Item 5. Fees and Compensation
As compensation for investment supervisory services rendered to the Funds, the Adviser receives
from each such Fund a management fee (each, a “Management Fee”). Management Fees paid by
a Fund are borne by investors in such Fund.
In addition, the Adviser and its affiliates may perform management, advisory, transaction-
related, and other services (“Related Services”) for, and receive fees from, portfolio companies
or other investment vehicles of the Funds, including fees in connection with monitoring and
advisory services, mergers, acquisitions, add-on acquisitions, re-financings, public offerings,
sales and similar transactions. These fees may be substantial. Although these fees are in
addition to the Management Fees, the Adviser typically will reduce the amount of Management
Fees paid by the applicable Fund in connection with the receipt of such fees. The amount and
manner of such reduction is set forth in the Advisory Agreement and/or organizational
documents of the applicable Fund. For a discussion of material conflicts of interest created by
the receipt of such fees, please see Item 11 below.
The precise amount of, and the manner and calculation of, the Management Fees for each 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 other
documentation received by each investor prior to investment in such Fund. The Management
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. The fee structures described above may be modified from time to time. Fees may
differ from one Fund to another, as well as among investors in the same Fund.
Management Fees billed to and received from the Funds are typically payable quarterly in
advance. Upon termination of an Advisory Agreement, Management Fees that have been prepaid
would generally be returned on a prorated basis as set forth in the Advisory Agreement and/or
organizational documents of the applicable Fund.
While the Advisor has not engaged a placement agent to-date, it may do so in the future. The
Management Fees paid by a Fund will generally be reduced by the amount of fees paid by such
Fund to persons acting as a placement agent in connection with the offer and sale of interests in
such Fund to certain potential investors, as well as by fees incurred by the Adviser in connection
with the organization of such Fund that exceed a limit specified in such Fund’s limited
partnership agreement or analogous organizational documents. In addition, the Adviser may
seek to waive or reduce all or a portion of the Management Fee paid by a Fund in full or partial
satisfaction of any obligation of the Adviser and certain employees and affiliates of the Adviser
to invest in such Fund.
To the extent provided in the Advisory Agreements and the partnership agreements and other
organizational documents of the Funds, the Adviser will pay out of Management Fees certain
operating expenses, including expenses on account of rent, utilities, office supplies, office
equipment, certain travel, entertainment, compensation of its partners and employees (other than
Carried Interest described in Item 6 below) and other customary expenses relating to the services
and facilities provided by the Adviser to the Funds. Each Fund will bear all other expenses
relating to it to the extent not borne by its portfolio companies, including deal sourcing-related
costs (including travel), legal, accounting, investment banking, consulting, applicable insurance,
research, brokerage, finders’, custody, transfer, registration, advisory board, interest, taxes and
extraordinary expenses, 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 Funds may pay.
Although the Adviser does not generally utilize the services of broker-dealers to effect portfolio
transactions for the Funds, in the event that it chooses to use a broker-dealer for limited purposes
relating to a particular investment within a Fund, such Fund will incur brokerage and other
transaction costs. For additional information regarding brokerage practices, please see Item 12
below.