Item 5. Fees and Compensation
The Adviser receives Management Fees and Carried Interest (each as defined below) from the Funds.
The Funds, and/or its 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
Management Fees payable to the Adviser. Additionally, consistent with the governing 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.
Management Fees
As compensation for investment supervisory services rendered to the Funds, the Adviser receives from
the Funds a management fee (each, a “Management Fee”).
Management Fees are typically 2% of the capital commitments by a Fund’s Limited Partners during a
Fund’s investment period (which is typically 4 to 5 years). Thereafter, the Management Fee is generally
2% of the Limited Partners’ remaining invested capital (or “Remaining Capital”), subject to a minimum
of 0.5% of aggregate capital commitments, in each case as set forth in the applicable Fund’s
Organizational Documents. Management Fees are, in most cases, paid in advance on the first day of each
fiscal quarter for each Fund. Certain Funds may have different obligations set forth in their respective
Organizational Documents.
Management Fees paid by the Funds are reduced by other fees or compensation received by the Adviser
or its affiliates that relate to the Funds’ activities and investments, or by certain excess organizational or
other expenses borne by the Funds, as described in more detail below. Management Fees paid by the
Funds are indirectly borne by investors in the Funds.
The precise amount of, and the manner and calculation of, the Management Fees for the Funds are set
forth in the Funds’ Advisory Agreement received by each investor prior to investment in the Funds. The
Management Fees and other fees and distributions described above are generally 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 Funds. The fee structures described herein may be modified from time to time. Fees will from
time to time differ as among investors in the same Funds. In addition, the Adviser will, from time to
time, enter into economic and/or other fee sharing arrangements with respect to a Fund and/or certain
limited partners thereof, the rights of which will not generally be made available to other limited partners.
In certain prior funds, certain investors that are employees, business associates and other “friends and
family” of the Adviser or their personnel (collectively the “Adviser Investors”) will typically pay reduced
or no Management Fees in connection with their investment in the Funds. Notwithstanding that Adviser
Investors will generally not pay Management 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 respective General Partner of the Fund.
The Management Fees paid by the Funds will generally be reduced by a percentage of: (1) the fees
incurred by the Adviser in connection with the organization of the Funds, including placement fees, that
exceed a limit specified in the Funds’ Organizational Documents and (2) 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 Funds. Any such reduction of the Funds’ Management
Fees will be limited to the extent of the Funds’ proportionate interest in any such portfolio company.
In addition, the Adviser will, from time to time, waive or reduce all or a portion of the Advisory Fee paid
by the Funds in full or partial satisfaction of any obligation of the Adviser and certain employees and
affiliates of the Adviser to invest in and alongside the Funds, which could result in acceleration of
investor capital contributions. Waived or reduced Management Fees are not subject to various offsets or
the reductions described above.
Upon termination of an Advisory Agreement, Management Fees that have been prepaid are returned on
a prorated basis.
Carried Interest
In accordance with the terms of the Funds’ Organizational Documents, a portion of the profits of the
Funds, typically 20% for Funds and potentially less for coinvest vehicles , are allocated to the capital
account of its General Partner as “carried interest” (the “Carried Interest”). The General Partners of the
Funds are related persons of the Adviser. Carried Interest paid by the Funds is indirectly borne by
investors in the Funds. Certain investors in prior Funds incur lower or no Carried Interest.
Other Fees
Fees Payable by the Portfolio Companies
The Adviser and its employees may, but currently does not, perform transaction-related, financial
advisory and other services for, and may, but currently does 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
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