Item 5: Fees and Compensation Management Fees
As compensation for its investment advisory services, each of the ERR Funds generally paid a
management fee to Parallel quarterly in advance at an annual rate of 2.0% of capital contributed to
portfolio company investments of the ERR Funds (increased by any incremental capital contributed
to portfolio company investments of the ERR Funds and decreased by any distributions made). If a
successor fund meeting certain criteria commences to accrue management fees in an amount that
equals or exceeds 100% of the management fees then payable by each of the ERR Funds, the
management fee will further step down to 1.0% of capital contributed to portfolio company
investments of the ERR Funds (increased by any incremental capital contributed to portfolio
company investments of the ERR Funds and decreased by any distributions made). The ERR Funds
call capital from their investors for the amount of management fees.
The organizational documents of the ERR Funds do not contemplate repayments of management
fees to the extent that Parallel’s services terminate prior to the end of the relevant quarterly payment
period. Management fees paid by an investor in the ERR Funds impact Parallel’s performance-
related compensation.
The management fees of the ERR Funds generally are not negotiable; however, Parallel may reduce
the management fee due with respect to any investor in the ERR Funds in its sole discretion and it
has done so for certain investors. Certain investors are not subject to the management fee, including
Parallel, (ii) Bluescape or CEP I, (iii) an investment fund managed by Bluescape, CEP I, or their
respective affiliates, (iv) an officer, director, or employee of Bluescape, CEP I, or their respective
affiliates or any trust, family limited partnership or other similar estate planning vehicle established
by such officer, director or employee, or (v) an affiliate of any of the foregoing parties.
None of the Eligible Co-Investors, including the Co-Investor Entities and the Client Co-Investor,
pays Parallel a management fee with regard to any co-investment opportunity.
Performance-Related Compensation
Subject to the limitations below, Parallel receives a special allocation of profits, or “performance
allocation,” from each of the ERR Funds of 20% of the net profits, if any, of the applicable ERR
Fund after taking into account a preferred return to investors (subject to catch-up), as well as the
expenses of the applicable ERR Fund, including management fees. The performance allocation was
calculated each time the ERR Funds made a distribution to their investors.
Subject to the limitations below, Parallel receives a performance allocation from each of the Eligible
Co-Investors of 10% of the net profits, if any, in each applicable co-investment opportunity in which
such Eligible Co-Investor invests after taking into account a preferred return to such Eligible Co-
Investor (subject to catch-up) in that specific co-investment opportunity, as well as the expenses of
the Eligible Co-Investor related to such co-investment opportunity, subject to adjustment based on
the current values of all other co-investment opportunities in which such Eligible Co-Investor has
invested. The performance allocation was calculated each time such Eligible Co-Investor received a
distribution from a co-investment opportunity.
The performance allocation of the ERR Funds and the Eligible Co-Investors generally is not
negotiable; however, Parallel may reduce the performance allocation due with respect to any investor
in the ERR Funds in its sole discretion. Certain investors in the ERR Funds and certain Eligible Co-
Investors were not subject to the performance allocations described above, including (i) Parallel,
Bluescape or CEP I, (iii) an investment fund managed by Bluescape, CEP I, or their respective
affiliates, (iv) an officer, director, or employee of Bluescape, CEP I, or their respective affiliates or
any trust, family limited partnership or other similar estate planning vehicle established by such
officer, director or employee, or (v) an affiliate of any of the foregoing parties.
Transaction, Break-Up and Other Fees
Parallel and certain other persons associated with Parallel may charge transaction fees, monitoring
fees, advisory fees, break-up fees, and other similar fees to the ERR Funds’ portfolio companies,
and Parallel or such certain other persons may also receive directors’ fees in connection with services
they may provide to the ERR Funds’ portfolio companies. Upon receipt of any such amounts by
Parallel or such persons, Parallel will (i) net any unreimbursed expenses incurred by Parallel in
connection with unconsummated transactions (with respect to the ERR Funds’ proportionate
interest in such investments) and (ii) if any such amounts (with respect to the ERR Funds’
proportionate interest in such investments) remain after netting, reduce the management fee
otherwise payable to Parallel by 100% of such remaining amount.
Organizational/Offering Costs
The ERR Funds paid (or reimbursed Parallel for) reasonable out-of-pocket fees, costs, and expenses
associated with the formation of Parallel and the ERR Funds and the offering and sale of limited
partnership interests therein incurred by Parallel or one of its affiliates, including all legal, accounting,
printing, mailing and courier fees and expenses, filing fees, travel and other start-up costs and
expenses, and any fees, costs and expenses incurred in connection with compliance by any of the
foregoing entities with applicable laws or regulations, but excluding (i) any fees, costs and expenses
related to Parallel’s registration as an investment adviser or the maintenance of such registration, and
(ii) any fees paid to a placement agent.
All organizational costs incurred prior to the initial closing of the ERR Funds, all organizational
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