Item 5 - Fees and Compensation
A. Below is a discussion of how the Adviser will be compensated in connection with providing
advisory services to its Clients. The Adviser may enter into different fee arrangements on a Client
by Client basis. The ultimate fees are concluded based on negotiation with the Client, its investors,
as applicable, and its consultants or advisors. It is critical that all Clients, and investors in all Clients,
refer to the applicable Client’s governing documents for a complete understanding of how the
Adviser and its affiliates are compensated for advisory services. The following information is a
summary only and is qualified in its entirety by each applicable Client’s governing documents:
Management Fee. A Fund will enter into a management agreement with the Adviser and will pay
the Adviser or an affiliate thereof an annual management fee (the “Management Fee”) of an agreed
upon amount payable quarterly in advance. The Management Fee is intended to cover the
reasonable annual expenses of the Adviser while the Fund is the only vehicle managed by the
Adviser. The Management Fee payable in any quarterly period shall be reduced by an amount equal
to 100% of any transaction fees received by the Adviser during the immediately preceding quarterly
period. In the event that the amount of fee reduction referred to in the preceding sentence exceeds
the Management Fee for such quarterly period, such excess shall either (i) be carried forward to
reduce the Management Fee payable in following quarterly periods, or (ii) be distributed to the
Limited Partners.
Carried Interest. Distributions from the Funds are subject to a carried interest (the “Carried
Interest”) after a Fund’s investors receive a return of capital and a stated preferred return. Next,
distributions are shared between the investors and an affiliate of the Adviser according to a catch-
up provision, after which the Adviser affiliate receives a Carried Interest of all additional
distributions up to 20%. Distributions are generally made after receipt by the Fund of investment
proceeds relating to its portfolio investments.
The Management Fee and Carried Interest may be waived or reduced at the discretion of the
Adviser.
LOWER FEES FOR COMPARABLE SERVICES MAY BE AVAILABLE FROM OTHER
SOURCES.
B. The annual Management Fees will be payable, quarterly in advance, by a Fund to the Adviser and
Carried Interest amounts are paid directly to an affiliate of the Adviser (generally the Fund’s
respective General Partner) as specified in A, in each case on the terms provided for in the
applicable Fund’s governing documentation.
C. With respect to a Fund, and as more fully described in the Fund’s governing documents, a Fund
will bear costs and expenses relating to its organization and formation, continuation, and business.
Such expenses include:
Organizational Expenses. A Fund will pay, or reimburse the Adviser and its affiliates
for, Fund’s and certain of its affiliates’ organizational and startup expenses, including
legal, accounting, filing, capital raising, and other organizational expenses; provided,
however, that organizational expenses of the Fund, the Fund’s General Partner or their
affiliates in excess of an agreed upon amount paid by the Fund shall be borne by the
Fund’s General Partner or its affiliates. In addition, the Fund will pay, or reimburse
Fund investors and its affiliates for an agreed upon amount of its expenses related to
executing a transaction.
Fund Expenses. The Fund will be responsible for all expenses attributable to the
operation of the Fund and its Portfolio Companies, including, but not limited to: all
fees, costs, expenses, liabilities and obligations relating to the Fund’s activities,
investments and business (to the extent not borne or reimbursed by a Portfolio
Company), including (i) all fees, costs, expenses, liabilities and obligations attributable
to managing, operating, holding, valuing, winding up, liquidating, dissolving and
disposing of the Investments, (ii) legal, accounting, administration, custodian,
depositary, auditing, insurance (including directors and officers, and errors and
omissions liability insurance), litigation and indemnification costs and expenses,
consulting, finders’, financing, appraisal, filing and other fees and expenses (including
fees, costs and expenses associated with the preparation or distribution of the Fund’s
financial statements), (iii) costs and expenses of an Advisory Board incurred, (iv) all
out-of-pocket fees, costs and expenses incurred by the Fund or the General Partner in
connection with the annual and other periodic (if any) meetings of the Limited Partners
and any other conference or meeting with any Limited Partner(s), (v) the Management
Fee, (vi) any taxes, fees and other governmental charges (including the costs incurred
in complying therewith) levied against the Fund (except to the extent that the Fund is
reimbursed or such tax, fee or charge is treated as having been distributed to the
Partners), (vii) costs and expenses that are classified as extraordinary expenses under
GAAP, and (viii) the reasonable travel expenses of an Limited Partner Representative,
and the fee payable to a Limited Partner Representative. For purposes of clarification,
Fund expenses do not include any expenses related to the General Partner’s and/or the
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