Item 5. Fees and Compensation
The Adviser or its affiliates generally receive Management Fees and Carried Interest (each as
defined below) or similar performance-based remuneration from a Fund. References herein to
“Funds” refer to such subsidiary vehicles as applicable. A Fund and/or its portfolio companies also
from time to time make other payments to the Adviser or its affiliates, including Carbon Direct Inc.,
for services provided to the Funds and/or portfolio companies which, in certain circumstances in
accordance with a Fund’s Organization Documents, may not reduce the Advisory Fees payable to
the Adviser. Additionally, consistent with each Fund’s Organizational Documents, the Funds bear
certain out-of-pocket expenses incurred by the Adviser in connection with the services provided to
the Funds and/or their portfolio companies. Further details about such fees and expenses are set
forth below.
Management Fees
As compensation for investment supervisory services rendered to the Funds, the Adviser receives
from each such Fund a management fee (each, a “Management Fee”) typically calculated based on
committed capital or remaining invested capital, with respect to such Fund. Management Fees may
be reduced during the life of a Fund. The precise amount of, and the manner and calculation of, the
Management Fees for each Fund are established by the Adviser and are set forth in such Fund’s
Organizational Documents. The Management Fees and other fees and distributions described herein
are generally subject to modification, waiver, or reduction by the Adviser in its sole discretion, both
voluntarily and on a negotiated basis with selected investors, which may not be disclosed to other
investors in the same Fund. The fee structures described herein may be modified from time to time.
Fees may differ from one Fund to another, as well as among investors in the same Fund.
Certain investors in the Funds that are employees or other associates of the Adviser, its affiliates, or
their personnel (including any related entity established by any of the foregoing, such as trusts,
charitable programs, endowments, or related programs, family investment vehicles and other estate
planning vehicles) (collectively, “Adviser Investors”) will not typically pay Management Fees or
Carried Interest in connection with their investment in a Fund. Furthermore, the Adviser has in the
past and may, from time to time in the future establish certain investment vehicles through which
Adviser Investors or other third parties may invest alongside one or more Funds in one or more
investment opportunities, which may not pay Management Fees or Carried Interest.
Management Fees billed to and received from the Funds are payable quarterly either (i) in advance,
generally on the first day of each fiscal quarter, or (ii) in arrears, generally on the last day of each
fiscal quarter. Upon termination of an Advisory Agreement, Management Fees that have been
prepaid, if any, are generally returned on a prorated basis.
Expenses
Adviser Expenses
To the extent provided in the Organizational Documents of the Funds and except as described below
as a “Fund Expense,” as a general matter, the Adviser will bear its own internal costs of existence
and operations, such as rent, utilities, communications, office supplies, office equipment,
member/employee salaries and benefits (not including Carried Interest compensation described in
Item 6 below), expenses incurred in excess of a Fund’s organizational expense cap as applicable.
Fund Expenses
Consistent with the Organizational Documents of the Funds, each Fund will bear all other costs,
expenses and losses incurred by such Fund, its general partner, or an affiliate thereof and associated
with the formation, operation, dissolution, winding-up, liquidation or termination of the Fund to the
extent not borne by its portfolio companies, including (i) the management fee, (ii) organizational
expenses, (iii) all fees, costs and expenses incurred in connection with (A) identifying, investigating,
evaluating, acquiring, consummating, holding, maintaining, monitoring and disposing of
investments (including legal, accounting, auditing, custodial, consulting, investment banking and
other fees and expenses, commissions, appraisal fees, taxes, brokerage and other finders fees, merger
fees, registration fees, due diligence and similar fees and expenses, and all reasonable out- of-pocket
entertainment and travel and related expenses (including business class (or equivalent) air travel, car
services, hotel accommodations and meals) incurred by members, employees and/or other agents of
the Adviser and its affiliates in connection with the foregoing and also investment and disposition
opportunities that are not consummated); (B) any bank account, credit facility, guarantee, line of
credit, loan commitment, letter of credit or similar credit support or other indebtedness involving a
Fund or a Fund investment (including any fees, costs and expenses incurred in obtaining such
borrowings and indebtedness and interest arising out of such borrowings and indebtedness); (C) the
managed distribution of marketable securities; (D) actual or threatened litigation or administrative
proceedings involving the Partnership that are allocated to the Partnership and attributable to
Partnership activities; (E) indemnification expenses; (F) complying with (or facilitating compliance
with) any applicable law, rule or regulation (including legal fees, costs and expenses), regulatory
filing or other expenses of a Fund, the Adviser or its affiliates, anti- money laundering compliance
and any compliance, filings or other obligations related to or arising out of the Alternative Investment
Fund Managers Directive 2011/61/EU, in each case, involving or otherwise related to a Fund; (G)
fees and expenses related to the negotiation of agreements with limited partners, including side
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