its personnel will receive certain intangible and/or other benefits,
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