Item 5 – Fees and Compensation
A. Management Fees. In consideration of the investment advisory services provided by the
General Partner, each Fund pays the General Partner or its designated affiliate a quarterly
management fee. Under each Fund’s limited partnership agreement, the quarterly
management fee payable by a Fund until the termination of that Fund’s “Commitment Period”
equals 0.5% of the Fund’s aggregate capital commitments, and thereafter 0.375% of the
Fund’s funded capital commitments, reduced proportionately by the cost of realized
investments. Quarterly installments of management fees are payable in advance, on January
1, April 1, July 1 and October 1 of each year.
Other Fees. The General Partner or one or more of its affiliates may receive cash or non-cash
commitment, break-up, topping, termination, monitoring, directors, organizational, set-up,
advisory, investment banking, underwriting, syndication and other similar fees in connection
with the actual or prospective purchases or dispositions of specified investments. Subject to
certain carve-outs, management fees at the level of each Fund will be reduced by 100% of that
Fund’s proportionate share of such fees, reduced by the General Partner’s unreimbursed out-
of-pocket expenses incurred in actual or prospective transactions giving rise to such fees.
Carried Interest. Distributions from each Fund are made to that Fund’s partners under a
distribution waterfall specified in that Fund’s limited partnership agreement. Each Fund has a
distribution waterfall for disposition proceeds and a distribution waterfall for current
proceeds. In general, each distribution waterfall provides for distributions (i) first, to investors
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until they receive distributions equal to the cost and expenses associated with the Fund’s
realized investments, (ii) then, to investors until they have received a cumulative compounded
preferred return of 8% per annum on invested capital in the Fund’s realized investments,
(iii) then, to the General Partner until it receives “Carried Interest” distributions equal to 20%
of the Fund’s net profits, and (iv) then, 80% to investors and 20% to the General Partner as a
“Carried Interest” distribution.
The above fees are currently not negotiable.
B. Deduction of Fees. The General Partner is permitted to deduct fees from each Fund’s
assets. Management fees are deducted from Fund assets on a quarterly basis on January 1,
April 1, July 1 and October 1 of each year. Carried Interest distributions are deducted from
Fund assets when distributions of disposition proceeds and current income are made under
the distribution waterfalls discussed in Item 5.A.
C. Other Expenses. Each Fund bears the costs and expenses of its operations as specified in
that Fund’s limited partnership agreement. Fund expenses may include, without limitation,
(i) fees, costs and expenses of any administrators, custodians, consultants, brokers, appraisers,
attorneys, accountants and other agents; (ii) out-of-pocket fees, costs and expenses, if any,
incurred in developing, negotiating, structuring, holding and disposing of actual investments;
(iii) certain broken deal expenses; (iv) brokerage commissions, custodial expenses and other
investments costs; (v) interest on and fees and expenses arising out of all borrowings made by
the Fund; (vi) the costs of any litigation, directors and officers liability or other insurance and
indemnification or extraordinary expense or liability relating to the affairs of the Fund;
(vii) expenses of liquidating the Fund; (viii) taxes, fees or other governmental charges levied
against the Fund and all expenses incurred in connection with any tax audit, investigation,
settlement or review of the Fund; (ix) corporation blocker expenses; (x) out-of-pocket
expenses of the advisory committee of the Fund (the “Advisory Committee”); and
(xi) expenses incurred by the Fund in connection with registering as a bank holding company,
including expenses related to ongoing reporting and regulatory compliance by the Fund in
connection with its status as a bank holding company.
Although each Fund initially will not incur brokerage fees, each Fund may in the future incur
brokerage costs in connection with investments acquired or disposed of via broker-dealers.
See Item 12 for a discussion of CFMC’s brokerage practices.
D. Management Fees. In general, quarterly installments of management fees are payable by
each Fund in advance, on January 1, April 1, July 1 and October 1 of each year. Each Fund may
make Carried Interest distributions prior to the date when all capital has been returned to
investors, which could result in the General Partner receiving Carried Interest distributions
before an investor receives a return of capital and its preferred return on a back-end basis.
If a Fund terminates its relationship with the General Partner and with CFMC other than at the
end of a calendar quarter, CFMC will refund to that Fund any prepaid management fees that
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relate to the portion of that quarter during which CFMC will not act as an investment adviser
to that Fund.
E. Neither the General Partner, nor its supervised persons accepts compensation for the sale
of securities or other investment products, including asset-based sales charges or service fees
from the sale of mutual funds.