Item 5: Fees and Compensation
The management fees and performance-based compensation applicable to each Fund are set forth
in detail in such Fund’s Governing Documents. Generally, each Fund pays Bluescape a fee for
investment management services (a “Management Fee”) and pays its General Partner a
performance-based carried interest. Bluescape or affiliates receive additional compensation in
connection with management and other services performed for portfolio companies of Funds and
such additional compensation will offset in whole or in part the management fees otherwise
payable to Bluescape as further described in the relevant Governing Documents. In addition, in
certain circumstances, Bluescape receives compensation for management and/or other services
performed in connection with co-investments made in portfolio companies of the Funds. Investors
in a Fund also bear certain expenses. Certain investors, including investors that are affiliates of
Bluescape (“Affiliated Limited Partners”), in the Funds may receive fee breaks or fee discounts in
Management Fees and/or carried interest.
Management Fees
As further discussed in the applicable Governing Documents, the Funds will generally pay a
Management Fee to Bluescape equal to 2% per annum of the aggregate commitments of the fee-
paying Limited Partners, payable quarterly in advance, during the initial period (i.e., until the
expiration of the investment period or earlier upon the occurrence of certain events as set forth in
the applicable Governing Documents). After the initial period, the Management Fee will be equal
to 2% per annum of capital contributions of the fee-paying Limited Partners that are invested in
portfolio companies (net of distributions constituting a return of capital and any permanent write-
downs). The Management Fee for certain Funds will be reduced to a range of 1% to 1.75% per
annum of the capital contributions of the fee-paying Limited Partners that are invested in portfolio
companies (or payable pursuant to an outstanding capital call notice or a capital call notice that a
General Partner intends to issue to repay indebtedness) (net of distributions constituting a return
of capital and any permanent write-downs) following the date that a Bluescape successor fund
commences to accrue Management Fees in an amount that equals or exceeds the Management Fees
then-payable by the applicable Funds.
The Management Fee will be reduced by an amount equal to 100% of Transaction Fees attributable
to fee-paying Limited Partners. As further set forth in the relevant Governing Documents,
“Transaction Fees” typically include any: (i) directors’ fees, financial consulting fees or advisory
fees paid to Bluescape and/or its affiliates with respect to any Fund investment; (ii) transaction
fees paid to Bluescape and/or its affiliates with respect to any Fund investment; (iii) monitoring
fees and (iv) break-up fees with respect to Fund transactions not completed that are paid to
Bluescape and/or its affiliates, in each case net of certain expenses as set forth in the Governing
Documents; but not including, in any event, any amount received by Bluescape and/or its affiliates
or other person from a portfolio company (A) as reimbursement for expenses directly related to
such portfolio company, (B) as payment for services not of the type customarily provided by
Bluescape to such portfolio company as part of ordinary management services, or (C) as
compensation for providing consulting or similar services at the request of a third party to or for
any other person or entity that do not incrementally increase the expenses or costs borne by any
portfolio company.
Various costs and expenses will reduce Transaction Fees (and therefore such amounts will not
reduce the Management Fee for fee-paying Limited Partners), including out-of-pocket costs and
expenses (including travel expenses) incurred by the applicable General Partner in connection with
any consummated or unconsummated transaction or in connection with generating any such
Transaction Fees. Additionally, a portfolio company typically will reimburse Bluescape, and its
affiliates or service providers retained at their discretion or influence for expenses (including travel
expenses) incurred by Bluescape and its affiliates or such service providers in connection with the
performance of services for such portfolio company. Such reimbursed amounts will be in addition
to, and will not otherwise reduce or offset, the Management Fee.
As a matter of practice, Bluescape is typically paid fees of the type referred to in the preceding
paragraphs from, on behalf of or with respect to co-investors in an investment. The receipt of such
fees will not reduce the Management Fee payable by any Funds that have also invested in such
investment, and as a result a Fund will, in most cases, only benefit with respect to its allocable
portion of any such fee and not the portion of any fee that relates to such co-investors, which have
the potential to be significant.
Carried Interest
Performance‐based fees or carried interest profit allocations are subject to regulation under Rule
205‐3 under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). Bluescape
seeks to ensure that any Client or investors in a Fund that are directly or indirectly assessed
performance‐based fees or are subject to carried interest profit allocations satisfy the qualifications
of Rule 205‐3 and have been advised of such fees or allocations and their risks.
Subject to the limitations below, Bluescape and/or its affiliates will receive a special allocation of
profits (“performance allocation” or “carried interest”), from the Funds of 20% of any net profits
of the Funds after taking into account a preferred return to investors (subject to catch-up), as well
as the expenses of the applicable Fund, including Management Fees. The performance allocation
is calculated each time a Fund makes a distribution to its investors.
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