ITEM 5 – FEES AND COMPENSATION
General
Adviser (including any Adviser GPs) generally receives management fees and carried interest
allocations in connection with the investment management and administrative services Adviser
provides to the Funds and Co-Investment Funds. Co-Investment Funds and other investment
vehicles may not be subject to the fees, expenses and/or carried interest allocations described herein.
Management fees, carried interest allocations and other compensation payable to Adviser (including
Adviser GPs) by the Funds or Co-Investment Funds together with other terms governing the
management of the Funds or Co-Investment Funds by Adviser, are established by Adviser at the
time of the establishment of the relevant Funds or Co-Investment Funds (and negotiated with
participating investors prior to their investment), as applicable. Specific details of such
compensation and its method of calculation are set out in the offering materials, disclosure
documents, management agreements and/or governing documents of the relevant Funds or Co-
Investment Funds, and vary as between the Funds and Co-Investment Funds. Fee terms or the Funds
or Co-Investment Funds may be changed during the term of the relevant relationship. The share of
compensation earned by Adviser or its affiliates in respect of a Fund or Co-Investment Fund varies
among investors pursuant to the terms of the governing documents, side letter agreements or other
arrangements with specific investors in such Fund or Co-Investment Fund, whereby such investors
receive direct or indirect reductions of management fees or other compensation otherwise payable
with respect to their investments managed by Adviser. Such arrangements may include Adviser
granting certain preferential terms to certain investors in a Fund or Co-Investment Fund. Where a
strategic investor participates in a Fund or Co-Investment Fund through a dedicated investment
vehicle as part of such arrangement, such vehicle may be granted terms, including management fees
or carried interest, that are more favorable than those applicable to other investors.
Fees
As investment adviser to each Fund, Adviser will generally receive an annual management fee
equal to a percent, generally 2.5%, of the capital commitment of each Fund investor from the initial
closing of the Fund through the end of the Fund’s investment period and, thereafter, a percent,
generally 2.5%, of the invested capital (i.e., cost basis of all unrealized portfolio investments) of
each Fund investor.
The management fee generally will be paid by each Fund quarterly in advance. Management fees
are deducted from the assets of each Fund and are generally payable out of current cash flow,
disposition proceeds or from drawdowns of investors’ capital commitments to the Fund. The
investment management agreement of a Fund may be terminated upon the winding up of the Fund
or in the event a specified percentage of the investors vote to (i) remove the general partner for
cause after the occurrence of certain specified events (e.g., willfully violated the anti-fraud
provisions of the federal securities laws in connection with the activities of the Fund) or (ii)
dissolve the Fund.
Adviser and/or its affiliates may be entitled to receive fees from actual or prospective portfolio
investments of the Funds, including origination, directors’, transaction, breakup, commitment,
closing, and monitoring fees, however these fees reduce management fees otherwise paid by the
Fund.
Carried Interest
Under each Fund’s governing agreement, an affiliate of Adviser generally will be entitled to
receive carried interest distributions. The carried interest distributions will generally be an amount
equal to a percentage, generally 20%, of the profits from each portfolio investment made by such
Fund after the return of invested capital and a preferred return to investors.
The carried interest distributions for each Fund generally are paid out as distributions of the net
cash proceeds attributable to dispositions of portfolio investments of the Fund.
The amount of, and the manner and calculation of, the management fees and carried interest
distributions for each Fund are set forth in the governing documents and/or Memorandum of the
Fund.
Adviser will not receive sales commissions in connection with sales of interests in a Fund.
Lower fees for comparable services may be available from other sources. The expenses of a
Fund, including Adviser’s management fee and carried interest distributions, may constitute a
higher percentage of average net assets than would be found in other investment vehicles not
managed by Adviser.
Portfolio Company-Related Fees
In addition to management fees for operating the Funds and Co-Investment Funds, Adviser
receives fees for work on the development and execution of core strategies for portfolio
companies and for projects to increase portfolio company value. No portion of these fees will
be offset against management fees payable by the Funds or Co-Investment Funds. Portfolio-
company related fees are paid regardless of a fund’s profitability and are not negotiated with
investors in the Funds or Co-Investment Funds and may be capitalized as part of the acquisition
price of the relevant investment for consummated investments.
Costs and Expenses
Generally, a Fund bears all legal, accounting and other fees, costs and expenses of and incidental
to organizing and funding the Fund and the general partner and manager of the Fund up to a certain
amount as set forth in the governing documents and/or Memorandum of the Fund. A Fund will
also bear the operational costs and expenses of the Fund. Such costs and expenses include, but
are not limited to: (i) legal, auditing, custodial, administrative, consulting, financing and
accounting fees and expenses of the Fund; (ii) expenses associated with preparation of the Fund’s
financial statements, reports to Fund investors and tax returns; (iii) out-of-pocket expenses and
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