Item 5. Fees and Compensation
The Adviser or its affiliates generally receive Management Fees and Carried Interest (each as
defined below). Fund portfolio companies will, from time to time, also make other payments to the
Adviser or its affiliates for services provided to the portfolio companies which offset the
Management Fees payable by the applicable Fund. Additionally, consistent with the organizational
documents of a Fund, the Fund typically bears certain out-of-pocket expenses incurred by the
Adviser in connection with the services provided to the Fund and/or the portfolio companies.
Further details regarding these fees and expenses are set forth below.
Certain current and/or former employees of the Adviser generally receive salaries and/or other
compensation derived from, and in certain cases including a portion of, the Management Fee,
Carried Interest or other compensation received by the Adviser or its affiliates.
Management Fees
As compensation for investment advisory services rendered to certain Funds, the Adviser and/or
certain of its affiliates are entitled to receive from each such Fund a management fee (each, a
“Management Fee”). The precise amount of, the manner and calculation of and the manner and
timing of payment of the Management Fee for each such Fund are established by the Adviser, as
modified by negotiations with investors in the applicable Fund, and are set forth in such Fund’s
Advisory Agreement, organizational documents and/or documentation received by each investor
prior to investment in such Fund. For certain Funds, Management Fees and other fees and
distributions described below are generally subject to waiver or reduction by the Adviser in its sole
discretion, both voluntarily and on a negotiated basis with investors. Management Fees may differ
from one Fund to another and certain Funds may not pay Management Fees.
While the precise calculation of the Management Fee for each Fund is described in its
organizational documents, the Management Fees are generally calculated and charged on a basis
that is not tied to a Fund’s then-current net asset value, but rather is tied to a Fund’s aggregate
commitments or invested capital and, in certain circumstances, a percentage of the lesser of (i)
investment contributions to such Fund with respect to then-existing investments and (ii) the fair
market value of such Fund’s then-existing investments. In certain circumstances, as described in
the relevant Fund’s organizational documents, the Management Fee base may be reduced to reflect
the value of securities written off if they have permanently declined in value or have been
completely written off for federal income tax purposes (for each Fund, the relevant “Impaired
Value Investments”).
As a result, the amount of Management Fees generally will not correspond with fluctuations in the
net asset value of individual investments or of the Fund, and will not be reduced or refunded in
connection with any write downs (whether temporary or permanent), except in the case of Impaired
Value Investments. Except where the organizational documents expressly provide to the contrary,
Management Fees will generally not be reduced (in whole or in part) in the case of partial
distributions (e.g., those resulting from a dividend recapitalization), partial sales or dispositions,
reorganizations, restructurings, roll-over investments, dividends or similar transactions, and in
cases where the value of the Fund’s investment or the Fund’s ownership percentage in such
investment has been reduced (including substantially reduced) as a result of such transaction.
In certain circumstances, the Management Fee base will include capitalized transaction-specific
fees and expenses of unrealized investments, including certain fees (such as Other Fees) and
expenses paid to third parties, the Adviser or its affiliate. Further, Management Fees generally will
not be reimbursed or refunded under the organizational documents in the event of realizations,
dispositions or complete write-offs that occur partway through the relevant calculation period. The
organizational documents set forth the full list of terms under which Management Fees will be
reduced, offset or otherwise be limited, and consequently investors should expect to bear the full
specified Management Fee rate in the organizational documents until they are reduced in the
circumstances and on the date(s) specified therein.
Certain Funds through which employees, business associates and other “friends and family” of the
Adviser or its personnel invest alongside one or more of the Funds (the “Co-Invest Funds”) will
not typically pay Management Fees. Notwithstanding that the Co-Invest Funds will not typically
pay Management Fees, the Co-Invest Funds will pay for their pro rata share of certain Fund
expenses.
If a placement agent is retained in connection with the offer and sale of interests in a Fund to certain
potential investors, the Management Fee payable by a Fund generally will be reduced by the
amount of fees paid by such Fund to such placement agent, as well as by (1) expenses and fees
incurred by the Adviser in connection with the organization of such Fund that exceed a limit
specified in such Fund’s organizational documents and (2) certain Other Fees (as defined below)
received by the Adviser or its affiliates. The amount and manner of any such reduction is set forth
in the Advisory Agreement and/or organizational documents of the applicable Fund. As some
Funds do not pay Management Fees, any such reduction will not benefit such Funds.
The Adviser reserves the right to, voluntarily and on a negotiated basis, waive or reduce fees with
respect to any investor. Upon termination of an Advisory Agreement and/or other organizational
documents of the Funds, Management Fees that have been prepaid, if any, are generally returned
on a prorated basis.
Other Fees Payable by Portfolio Companies
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