Item 5 - Fees and Compensation
Fees
Management Fees
ACON does not charge, nor does it receive, any management fees from the Investment Vehicle.
Carried Interest (Performance-Related Compensation)
See Item 6 (Performance-Based Fees and Side-by-Side Management) for detail about
performance-related compensation.
Other Fees Earned by ACON and Fee Offsets
Description of Fees
The Adviser and its affiliates may receive, and retain as additional revenue, fee income paid by
portfolio companies or other third parties, including, for example: (i) monitoring fees, set-up
fees, operational consulting fees or other fees; (ii) cash and non-cash directors’ fees; and (iii)
termination, break-up or other similar fees, payments or compensation, in each case received in
connection with investments or proposed investments of the Investment Vehicle and and/or co-
investors, or services provided in connection therewith (collectively, “Other Fees”). Other Fees
negotiated for by ACON also include accelerated portfolio company monitoring fees in the event
of a sale of a company prior to the expiration of the term of the applicable portfolio company
monitoring fee or management services agreement. Such accelerated monitoring fees may be
calculated based on expectations or estimates of future events and, accordingly, may be higher or
lower than the actual cost and/or amount of services provided.
Fee Offsets, Allocation and Other Considerations
Other Fees received by ACON and its affiliates in connection with investments made by two or
more investment vehicles (for example, by the Investment Vehicle and a private equity fund
managed by an ACON affiliate) or by the ACON Investment Vehicle and co-investors, will be
allocated among the various investment vehicles and co-investors pro rata in accordance with
the relative ownership by each such person of the portfolio company, or some other fair and
reasonable methodology depending upon the circumstances and if permitted by the terms of the
various investment agreements governing such investments. All or a portion of the Other Fees
allocated to private equity funds sponsored by ACON affiliates is usually applied to offset the
management fee received by ACON affiliates from investors in such private equity funds. The
terms of the investment agreements governing the other vehicles and co-investors may or may
not provide for fee offsets, such that ACON may retain as earned revenue the portion of the fee
income not allocated to private equity funds and offset thereby. The Investment Agreement
relating to the Investment Vehicle does not provide for a fee offset mechanism as the vehicle
does not charge management fees.
The right of ACON and its affiliates to receive Other Fees may create a conflict of interest
between ACON, on the one hand, and the various investment vehicles and their investors, on the
other hand, because the fees may be substantial and the investment vehicles and their investors
do not have a direct interest in the fees. ACON believes, however, that the management fee
offset mechanism described above (to the extent applicable) and the equity commitments made
by owners of the Adviser and other ACON personnel in the ACON Investment Vehicle and other
investment vehicles, significantly mitigates this potential conflict. In addition, ACON believes
this potential conflict is often further mitigated by the fact that Other Fees may become limited
as the result of negotiations involving third parties, such as with sellers, buyers, and management
teams or boards of directors of, or lenders to, portfolio companies.
Board Fees
With respect to directors’ fees or other similar compensation, to the extent an employee of an
ACON affiliate or an owner/partner of ACON or its affiliates (other than certain consultants)
receives directors’ compensation in connection with board service for a portfolio company of the
Investment Vehicle managed by the Adviser, the compensation is turned over to ACON or its
affiliates and is allocated across investment vehicles and co-investors (including the Investment
Vehicle) pro rata as described above. Any requisite offsets against private equity fund
management fees and/or co-invest vehicle management fees (if any) are applied as described
above. Similar fees received by persons who are not employees of ACON affiliates or
owners/partners of ACON or its affiliates (other than certain consultants), even if they serve at
ACON’s request on a board of directors of a portfolio company advised by the Adviser, are
permitted to retain board fees and the like as individual compensation for themselves.
Consequently, no fee offsets (to the extent applicable) will be applied to such fees. Employees of
ACON affiliates and owners/partners of ACON or its affiliates (other than certain consultants)
that serve on the boards of companies that are managed by other ACON affiliated investment
advisers also are not required to turn directors’ fees and other similar compensation over to the
Adviser, but rather are required to turn such compensation over to the relevant ACON affiliated
investment adviser for allocation and offset in accordance with the terms governing such
affiliates’ investment vehicles. Finally, board fees and other similar compensation received by
employees of ACON affiliates and owners/partners of ACON or its affiliates (other than certain
consultants) in connection with outside board service (i.e., companies that are not owned by
investment vehicles managed by ACON or any of its affiliates) may be retained by such persons
for themselves and, accordingly, there is no offset taken against fees in connection therewith.
Other Benefits
From time to time, the Investment Vehicle (or other private equity funds sponsored by ACON’s
other affiliated registered investment advisers) may invest in portfolio companies engaged in the
retail, consumer products, services or other industry. ACON personnel and investors may derive
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