Item 5. Fees and Compensation
As compensation for investment supervisory services rendered to the Fund, GI International L.P.
receives from the Fund an advisory fee and pays a portion of such fee to the Adviser (each, an
“Advisory Fee”). Advisory Fees paid by the Fund are indirectly borne by investors in such
Fund.
In addition, the Adviser and its affiliates perform management, advisory, transaction related,
financial advisory and other services (“Related Services”) for, actual or prospective portfolio
companies or other investment vehicles of the Fund. Further, a portfolio company will typically
reimburse the Adviser for expenses (including without limitation conference attendance
expenses, database subscriptions and other expenses, including compensation or reimbursements
of Operations Support Providers (as defined below) deemed by the Adviser to benefit such
portfolio company, meals and entertainment, and travel expenses, which have included, and may
in the future include, expenses for “black car” transportation or chartered or first class travel
incurred by the Adviser in connection with its performance of services for such portfolio
company; such reimbursed expenses are generally not included in the definition of “Transaction
Fees” under the terms of the applicable organizational documents, and such reimbursements are
not subject to the sharing arrangements described above.
The Adviser and its affiliates also engage and retain operating advisers, senior advisors, advisers,
consultants, and other similar professionals who are not employees or affiliates of the Adviser
and who, from time to time, receive payments or other compensation from portfolio companies
and/or other entities. In such circumstances, such amounts will not be deemed paid to or
received by the Adviser and its affiliates and such amounts will not be subject to the sharing
arrangements described above.
The precise amount of, and the manner and calculation of, the Advisory Fees for the Fund are
established by the Adviser, as modified by negotiations with investors in the Fund, and are set
forth in such Fund’s Advisory Agreement, organizational documents and/or other documentation
received by each investor prior to investment in such Fund. The Advisory Fees and other fees
and distributions described above are generally subject to waiver or reduction by the Adviser in
its sole discretion, both voluntarily and on a negotiated basis with selected investors. The
Advisory Fee structures described above may be modified from time to time. Advisory fees may
differ among investors in the Fund.
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Advisory Fees in respect of the Fund are payable quarterly in advance. Upon termination of an
Advisory Agreement, Advisory Fees that have been prepaid are generally returned on a prorated
basis.
To the extent provided in the Advisory Agreements and the partnership agreements and other
organizational documents of the Fund, the Adviser will pay out of Advisory Fees certain
operating, administrative and overhead expenses, including the costs and expenses of rent,
facilities, utilities, office supplies, office equipment, entertainment and all other ordinary
operating expenses of the Adviser, including compensation of its partners and employees (other
than Carried Interest described in Item 6 below) and other routine administrative expenses
relating to the investment advisory services and facilities provided by the Adviser to the Fund.
Consistent with the partnership agreements or other organizational documents of the Fund, the
Fund will bear all other reasonable out-of-pocket expenses relating to it to the extent not borne
by its portfolio companies, including legal, accounting, audit, investment banking, consulting
(including but not limited to consulting fees incurred by the applicable Fund for the benefit of its
portfolio company), fees paid to third party valuation agents, research, reports, brokerage,
finders’, custody, transfer, registration, advisory board, directors’ and officers’ insurance,
interest, taxes and extraordinary expenses, such Fund’s allocable share of expenses and fees
generated in the course of evaluating potential investments, including investments that are not
consummated, such Fund’s allocable share of expenses and fees incurred in the course of making
investments and other similar fees and expenses, as well as any other fees or expenses incurred
by the Adviser or such Fund in connection with such Fund’s operations that are not specifically
set forth above as being paid by the Adviser. Additionally, please see Item 6 below regarding
“Carried Interest” that the Fund pays.
In the event that it chooses to use a broker-dealer for limited purposes relating to a particular
Fund, such Fund will incur brokerage and other transaction costs. For additional information
regarding brokerage practices, please see Item 12 below.