Item 5. Fees and Compensation
The Adviser receives Advisory Fees and Carried Interest (each as defined below) from the Funds.
The Funds, and/or their portfolio companies may also make other payments to the Adviser or its
affiliates for services provided to the portfolio companies which, in certain circumstances, may
reduce the Advisory Fees payable to the Adviser. Additionally, consistent with the Organizational
Documents of the Funds, the Funds typically bear certain out-of-pocket expenses incurred by the
Adviser in connection with the services provided to the Funds and/or the portfolio companies.
Further details about certain common fees and expenses are set forth in more detail below.
Advisory Fees
As compensation for investment supervisory services rendered to the Funds, the Adviser receives
from each such Fund an advisory fee (each, an “Advisory Fee”) calculated based on committed
capital, a percentage of the annual advisory fee payable during a previous 12-month period or a
percentage of the cost basis of unrealized portfolio investments with respect to such Fund.
Advisory Fees will be reduced during the life of a Fund. Advisory Fees paid by a Fund are also
reduced by other fees or compensation received by the Adviser or its affiliates that relate to such
Fund’s activities and investments, or by certain excess organizational or other expenses borne by
such Fund, as described in more detail below. Advisory Fees paid by a Fund are indirectly borne
by investors in such Funds.
Advisory Fees billed to and received from the Funds are paid quarterly in advance and pro-rated
for any partial periods of less than a full quarter.
The precise amount of, and the manner and calculation of, the Advisory Fees for each Fund are set
forth in the applicable Fund’s Organizational Documents received by each investor prior to
investment in such Fund. The Advisory Fees and other fees and distributions described above may
be subject to waiver or reduction by the Adviser in its sole discretion, both voluntarily and on a
negotiated basis with selected investors via side letter and other arrangements, 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. . In addition, the Adviser may enter into economic and/or other fee sharing
arrangements with respect to one or both Funds and/or certain limited partners thereof, the rights
of which will not generally be made available to other limited partners.
Certain investors in the Funds that are employees, business associates and other “friends and
family” of the Adviser, its shareholders or their personnel (collectively the “Adviser Investors”)
will not typically pay Advisory Fees in connection with their investment in a Fund.
Notwithstanding that Adviser Investors will generally not pay Advisory Fees, Adviser Investors
will pay for their pro rata share of certain Fund expenses or the pro rata portion of such Adviser
Investors’ expenses will be allocated to the Adviser or the General Partner.
The Advisory Fees paid by a Fund will generally be reduced by a percentage of: (1) the fees
incurred by the Adviser in connection with the organization of such Fund that exceed a limit
specified in such Fund’s Organizational Documents; (2) the amount of fees paid by such Fund to
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any persons acting as a placement agent in connection with the offer and sale of interests in such
Fund to certain potential investors and (3) certain Other Fees (as defined below) received by the
Adviser or its affiliates. The amount and manner of such reduction, if any, is set forth in the
Organizational Documents of the applicable Fund. To the extent a reduction relates to more than
one Fund, the Adviser shall allocate the resulting Advisory Fee reduction among the Funds in
proportion to their interest (or prospective interest) in the portfolio company. Any such reduction
of a Fund’s Advisory Fees will be limited to the extent of such Fund’s proportionate interest in
any such portfolio company. The portion of Other Fees allocable to capital invested by a co-
investment vehicle or third-party investor that does not pay Advisory Fees will be retained by the
Adviser and such amounts may not offset any Advisory Fee.
If the Advisory Fee ceases to be payable during any fiscal quarter (e.g., upon termination of an
Advisory Agreement), Advisory Fees that have been prepaid are returned on a prorated basis.
Other Fees
Fees Payable by the Portfolio Companies
The Adviser and its employees may, but currently do not, perform transaction-related, financial
advisory and other services for, and may, but currently do not, receive fees from, actual or
prospective portfolio companies or other investment vehicles of the Funds, including fees in
connection with structuring investments in such portfolio companies, as well as mergers,
acquisitions, add-on acquisitions, refinancings, public offerings, sales or other dispositions and
similar transactions with respect to such portfolio companies (“Transaction Fees”).
The Adviser may, but currently does not, receive “Monitoring Fees” pursuant to monitoring
agreements with portfolio companies of the Funds governing the advice, consultation and other
similar ongoing services provided by the Adviser to such portfolio companies. The terms of a
monitoring agreement may include (among other things) acceleration of payment of the
Monitoring Fees upon certain termination events, including the occurrence of an initial public
offering or strategic exit, the financial effect of such acceleration may be substantial, particularly
in the event such circumstances occur early in the life of the Fund’s investment in such portfolio
company. Notwithstanding the foregoing, in the event of an initial public offering or other
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