ITEM 5 FEES AND COMPENSATION
General
St. Cloud receives a management fee from the fund as compensation for the investment
management and administrative services St. Cloud provides to its Funds. The General Partners, an
affiliate of St. Cloud, receives a carried interest out of the Funds’ net realized gains. Management
fees, carried interest allocations and/or any other compensation payable by the Funds were
negotiated with the investors in the Funds at the time of formation.
St. Cloud may, from time to time, enter into side letter agreements or other arrangements with
specific investors in the Funds whereby such investors receive rebates or reductions of management
fees or other compensation otherwise payable with respect to their investments in St. Cloud. These
agreements were disclosed to the investors in the Funds at the time of formation.
Management Fees
St. Cloud receives periodic management fees from the Funds ranging from 1.5% to 2% of capital
committed to, or the net asset value of, the Funds, during the commitment period and thereafter,
respectively. Management fees are paid quarterly in advance. The General Partner can make
capital calls on investors in the Funds for the amount of St. Cloud’s management fees or pay them
from available cash. These arrangements regarding fee payment were negotiated and approved at
the Funds formation and described in the offering materials, disclosure documents and governing
documents. Because the Adviser has registered as an investment adviser with the SEC under the
Advisers Act, and this brochure is delivered only to qualified purchasers as defined in section
2(a)(51)(A) of the Investment Company Act, a fee schedule is not provided.
Management fees payable to St. Cloud by the Funds may be reduced by certain other compensation
received by St. Cloud that relate to the Funds and its activities or by certain organizational, offering
and other expenses borne by the Funds.
Other Compensation
St. Cloud or its affiliates may receive other compensation in connection with the Funds’ portfolio
activities. For example, St. Cloud may receive monitoring fees in exchange for providing portfolio
companies with management, consulting and other services and may also receive financial advisory
fees in connection with specific transactions. Principals and employees of St. Cloud and its affiliates
also receive directors’ fees for serving on the boards of the Funds’ portfolio companies. These
directors’ fees are generally offset against the Funds’ management fees.
Other Expenses
The Funds will typically pay all legal, accounting, and filing expenses incurred in connection with
organizing and establishing the Funds and the General Partners, and the marketing and offering of
interests in the Funds, including legal, accounting, filing and other out-of pocket expenses of
organizing and raising capital, travel and accommodations, printing expenses and other similar
costs, fees, and expenses. Investors in the Funds will typically receive a reduction in management
fees with respect to offering and organizational expenses in excess of specific amounts as described
in the offering materials, disclosure documents and/or governing documents.
In addition, the Funds will typically pay broken deal expenses and all expenses related to the
operation of the Funds, including fees, costs, and expenses directly related to the purchase, holding,
and sale of investments, expenses of any consultants, counsel, and accountants, any insurance,
indemnity, or litigation expense, custody fees, brokerage fees (if any, as further discussed in Item
12), certain taxes, expenses of any advisory committee established in respect of the Funds and its
members, costs of any information meetings of the Funds’ investors, and any fees or other
governmental charges levied against the Funds. Out-of-pocket expenses associated with completed
investments by the Funds are generally reimbursed by the portfolio company or capitalized as part of
the acquisition price of the relevant transaction.
Neither St. Cloud nor any of its supervised persons accept compensation for the sale of securities or
other investment products.