Bain Capital Fund L.P Cayman Islands Exempted Limited Partnership Financial Statements December 31, 2009 Bain Capital Fund L.P. Index te Financial Statements Page Report of Independent Auditors I Filiancial Statements: Starenieiit of Assets, Liabilities and Partners' Capital as 31, 2009 2 Slateineiit ef ()pe1?atiens fer the Year Ended December 31, 2009 3 Statement oflihanges in Partners' Capital for the Year Ended December 31, 2009 -4 Statement ot`Cesh Flows for the Year Ended December 31, 2009 5 Schedule ef lnvestrileiite as et`IJccen"1ber 31, 2009 Notes to lfinaiicial Statements 8-1? I I |25 High Street lioston, U21 10-1?0 530 5000 (0 I T) Report of Independent Auditors To the General and Limited Partners of Bain Capital Fund L.P.: In our opinion, the accompanying statement of assets, liabilities and partners' capital, including the schedule of investments, and the related statements of operations, of changes in partners' capital and of cash flows present fairly, in all material respects, the financial position of Bain Capital Fund L.P. at December 31, 2009, and the results of its operations, the changes in its partners' capital and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the General Partner. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made bythe General Partner, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. ivlarch 2010 Bain Capital Fund L.P. Statement of Assets, Liabilities and Partners' Capita! December 31 2009 I Assets Cash and eash equivalents investments at fair value (cost ei`E 704,15 25,636) Other assets Total assets iabilities 2.142.675 1,037,571 100,430,663 Capital eentributieiis received in advance Accrued expenses and other liabilities '1`etal liabilities 327,540 49,154 3 76,694 Partners' capital Partners' capital exclusive einer unrealized gain on investments Net Llnrealixed gain on investmelits Total partners' eapital Total liabilities and partners' capital The notes are an integral part of these financial statenients, 2 82,674,781 190,053,969 EUR 79U,=t3fJ,663 Bain Capital Fund L.P. Statement of Operations Year Ended December 31, 2009 lncu me Interest income EUR Expenses Management fees, net (Note 6) Professional fees and other Total expenses Net investment loss Net realized and unrealized gain on investments Realized loss on intfestinents Change in net unrealized gain on investments Net realized and unrealized gain on investntents 6,724 814,021 814,021 (307,291) {i94,299,70l} 294,srs,1r6 200,3 73,475 199,571,170 Net increase in partners' capital resulting from operations 6 The notes are an integral part of these financial statements. 3 Bain Capital Fund L.P. Statement of Changes in Partners' Capital Year Ended December 31, 2009 Capital cam mitment 825,498,364 138,501,130 1,014,000,000 1,015,015 1,015,015,015 Total Partners Balance at December 31, 2008 lnstitutinnai Lirniled Partners EUR 537,225,262 Other Partners 119,338,099 Total Limited Partners 652,063 ,361 General Partner (Note 6) (66,580,5?0) EUR 590,482,791 EUR Net increase in partn ers' capital Balance at resulting December 31, nperations 2009 33,491,890 625,212,152 20,205,426 140,043,525 103,697,316 765,760,677 90,873,862 24,293,292 199,571,178 The nc-tes are an integral part of these financial staten1e11ts_ 4- 790,053,969 Bain Capital Fund L.P. Statement of Cash Flows Year Ended December 31, 2009 Cash flows from operating activities Net increase in partners' capital resulting from operations 19915 Tl ,l 78 to reconcile net increase in partners' capital resulting from operations to net cash used for operating activities: Purchases ofinvestinents {5,45l ,4l9) Realized loss on investments 94,299,70l Change in net unrealized gain on investments (29415 ?S,l 76) Decrease in ether assets 369,439 Increase in accrued expenses and other liabilities 49,154 Net cash used liar operating activities (5,47`0,0 Cash flows from financing activities Capital contributions received in advance 327,540 Net decrease in cash and cash equivalents {5,l42,533) Cash and cash equivalents, beginning ofyear 12 S5 ,208 (Cash and cash equivalents, end of year EUR 2,142,675 The Partnership had the following non-cash operating activity: The Partnership has included a reclassilication of other assets of? l, i3 1,667 in the purchases of investments, of which and 70 were capitalized into the investment cost bases and Bavaria Yachts, respectively. The Partnership has included a reclassification ofinvestinent cost basis l6,3 03 in the purchases of investments related to the restructuring of the investment in Bavaria Yachts, wliich was transierrecl to other assets, The acconftpanying notes are an integral part of these financial statements. 5 Bain Capital Fund L.P. Schedule of Investments December 31, 2009 Number of shares Cost Fair value 4 2,470,849 5 ,740,953,733 433,760,948 1,003,925,246 74,075,200 301 ,862 27,800,374 47,99 2 ,868 2 ,945 ,25 1 6,117,058 121,023 1,231,498 75,973,441 217,555 92,128,051 523,291,753 2,036,725,266 968,298,084 Brake Brothers: Cucina (BC) Luxco 8.51 r.l, Ordinary shares Series 1 preferred equity certificates Senes 2 preferred equity Series 4 preferred equity certificates Convertible preferred equity certificates Brenntag: Bain Capital Brenn tagCayman L.P Class A units Class CI units Class units Ed con Ed;-gars Holdings Limited Ordinary shares Series 1 preference equity shares FCI: Bain Capital FCI Cayman L.P, Class A units Class units Class units Ideal Standard Ideal Standard International Topco SCA Class It ordinary shares Convertible preferred equity certilicates Series 1 preferred equity certificates Series 2 preieircd equity certificates Series 3 prelizired equity 36,460 8-4,714, 190 6,400,628 12,639,119 1,093,062 104,883,459 301,862 27,800,374 47,992,868 76,095,104 31,162,546 64,722,206 -r 67,639,725 4,603,738 8,690,449 635,680 81,569,592 936,737 86,269,882 64,9 83,5 89 152,190,208 50,818,918 95,884,752 1,576,574 12,536,650 76,002,073 90,115,297 21,747 9,209,501 52,310,405 14,287,683 13,434,137 89,263,473 The accoinpanying notes are an integral part of these financial statements. 6 50,818,918 5,402,817 51,471,485 100,827,469 157,701,771 9,527,682 8,325,013 17,852,695 Bain Capital Fund L.P. Schedule of Investments December 31, 2009 Nu er ofsltares Cost Fair value NXP Kas lion 5.3 9,211 Ordinary shares EUR 230,265 3,607,943 Non-yield bearing preferred equity certificates 90,198,571 24,415,786 90,428,836 24,415,786 Sensata Technologies: Sensata Investment Company S.C.A. 81,589 Class A sleek 103,006 116,714 14,278,075 Convertible preferred equity certificates 18,026,082 20,42 5,053 50,911,536 Series 1 preferred equity certificates 64,275,857 103,889,699 Bain Capital ST (Lu xembourg) S.a r.l. (tl) (Note 5) 1,197 Ordinary shares - - 1,761,392 Series 2 preferred equity certificates 1,761,392 4,315,410 84,166,337 128,746,876 Integral Investors S.a r.l. 60,493 Class A ordinary shares 1,803,144 6,202,486 17,168,919 Series 1 eonvenible preferred equity certificates 25,961,628 88,015,526 35,858,731 Series 1 preferred equity certificates 44,823,414 78,308,822 585,209 Series 2 preferred equity certificates 1,100,192 1,377,737 73,688,378 173,904,571 Total investments Fair value as detennined by the General Partner (Note 2) lnvestznent held via Bain Capital Lion Holdings, L.P. Investment held via Bain Capital Integral Investors II, L.P. (ct Investment held via Bain Capital Ideal Standard, L.P. (ti) Investment held via Bain Capital (ST) Integral Investors, L.P. EUR 704,525,636 fi 787,200,417 The accompanying notes are an integral part of these financial statements. 7 Bain Capital Fund L.P. Notes to Financial Statements December 31, 2009 'l`he Partnership Background Bain Capital liund V111-13, L.P. (the is a Cayman Islands exempted limited partnership organized pursuant to the Amended and Restated Agreement ot`1-i1nited Partnership, as last amended on December 31, 2009 (the "Partnership Agrcernent"). The Parlnership's business activity is to invest the funds ofthe Partnership with the principal objective ofaehievin appreciation orcapital invested. Services are performed for the Partnership by its management company, Bain Capital, Ltd. (the "l\flanager") for a rnariagement fee (Note 6). The general partner ot' the Partnership is Bain Capital Partners V111-lj, L.P. (the "General Partner"). The Partnership shall continue until December 31, 2015, unless sooner dissolved or extended to a date no later than December 31, 2019, as specified in the Partnership Agreement. The Partnership has of partners' capital commitments of which E71 1,892,708 or 86.13% ofthe Institutional Limited Partners" and General Partner's committed capital was contributed, and 6159253 1,376 or 84.63% ofthe Other Limited Partners' committed capital was contributed at Deceinber 31, 2009. Additionally, or 8.87% of the Institutional Limited Partners' and General Partner's committed capital, and eisai 7,185 or 8.87% of the Other Limited Ptu'tners` committed capital was contributed either directly or through TRU lloldings L.P. to Bain Capital (TRU) V111-li, L.P. at December 31, 2009 (Note 3). Total uncalled capital as of December 31. 2009 was 641,325,695 for Institutional Limited Partners and the General Partner, and 1 2.2 52,5 75 for Other Limited Partners. Partners are not able to withdraw from the Partnership. Income and Expense Allocation The Partnership Agreement provides for the allocation of operating income and operating expenses based upon the partners' contributed capital accounts. ln order to recognize the advance contributions of certain partners, adjustments to allocations may be made at the sole discretion of the Genera] Partner. Gains and losses are allocated in accordance with the Partnership Agreeinent. Prior to making any other allocations, gains and losses shall generally lirst be allocated to the General Partner until the General Partner has received a net amount equal to its Total Priority Profit Share (Note 6). Allocations ot` remaining gains and losses are generally made as necessary to ensure that, ai`ter the Partnership has achieved its Preferred Return as further defined in the Partnership Agreement. 70% of cumulative realized capital gains and losses through the date of allocation are allocated to all partners on a pro rata basis, based on the partners' contributed capital accounts, and 30% are allocated tothe General Partner ("Carried lnterest"). Unrealized gains and losses are allocated in the same manner described above as if realized at December 31, 2009. Distributions Distributions are made at the discretion of the General Partner. Cash distributions representing a return ol` capital are made in proportion to contributed capital. Generali y, cash distributions representing protit are made in the same proportion as such profit is allocated tothe capital accounts. As spccitied inthe Partnership Agreement, distributions of publicly traded securities are valued at the last trade price or, if unavailable, at the last bid price on the most recent day on which such securities traded prior to the date as oi" which their value is to be determined. 8 Bain Capital Fund L.P. Notes to Financial Statements December 31, 2009 Signiticant Accounting Policies Use of Estimates The preparation of financial statetnents in accordance with accounting principles gencrall accepted inthe United States of America requires the General Partner to make estimates and assumptions tltat affect the reported amounts and disclosures in the tinancial statements. Actual results cottld di t"t`or from those estimates. Events or transactions after year end tltrough the date that the tinancial statetnents were issued, March 17, 2010, have been evaluated in the preparation ot` the tinancial statetnents. Cash and Cash Equivalents The considers all highly liquid debt instrutnents purchased with an original maturity ot` three months or less to be cash equivalents. The Partnership has established guidelines relative to diversitication and maturities that it believes maintain safety and liquidity. 'l`he guidelines are periodically reviewed and modified to take advantage ot` trends in yields and interest rates. Included in cash and cash equivalents at December 31, 2009 is an unrestricted overnight deposit in the amount bearing interest at 0.09% which matured on January il, 2010. Investment Valuation In accordance with the authoritative guidance on fair value nfteasurements and disclosures under generally accepted accounting principles, the Partnership discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques ttsed to tneasttre the fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) andthe lowest priority to unobservable inputs (level 3 measurements). The guidance establishes three levels ofthe fair value hierarchy as follows: 0 Level - Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that the Partnership ltas the ability to access at the ineasurement date; l_.evel 2 - Inputs other than quoted prices that are observable forthe asset either directly or indirectly, inputs in markets that are not considered to be active; 1 l_.evel 3 - Inputs that are unobservable. Inputs are used in applying the valuation techniques discussed below and broadly refer to the assumptions that the General Partner uses to make valuation decisions, including assumptions about risk. Inputs may include recent transactions, eantings forecasts, market multiples, future cash flows, and other factors. An investment's level within the fair value hierarchy is based on the lowest level ot` arty input that is si gniticant to the fair value measurement. The categorization ot` an within the hierarchy is based upon the pricing transparency ofthe investment and does not necessarily correspond to the General Partners perceived risk ot' that investment. 9 Bain Capital Fund L.P. Notes to Financial Statements December 31, 2009 Generally, the majority of our private equity investments are valued utilizing unobservable inputs, and are therefore classilied within level 3. The General Partner`s determination of fair value is based upon the best information available for a given circumstance and may incorporate assumptions that are management's best estimates after consideration ofa variety of iitternal and external factors. In establishing the fair value of an investment the General Partner will first consider recent transactions in the same or similar see urities including the initial purchase transaction ofthe security being valued or any recent linancing round. Otlterwise, the General Partner generally employs two valuation methodologies when determining the fair value ofa private equity investment. The first methodology is a market multiples approaclt that considers a specified financial measure (such as EBITDA) and recent public market and private transactions and other available measures for valuing comparable companies "Market Approaclf). The second methodology detennines a valuation by discounting future cash flows "income The ultimate fair value recorded for a particular investment will generally be within the range suggested by the two methodologies utilizing the judgment of the General Partner. The General Partner may also adopt the valuation of an underlying partnership interest provided by the partnership unless the General Partner determines in the good faith exercise of its discretion that any such valuation is unreasonable or inappropriate under the circumstances. Because of the inherent uncertainty of valuation, this estimated fair value may differ significantly from the value that would have been used had a ready market for the security existed, and the difference could be material. Investments whose values are based on quoted market prices in active markets, and are therefore elassilied within level 1, generally include active listed equities. The General Partner does not adjust the quoted price for such instruments, even in situations where the Partnership holds a large position and a sale could reasonably impact the quoted price. January l, 2009, the Partnership adopted the authoritative guidance under GAAP on determining fair value when the volume and level of activity for the asset or liability have significantly decreased and identifying transactions that are not orderly. Accordingly, it` the Partnership determines that either the volume andfor level of activity for an asset or liability has signiticantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value. Valuation techniques such as an income approach might be appropriate to supplement or replace a market approach in those circumstances. The guidance also provides a list of factors to determine whether there has been a significant decrease in relation to normal market activity. Regardless, however, of the valuation technique and inputs used, the objective forthe fair value measurement in those circumstances is unchanged from what it would be if markets were operating at normal activity levels and/or transactions were orderly; that is, to determine the current exit price. 10 Bain Capital Fund L.P. Notes to Financial Statements December 31, 2009 The following table presents the investments carried on the Statement ot`Assets, Liabilities and Partners' Capital by level within the valuation hierarchy as 31 2009. Assets at Fair Value as of December 31, 2009 Level 1 Level 2 Level 3 Total Investnientsz ljquity Securities; Industrial and manufacturing EUR EUR 538,061,142 EUR 538,061,142 Softvvaie 173,904,571 1 73,904,5 71 Retail 50,818,918 50,818,918 Technology - - 24,415,786 24,415,786 Total: EUR - EUR - EUR 787,200,417 EUR 787,200,417 The t`ollovving table includes a rollforward ofthe amounts for the year ended December 31, 2009 for investments classified within level 3. Fair Value Mcasurenletll: Using Level 3 Inputs Net realized and unrealizetl Balance at December Net purchases Net transfers gain included in the Statement Balance at December' 3l, 2003 and sales inffou t) of Operations 31, 2009 ln vest men ts: [Equity Securities: Industrial and inaiiuliicltwing EUR So ll tv are Retail Inihrntatinn Total: 384,180,043 5,451,419 EUR (5 l48,429,t'180 54,520,l ll] - (5 ,7l_J7.185) 8,221,795 - 581,370,523 EUR 5,451,410 EUR - Net realized and unrealized gain on investments in the table above is reflected in the accompanying Statement of Operations. Change in net unrealized gain included in the Statement of Operations for the level 3 still held at December 31, 2009 is 99,969,637. Investment Transactions, Income and Expenses lnvestment transactions are accounted for on the closing date. Realized gains and losses on investment transactions are determined using the specific identitication method. lntercst income and expenses are recorded on the accrual basis. Dividend income is recorded on the ex-dividend date, net 1' applicable witliholding tax. The General Partner analyzes dividends received 1`rc-m companies to determine whether they have been accretive to the Partnership's investment based on an analysis of enterprise value and provided by investment banks, third party valuations or other parties, The iinaneial statements retleet the character of such dividends as required under generally accepted accounting principles. ll 538,061,142 173,904,571 50,818,918 24,415,780 78 7.20051 17 Bam Capital Fund L.P. Notes to Financial Statements December 31, 2009 ln some eases, the Partnership invests in portfolio companies directly and in some cases invests in portfolio companies indirectly through one or more holding companies or other entities in which other parties affiliated with the Partnership andfor the Manager may also be investors. ln cases where the Partnership invests indirectly through such an entity, the Schedule of investments reflects the Partnership's proportionate share of the underlying investment. Foreign Currency Translation The accounting records of the Partnership are maintained in Euro. The valtte of cash and foreign securities is recorded in the books and records ofthe Partnership after translation to ljuro based on the exchange rates on that day. Income and expenses are translated at prevailing exchange rates when accrued or incurred. The Partnership does not isolate that portion of realized or unrealized gains or losses resulting from changes in the foreign exchange rate on investments from fluctuations arising frorn changes in the market prices ofthe securities. Such gains and losses are included with the net realized and unrealized gainfloss on investments. Income Taxes The Partnership is a qualified intermediary and intends to conduct its operations so that it will not be engaged in a United States trade or business and, there fore, will not be subject to United States federal income or withholding tax on its income from United States sources. The Partnership may be subj cet to taxes in certain foreign jurisdictions. Under the current laws ofthe Cayman Islands, there are no income, estate, transfer, sales or other Cayman Islands taxes payable by the Partnership. Accordingly, no income tax provision is required in these financial statements. The Partnership adopted the authoritative guidance on accounting for and disclosure of uncertainty in tax positions (Financial Accounting Standards Board- Accounting Standards (Te-ditication MU) on January l, 2009, which required the General Partner to detenninc whether a tax position ofthe Partnership is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits ofthe position. For tax positions meeting the more likely than not threshold, the tax amount recognized in the financial statements is reduced bythe largest benefit that has a greater than tifty percent likelihood of being realized upon ultimate settlement with the relevant taxing authority. The General Partner has determined that there was no effect on the tinancial statements from the Partnership's adoption of this authoritative guidance. 'l'he Partnership files tax returns as prescribed by the tax laws ofthe jurisdictions in which it operates. ln the normal course of business, the Partnership is subject to examination by federal, state, local and foreign jurisdictions, where applicable. Alternative Investment Vehicles ln order to accommodate tax, legal or similar concerns of any partner or the Partnership with respect to one or more investments, the General Partner may establish one or me-re Alternative Investment Vehicles and require that the li_1nited partners hold their interests' in such investment through such AIV rather than through the Partnership. Contributions to an AIV shall reduce the limited partners' uncalled capital subscription as if they had been made to the Partnership. The tenns and conditions applicable to an Ally' shall be substantially the same as the terms and conditions applicable to the Partnership. However, the provisions ofthe Alva (including provisions relating to allocations and distributions of profits and losses) will he coordinated and, if necessary, will be adjusted to carry out the purpose and intent ofthe Partnersltip Agreement. The Aly' financial statements should be read in conjunction with the Partnership's financial statements. 12 Bain Capital Fund L.P. Notes to Financial Statements December 31, 2009 As of December 31, 2009, the General Partner has establislifl two AIVS, TRU Holdings 1..P. and Bain Capital (TRU) V111-E, L.P., to iacilitate an investment in Toys Us Holdings, lnc. 4. Investments by Industry Type and Geographical Location Categorization At December 31, 2009, the Partnership held investments in the following industry groups: Fair value as a percentage of Cost Fair value partners' capital industrial and if 44-4,5 23,670 (5 538,061,142 68% .Software 73,688,378 173,904,571 22% Retail 95,884,752 50,818,918 7% information Technology 90,428,836 24,415,786 3% EUR 704,525,636 787,200,411 7 100% At December 31, 2009, the geographical categorization based on fair value of investments is as follows: Fair value as a percentage oi' Cost Fair value total investments Italy 73,688,378 6 173,904,571 22% France 90,115,297 157,701,771 20% Netherlands 174,595,173 153,162,662 20% Germany 76,095,104 152,190,208 19% United Kingdom 104,883,459 81,569,592 11% South Africa 95,8 84,752 50,818,918 6% Belgium 89,263,473 17,852,695 2% . 704,525,636 1 737,200,417 100% The Partnersltip may have risks associated with the concentration ofinvestments in one industry or _geographical area. ln addition, the Partnership's ability to liquidate certain of its investments may bc inhibited since the issuers may be privately held or the Partnership may own a relatively large portion of the issuer's equity securities. Market and Credit Risks General 11 uctuations in the market prices of investrnents may affect the value ofinvestments held by the Partnership. Instability in the securities market may also increase risk inherent in the investments. The ability of the portfolio companies to refinance debt securities may depend on their ability to sell new securities in the public high yield debt market or otherwise. 13 Bam Capital Fund L.P. Notes to Financial Statements December 31, 2009 The Partnership may be invested in leveraged companies which of ter the opportunity for capital appreciation. Such investments also involve a higher degree of risk. ln instances where the investment involves leverage, the effects of recessions, operating problems and other general business and economic risks may have a mor pronounced effect on the prolitability or survival of the investments. Investments in Debt Securities At December 31, 2009, the Partnership held an investment in Bain Capital ST (LuJ~;embottrg} S-.a r.l. ("Sensata Debt 1intity"}, a Luxembourg corporation, via Bain Capital (ST) Integral Investors, I..P. 'l`he investment objective ot`thc Sensata Debt Entity is to invest in debt instruments issued by Scnsata "l`echnologies, HV. As of December 31, 2009, Sensata Debt Entity held the following Scnsata Debt: Coupon Description Par Value Rate Maturity Senior Subordinated Notes 42,3 00,000 1 1.25% January 15, 2014 As of December 31, 2009, the fair value (Note 2) of the investment in the Sensata Debt Entity was Market and Credit Risks of Debt Securities The l'artnership`s value in the Sensata Debt Entity is impacted by the value of the Sensata Debt lintity's underiying investments. The value ofthe investments held by the Sensata Debt Entity will generally tlueruate with, among other things, changes in prevailing interest rates, general economic conditions, the condition of certain financial markets, developments or trends in any particular industry and the financial condition of the issuer. During periods of limited liquidity and higher price volatility, the Sensata Debt Entity's ability to dispose at a price and time that they deem advantageous may be impaired. The Sensata Debt Entity`s investment in debt securities may present certain risks. Debt investments are subject to credit and interest rate risk. "Credit risk" refers to likelihood tltat an issuer will default in the payment of principal andfor interest on an instrument. Financial strength and solvency of an issuer arc the primary tactors influencing credit risk. in addition, subordination, lack or inadequacy of collateral or credit for a debt instrument may afibct its credit risk. Credit risk may change over the life of an instrument and securities which are rated by rating agencies are often reviewed and may be subject to downgrade. "interest rate risk" refers to the risks associated with market changes in interest rates. Interest rate changes may affect the value of a debt instrument indirectly and directly. ln general, rising interest rates will negatively impact the price of a tinted rate debt instrument and failing interest rates will have a positive effect on price. Adjustable rate instruments also react to interest rate changes in a similar manner although generally to a lesser degree. interest Fate sensitivity is generally tnore pronounced and less predictable in instruments with uncertain payment or prepayment schedules. As ofDccember 31, 2009, the Sensata Debt Entity holds an investment in Senior Subordinated Notes that were purchased from a third party. Based on activity in the corporate debt market, the Sensata Debt Entity is exposed to liquidity risk as well as risk of the borrower. 14 Bain Capital Fund L.P. Notes to Financial Statements December 31, 2009 Related Party Transactions The Partnership is a party to an investment and advisory agreement with the l\/Ianage In consideration for a management fee, the Manager provides administrative and operational services to the Partiiership. The annual management fee is the lesser of 2% ofthe aggregate subscribed capital multiplied by an inflation adjustment, as defined in the agreement, or 2.5% oi the aggregate subscribed capital and is subject to certain reductions as described in the agreement. The General Partner has reduced the management fee with respect to interests in the Partnership held by certain affiliates. The management fee is payable in advance on the first business day ofeacli quarter. I~`or the year ended December 31, 2009, the lvlanager received 63,307,798 in corporate service [ees from the Partnerships portfolio companies. In accordance with the investment advisory agreement, the Manager retained all oftliese fees and no reductions were applied to iana gement fees. For the year ended December 31, 2009, the Manager received in investment banking fees from the Partnership's portfolio cornpanies. In accordance with the investment 2 dvisory agreement, the Manager retained all of these fees and no reductions were applied to it fees these tees were less than 1% of the aggregate transaction value ofsuch trarisartions. During the year ended December 31, 2009, in accordance with the investment advisoy agreement, management fees were reduced by for 50% of the Partnerships pro rata share of corporate service fees, net of expenses, received by the li/Ianager in previous years. Pursuant to the investment and advisory agreement, the Manager may irrevocably waive the right to receive all or any portion ofthe payment of the management fee next due and payable and all or any portion of any payment ofthe inanagetitent fee that will bc due and payable durir the following year, provided that any such waiver must be made in a written notice delivered to the Partnership prior to the date on which the waived portion ofthe payment would otherwise be due and payable, or prior to the beginning of the year, as the case may be. The General Partner may allocate a portion of the waived tees to a particular investment ("Allocated Waived Fee Arnount"). Upon realization of an investment to which an Allocated Waived Fee Amount has been allocated, the proportional return to the General Partne dctemiined by dividing the Allocated Waived 1-'ee Amount by the total dollars invested in the particular investment multiplied by the amount retumcd is Priority Profit. The General Partner is entitled to recoup such Priority Profit from Allocated Waived ee Amounts Ottl of income, only to the extent that the income did not exist on a realized or unrealized basis at the time the Allocated Waived Fee Amount was allocated to such investment. In order to create flexibility in the management of cash resources, on February 27, 2009 the Partnership Agreement was amended in order to allow the General Partner to specifically designate a portion ofthe waived fee as unallocated ("Unallocated Waived Amount"). Unallocated Waived Pee Amounts are Priority Profit on the day the election is made. Priority Profit related to Unallocated Waived fee Amounts can be recouped out ofincome, only to the extent that the income did not exist on a realized or unrealized basis at the time the election was made. Priority Profits in aggregate are considered Total Priority Profit Share. For the year ended December 31, 2009, the Manager has elected to waive and designate as Unallocated Waivecl Fee Amount a total ofE22,3?2,038, or 100% in management fees. Through December 31, 2009, a total I 5,901 has been waived, 38 of which has been designated Unallocated Waived l~`ee Amount and 646,143,863 as Allocated waived Fee Amount. I5 7. Bain Capital Fund L.P. Notes to Financial Statements December 31, 2009 With respect to each investment to which waived fees were allocated, including AIVs, the percentage the amount of waived fee allocated to such investment represents of total contributions made by all Partners with respect to such investment is as follows: Investment fi Brake Brothers 5. 69 3.60 Edcon IO. 02 3.14 Ideal Standard 3.35 NXP 4.59 Sensata Technologies 5-66 Toys Us, Inc. 4.15 The following table includes a reconciliation of the net increase in partners' capital resulting from operations allocated to the General Partner forthe year ended December 31, 2009 pursuant to the Partnership Agreement: Net increase in Net Realized (Jhange in net partners' capital investment loss on unrealized gain resulting 1' loss investments on investin-t-nts operations General ticncral excluding Interest and Total Priority Profit Shan: EUR (306) (60, l3'3}) is 192.1 0| I3 I .I 56 tarrietl Interest iin,52l.053 o0,T4'i',03l Priority |'ml`it 5%-hare - f\llocatcd Waivetl Fee - 2,623,632 - llnallocalctl Waivcd Fee .timount - - 22.3-72.033 22,372,033 Total icncral Partner (Silo) 6 I Contingencies In conjunction with the Partnership's investment activities, the Partnership is a party to agreements which contain certain representations and warranties. As such, the Partnership may, from time to time, be a party to suits and claims arising in the normal course of business. The General Partner believes that any losses resulting from the resolution of such claims would not have a material adverse effect on the accompanying financial statements. `l`he parent company ofthe Manager has been named in civil litigation that niay result in a loss to the Partnership. While the General Partner believes that the claims are witliout merit, the ultimate outcome of these proceedings is not yet deterniinable. I6 Bain Capital Fund L.P. Notes to Financial Statements December 31, 2009 Other Required Disclosure The limited partners' net Internal Rate of Return ("net since the inception ofthe Partnership through December 31, 2009 and December 31, 2008 is 6.3% and respectivelymanagement fees, expenses, Total Priority Profil Share and Carried Interest. The calculation is based on the assumption that capital contributions and cash and stock distributions occurred onthe last day ol` the fiscal quarter. The fair value of the limited partners' capital accounts is assumed to be the terminal cash tlovv. The net IRR has been calculated for institutional limited partners, which docs not materially differ from that ofnon-institutional limited partners. 'l`he ratio of operating cxpeltses before and after Carried lntercst to limited partners' average capital is 0.1% and 90%. respectively. The ratio of operating expenses before and after Carried Interest to limited partners" committed capital is 0.1% and respectively. The ratio ol`net investment loss before Carried Interest to limited partners' average capital is Such numbers exclude the effect of waived fees. These financial liiglilights are for the limited partners taken as a whole, exclusive ofthe General Partner, forthe year ended Deceinber 31, 2009. The General Partner believes that the disclosure of net investment loss and expenses to limited partners' average capital and committed capital may be inconsistent with the basic concept that an investment in the Partnership is a longterm investment and therefore may not necessarily be appropriate measures for the l'artnersliip 17