Arlington Management Employees, LLC, a Delaware limited liability company (“AME”), doing business as Arlington Capital Partners, is a registered investment advisory entity that with other affiliated organizations (AME and, together with such affiliated organizations, collectively, “Arlington”), as of December 31, 2018, managed approximately $1.7 billion in private fund assets. AME is a registered investment adviser that commenced operations in December 1998. AME and its affiliated investment advisers, Arlington Capital Group, LLC (“ACP GP I”), Arlington Capital Group II, L.L.C. (“ACP GP II”), Arlington Capital Group III, L.L.C. (“ACP GP III”), Arlington Capital Group IV, L.L.C. (“ACP GP IV,” and together with ACP GP I, ACP GP II and ACP GP III, the “General Partners”), and Arlington Capital II, L.P. (“Manager II”), Arlington Capital III, L.P. (“Manager III”), Arlington Capital IV, L.P. (“Manager IV”) and Arlington Capital V, L.P. (“Manager V,” and together with Manager II, Manager III and Manager IV, the “Managers,” and the Managers, together with the General Partners and AME, the “Advisers”) provide investment advisory services to investment funds privately offered to qualified investors in the United States and elsewhere. ACP GP I previously served as the general partner of each of Arlington Capital Partners, L.P., a Delaware limited partnership, and Arlington Capital Partners Offshore, L.P., an exempted limited partnership formed under the Exempted Limited Partnership Law of the Cayman Islands, (together with Arlington Capital Partners Employee Co-Investment, LLC (“ACEC”), “Fund I”). Although Fund I has been liquidated, ACP GP I currently serves as the manager of Arlington TSI Investments, L.L.C. (“Arlington TSI”), which holds Fund I’s last remaining asset, a contingent interest in an escrow account relating to a former Fund I asset. The members of ACP GP I will continue to represent the interests of Arlington TSI until the distribution, if any, of the escrow. In its capacity as the management company of Arlington Capital Partners II, L.P., a Delaware limited partnership (“Fund II”), Manager II has the authority to manage the business and affairs of Fund II. ACP GP II is the general partner and where applicable the manager of each of the Fund II entities. Fund II was formed on March 4, 2005. In March 2018, the term of Fund II was extended to April 1, 2019, via approval by the Fund II advisory committee, a committee comprised of limited partners that provide advice and counsel regarding certain provisions of the Fund II limited partnership agreement (the limited partnership agreement or other operating agreement or governing document of each Fund, as defined below, a “Limited Partnership Agreement”). The extension represented the third of three extensions of Fund II’s term available to ACP GP II. The term of Fund II will continue until April 2020, unless the term is extended again or Fund II is dissolved sooner in accordance with the Fund II Limited Partnership Agreement. ACP GP II can only call capital to fund follow on investments in Fund II’s current portfolio company investments and for Fund II expenses and cannot call capital to make new portfolio company investments. In its capacity as the management company of Arlington Capital Partners III, L.P., a Delaware limited partnership (together with any of its feeder vehicles, alternative investment vehicles and other special purpose entities, “Fund III”), Manager III has the authority to manage the business and affairs of Fund III. ACP GP III is the general partner of Fund III. Fund III commenced operations on February 6, 2011 and will continue until August 6, 2021, unless the term is extended or Fund III is dissolved sooner in accordance with its Limited Partnership Agreement. ACP GP III can only call capital to fund follow on investments in Fund III’s current portfolio company investments and for Fund III expenses and cannot call capital to make new portfolio company investments. In its capacity as the management company of Arlington Capital Partners IV, L.P., a Delaware limited partnership (together with any of its feeder vehicles, alternative investment vehicles and other special purpose entities, “Fund IV”), Manager IV has the authority to manage the business and affairs of Fund IV. ACP GP IV is the general partner of Fund IV. Fund IV had its first closing on July 15, 2016, and is expected to continue to operate until December 19, 2026, unless the term is extended or Fund IV is dissolved sooner in accordance with its Limited Partnership Agreement. ACP GP IV is actively pursuing new portfolio company investments for Fund IV. The Advisers manage the business and affairs of Fund II, Fund III, Fund IV and Arlington TSI (each, a “Fund,” and, together with any future private investment fund managed by the Advisers, the “Funds”). Manager V is expected to be the management company of a future Fund. The Funds are private equity funds that make primarily control investments through negotiated transactions in operating entities, generally referred to herein as “portfolio companies.” The Advisers’ investment advisory services to the Funds consist of identifying and evaluating investment opportunities, negotiating the terms of investments, managing and monitoring investments, evaluating add-on investments for existing portfolio companies and achieving dispositions for such investments. Although investments are made predominantly in non-public companies, investments in public companies are permitted subject to certain limitations set forth in the applicable Fund’s Limited Partnership Agreement. The employees and/or owners of the Advisers will serve on such portfolio companies’ respective boards of directors or otherwise act to influence control over the management of portfolio companies in which the Funds have invested. The Advisers’ advisory services for the Funds are further detailed in the applicable private placement memoranda and the supplements thereto or other offering documents (each, a “Private Placement Memorandum” and, collectively, the “Private Placement Memoranda”) and the Limited Partnership Agreements and are further described below under “Methods of Analysis, Investment Strategies and Risk of Loss.” Investors in the Funds participate in the overall investment program for the applicable Fund, but may be excused from a particular investment due to legal, regulatory or other agreed-upon circumstances pursuant to the relevant Limited Partnership Agreement. The Funds or the Advisers have entered into side letters, or other similar agreements (“Side Letters”), with certain investors that have the effect of establishing rights under, or altering or supplementing the terms (including economic or other terms) of, the relevant Limited Partnership Agreement(s) with respect to such investors. As of December 31, 2018, the Advisers collectively managed $1.7 billion in client assets on a discretionary basis. As of the date hereof, AME is managed by Matthew L. Altman, Michael H. Lustbader and Peter M. Manos (the “Managing Partners”), and each “principal owner” of this entity pursuant to SEC guidelines is listed on Schedule A of Part 1A of AME’s Form ADV. Each “principal owner” of Manager II, Manager III, Manager IV, and Manager V pursuant to SEC guidelines is listed on Schedule R of Part 1A of AME’s Form ADV. Additionally, from time to time and as permitted by the relevant Limited Partnership Agreement, Arlington expects to provide (or agrees to provide) certain investors or other persons, including other sponsors, market participants, finders, consultants and other service providers, Arlington’s personnel and/or certain other persons associated with Arlington and/or its affiliates, co-investment opportunities (including the opportunity to participate in co-invest vehicles) that will invest in certain portfolio companies alongside a Fund. Such co-investments typically involve investment and disposal of interests in the applicable portfolio company at the same time and on the same terms as the Fund making the investment. However, from time to time, for strategic and other reasons, a co-investor or co-invest vehicle may purchase a portion of an investment from one or more Funds after such Funds have consummated their investment in the portfolio company (also known as a post-closing sell-down or transfer). Any such purchase from a Fund by a co-investor or co-invest vehicle generally occurs shortly after the Fund’s completion of the investment to avoid any changes in valuation of the investment, and the co-investor or co-invest vehicle may be charged interest on the purchase, or the purchase price may be equitably adjusted under certain conditions, to compensate the relevant Fund for the holding period, and the co-investor or co- invest vehicle generally will be required to reimburse the relevant Fund for related costs. please register to get more info

In general, the Managers receive a management fee (“Management Fee”) paid by the Funds in connection with the advisory services they provide. The Advisers or other Arlington entities or affiliates receive additional compensation in connection with management and other services performed for portfolio companies of the Funds and such additional compensation will offset in whole or in part the Management Fee otherwise payable to the Managers. Limited partners in the Funds also bear certain expenses. As is typical for private equity funds, the Funds likely bear additional and greater expenses, directly or indirectly, than many other pooled investment products, such as mutual funds. To the extent brokerage fees are incurred, they will be incurred in accordance with the general practices set forth in “Brokerage Practices.”
Management Fees
Fund I Fund I was liquidated on December 22, 2014. Fund I’s remaining assets and liabilities were transferred to Arlington TSI. Fund II Fund II pays Manager II a Management Fee calculated each calendar semi-annual period equal to 1.5% per annum, payable quarterly in advance, of capital commitments drawn for investments less any distributions from such investments. Effective on April 1, 2017, the Management Fee will be calculated each semi-annual period as the sum of, with respect to each investment, 1.5% per annum of the lower of (i) the capital commitments drawn for an investment less any distributions from such investment or (ii) the fair value of such investment. However, the Fund II Management Fee has been waived for the period from January 1, 2018 to March 31, 2020. The Management Fee payable is reduced by an amount (the “Fund II Waived Fee Amount”) equal to the lesser of (i) the amount of the Management Fee that Manager II has irrevocably elected to waive and (ii) the amount that would otherwise be payable to Manager II pursuant to the terms of the Fund II Limited Partnership Agreement. Waived Management Fees are not subject to the Management Fee offsets described below, and the amount of such Waived Management Fees has the potential to be significant. Due to any such waiving of Management Fees. including the waiver currently in effect (as described above), and/or timing of receipt of compensation subject to offsets (as described below), it is possible that Management Fee offsets will not be fully realized by investors in Fund II until Fund II’s dissolution (or ever, in the case of investors that have irrevocably elected not to receive distributions of excess offset amounts, as described below), resulting in an additional benefit to Manager II during such period. After giving effect to the Fund II Waived Fee Amount, the Management Fee will be reduced by 100% of any break-up fees and 80% of any transaction or monitoring fees received by ACP GP II, Manager II or any of their respective managers, partners, members, shareholders, officers or employees in their capacities as such from Fund II portfolio companies (the “Fund II Offset Amount”). Prior to any reduction of the Management Fee, any unapplied Fund II Offset Amount must first be used to reduce unconsummated transaction costs otherwise reimbursable by Fund II. In the event that the aggregate amount of fees applied against the Management Fee exceeds the Management Fee for the immediately succeeding semi-annual period, such excess will be carried forward to reduce the Management Fee payable in the following semi-annual periods. To the extent any such excess remains unapplied upon termination of Fund II, each Fund II limited partner will receive from Manager II its pro rata share (based on commitments) of such unapplied excess, unless such Fund II limited partner has previously notified ACP GP II of its irrevocable election not to receive its pro rata share of such excess. Fund II will be responsible for all expenses (other than normal overhead expenses of managing Fund II, including compensation for AME employees, rent, utilities and other administrative expenses) incurred by or on behalf of Fund II which are not reimbursed by portfolio companies, including legal, auditing, consulting, financing and accounting fees and expenses, expenses associated with Fund II’s financial statements, tax returns and K-1s, out-of-pocket expenses of transactions not consummated, other expenses associated with the acquisition, holding and disposition of the Fund’s investments, including interest on and fees and costs arising out of any borrowings made by Fund II, insurance, extraordinary expenses (such as litigation, if any), any taxes, fees or other governmental charges levied against Fund II, broken deal expenses (including broken deal expenses relating to transactions that have been offered to co-investors), management fees, fund raising expenses, organizational expenses and expenses of periodic meetings of the limited partners. The limited partners of Fund II will be assessed periodically for such expenses in accordance with their capital commitments. ACP GP II will have the right to reimburse itself for any partnership expenses it incurred prior to making any distributions to limited partners of Fund II. The Management Fee will be further reduced in the circumstances and by the amounts described in the Limited Partnership Agreement. Fund III Fund III pays Manager III a Management Fee calculated each calendar semi-annual period, which, effective December 20, 2016, is equal to 1.5% per annum of contributions made for investments less contributions made for realized investments, payable quarterly in advance and prorated in the event of any partial year, as set forth in the Fund III Limited Partnership Agreement. The Management Fee payable will be reduced by an amount (the “Fund III Waived Fee Amount”) equal to the lesser of (i) the amount of the Management Fee that Manager III has irrevocably elected to waive and (ii) the amount that would otherwise be payable to Manager III pursuant to the terms of the Fund III Limited Partnership Agreement. Waived Management Fees are not subject to the Management Fee offsets described below, and the amount of such Waived Management Fees has the potential to be significant. Due to any such waiving of Management Fees and/or timing of receipt of compensation subject to offsets (as described below), it is possible that Management Fee offsets will not be fully realized by investors in Fund III until Fund III’s dissolution (or ever, in the case of investors that have irrevocably elected not to receive distributions of excess offset amounts, as described below), resulting in an additional benefit to Manager III during such period. After giving effect to the Fund III Waived Fee Amount, the Management Fee will be (i) reduced by 100% of any break-up fees and 80% of any transaction or monitoring fees received by ACP GP III, Manager III or any of their respective managers, partners, members, shareholders, officers or employees in their capacities as such from Fund III portfolio companies (the “Fund III Offset Amount”) and (ii) Manager III will reduce the Management Fee payable in any semi- annual period by the aggregate amount of all private placement fees paid or reimbursed by Fund III in connection with the organization and funding of Fund III prior to such semi-annual period, but only to the extent that the aggregate Management Fee previously payable to Fund III has not been reduced by such private placement fees. Prior to any reduction of the Management Fee, any unapplied Fund III Offset Amount must first be used to reduce unconsummated transaction costs otherwise reimbursable by Fund III. In the event that the aggregate amount of such fees applied against the Management Fee exceeds the Management Fee for the immediately succeeding semi- annual period, such excess will be carried forward to reduce the Management Fee payable in the following semi-annual periods. To the extent any such excess remains unapplied upon termination of Fund III, each Fund III limited partner will receive from Manager III its pro rata share (based on commitments) of such unapplied excess unless such limited partner has previously notified ACP GP III in writing of its irrevocable election not to receive its pro rata share of such excess. Fund III will be responsible for all expenses (other than normal overhead expenses of managing Fund III, including compensation for AME employees, rent, utilities and other administrative expenses) incurred by or on behalf of Fund III which are not reimbursed by portfolio companies, including legal, auditing, consulting, financing and accounting fees and expenses, expenses associated with Fund III’s financial statements, tax returns and K-1s, out-of-pocket expenses of transactions not consummated, other expenses associated with the acquisition, holding and disposition of the Fund’s investments, including interest on and fees and costs arising out of any borrowings made by Fund III, insurance, extraordinary expenses (such as litigation, if any), any taxes, fees or other governmental charges levied against Fund III, broken deal expenses (including broken deal expenses relating to transactions that have been offered to co-investors), management fees, fund raising expenses, organizational expenses and expenses of periodic meetings of the limited partners. The limited partners of Fund III will be assessed periodically for such expenses in accordance with their capital commitments. ACP GP III will have the right to reimburse itself for any partnership expenses it incurred prior to making any distributions to limited partners of Fund III. The Management Fee will be further reduced in the circumstances and by the amounts described in the Limited Partnership Agreement. Fund IV Fund IV pays Manager IV a Management Fee calculated each calendar quarter equal to 2.0% of aggregate Fund IV limited partner commitments per annum, payable quarterly in advance and prorated in the event of any partial period. Effective on the first day after the earliest of the following dates: (i) the sixth anniversary of the effective date of the Fund IV Limited Partnership Agreement, (ii) the date ACP GP IV receives written notice in connection with early termination of Fund IV pursuant to the Fund IV Limited Partnership Agreement, (iii) the date on which ACP GP IV or its affiliate first receives or begins to accrue management fees with respect to a pooled investment fund, formed after Fund IV, with objectives substantially similar to those of Fund IV and (iv) the first anniversary of the date after which there ceases to be at least three approved executive officers (i.e., any of Matthew L. Altman, Michael H. Lustbader, Peter M. Manos and any other officer selected by ACP GP IV and approved by a majority of the limited partners to be an approved executive officer), active in Fund IV’s affairs, the Management Fee will be reduced to 1.5% per annum of contributions made for investments less contributions made for realized investments, as set forth in the Fund IV Limited Partnership Agreement. The Management Fee, as determined on a quarterly basis, will be reduced by an amount equal to 100% of Fund IV’s allocable portion of any break-up fees, transaction fees and monitoring fees received by ACP GP IV, Manager IV or any of their respective managers, partners, members, shareholders, officers or employees in their capacities as such from Fund IV portfolio companies, during the immediately preceding quarterly period (the “Fund IV Offset Amount”). In addition, the Management Fee payable in any quarterly period will be reduced by an amount equal to the aggregate amount of all placement fees and excess organizational expenses paid or reimbursed by Fund IV prior to such period, but only to the extent that the aggregate Management Fee previously payable to Fund IV has not been reduced by such placement fees or excess organizational expenses. Prior to any reduction of the Management Fee, any unapplied Fund IV Offset Amount must first be used to reduce unconsummated transaction costs otherwise reimbursable by Fund IV. In the event that the aggregate amount of such fees to be applied against the Management Fee exceeds the Management Fee for such quarterly period, such excess will be carried forward to reduce the Management Fee payable in the following quarterly periods. To the extent any such excess remains unapplied upon termination of Fund IV, each Fund IV limited partner will receive from Manager IV its pro rata share (based on commitments) of such unapplied excess unless such limited partner has previously notified ACP GP IV in writing of its irrevocable election not to receive its pro rata share of such excess. Fund IV will be responsible for all fees, costs, expenses, liabilities and obligations (other than normal overhead expenses of managing Fund IV, including compensation for AME employees, rent, utilities and other administrative expenses) relating to Fund IV’s and/or its subsidiaries’ activities, investments and business which are not borne or reimbursed by portfolio companies or potential portfolio companies (which reimbursement may be for travel and any other expenses incurred in connection with such portfolio company) or applied to reduce transaction fees, including without limitation, (i) all fees, costs, expenses, liabilities and obligations attributable to structuring, organizing, acquiring, holding, financing, refinancing, managing, operating, taking public or private, valuing, winding up, liquidating, dissolving and disposing of Fund IV’s investments (including, without limitation, interest and fees on money borrowed by Fund IV, Manager IV, ACP GP IV or any of their affiliates on behalf of Fund IV, registration expenses, commitment, real estate title, survey, brokerage, finders’, custodial and other fees); (ii) legal, accounting, administration, custodian, depositary, auditing, travel, litigation and indemnification costs and expenses, judgments and settlements, consulting (including consulting and retainer fees paid to Operating Executives (as defined below) or any member thereof, consultants performing investment initiatives and other similar consultants), brokerage, finders’, financing, appraisal, third party valuation, filing, printing, title, transfer, registration and other fees and expenses (including, without limitation, fees, costs and expenses associated with the preparation and delivery of Fund IV’s quarterly and annual reports, financial statements, tax returns, tax estimates and Schedule K-1s (including, without limitation, fees and expenses incurred in connection with the presentation and delivery of such statements via an electronic reporting medium) or any other administrative, regulatory or other Fund IV-related reporting or filing (including any Fund IV-related filings or reports contemplated by the Alternative Investment Fund Managers Directive or any similar law, rule or regulation)); (iii) all insurance premiums or similar expenses incurred by Fund IV or ACP GP IV in connection with the activities and management of Fund IV (including, without limitation, fidelity insurance, directors and officers and errors and omissions liability insurance and representations and warranties liability insurance); (iv) the cost of maintaining records and books of account in relation to the business of Fund IV; (v) all costs and expenses incurred as a result of termination of Fund IV and the distribution, realization or disposal of investments and other Fund IV assets pursuant thereto; (vi) all costs and expenses of any threatened or actual litigation or other dispute resolution process involving Fund IV and the amount of any judgment or settlement paid in connection therewith, excluding, however, the costs and expenses of any litigation or other dispute resolution process, judgment or settlement with respect to which an indemnitee is not entitled to indemnity pursuant to the Fund IV Limited Partnership Agreement; (vii) fees, costs and expenses of the Fund IV advisory committee incurred in accordance with the Fund IV Limited Partnership Agreement, (viii) all out-of-pocket fees, costs, expenses, liabilities and obligations incurred by Fund IV, ACP GP IV, Manager IV or any of their affiliates relating to investment and disposition opportunities for Fund IV not consummated (including, without limitation, legal, accounting, auditing, insurance, travel, consulting (including consulting and retainer fees paid to Operating Executives, consultants performing investment initiatives and other similar consultants), brokerage, finders’, financing, appraisal, filing, printing, real estate title, survey, reverse breakup, termination and other fees and expenses (including broken deal expenses relating to transactions that have been offered to co-investors, if any); (ix) all out- of-pocket fees, costs and expenses incurred by Fund IV, ACP GP IV, Manager IV or any of their affiliates in connection with the annual and other periodic (if any) meetings of the Fund IV limited partners and any other conference or meeting with any Fund IV limited partner(s); (x) the Management Fee; (xi) any taxes, fees and other governmental charges levied against Fund IV; (xii) placement fees and any expenses paid to third parties in connection with the organization and funding of Fund IV; (xiii) costs and expenses that are classified as extraordinary expenses under GAAP; (xiv) all fees, costs and expenses incurred in connection with the organization, management, operation, and dissolution, liquidation and final winding up of any alternative investment vehicles; (xv) organizational expenses; and (xvi) unreimbursed expenses and unpaid fees of the Operating Executives or members thereof. The limited partners of Fund IV will be assessed periodically for such expenses in accordance with their capital commitments. ACP GP IV will have the right to reimburse itself for any partnership expenses it incurred prior to making any distributions to limited partners of Fund IV. The Management Fee will be further reduced in the circumstances and by the amounts described in the Fund IV Limited Partnership Agreement.
Other Information
The Advisers are permitted to exempt certain investors in the Funds from payment of all or a portion of Management Fees, such as “friends and family” of Arlington or its personnel, or other investors meeting certain qualification requirements. Any such exemption from fees may be made by a direct exemption, a rebate by the Managers or through investment vehicles that co- invest with a Fund. For example, in instances where an Arlington professional or its affiliate invests in a Fund, such professional or its affiliate generally will be exempt from payment of the Management Fee and Carried Interest (as defined below) with respect to such Fund. In general, the offsets described under “Management Fees” above apply only with respect to the capital commitments of fee-paying investors. The Funds generally invest on a long-term basis. Accordingly, investment advisory and other fees are expected to be paid, except as otherwise described in the Limited Partnership Agreements, over the term of the Funds and Fund limited partners are generally not permitted to withdraw or redeem interests in the Funds. Owners or other current or former employees of the Advisers receive salaries and other compensation derived from, and in certain cases including a portion of, the Management Fee, Carried Interest or other compensation received by the Advisers or their affiliates. Arlington and/or its affiliates generally have discretion over whether to charge transaction fees, monitoring fees or other compensation to a portfolio company and, if so, the rate, timing and/or amount of such compensation. The receipt of such compensation generally will give rise to conflicts of interest between the Funds, on the one hand, and Arlington and/or its affiliates on the other hand. The Funds may include alternative investment vehicles established from time to time in order to permit one or more investors to participate in one or more particular investment opportunities in a manner desirable for tax regulatory or other reasons. Alternative investment vehicle sponsors generally have limited discretion to invest the assets of these vehicles independent of limitations or other procedures set forth in the organizational documents of such vehicles and the related Fund. In certain circumstances, one Fund is expected to pay an expense common to multiple Funds (including without limitation legal expenses for a transaction in which all such Funds participate, or other fees or expenses in connection with services the benefits of which are received by other Funds over time), and be reimbursed by the other Funds by their share of such expense, without interest. While highly unlikely, it is possible that one of the other Funds could default on its obligation to reimburse the paying Fund. In certain circumstances, Arlington is expected to advance amounts related to the foregoing and receive reimbursement from the Funds to which such expenses relate. As described above, in certain circumstances, Arlington is expected to permit certain investors to co-invest in portfolio companies alongside one or more Funds, subject to Arlington’s related policies and the relevant Limited Partnership Agreement(s) and/or Side Letter(s). Where a co-invest vehicle is formed, such entity will bear expenses related to its formation and operation, many of which are similar in nature to those borne by the Funds. In the event that a transaction in which a co-investment was planned, including a transaction for which a co-investment was believed necessary in order to consummate such transaction or would otherwise have been beneficial, in the judgment of the relevant General Partner, ultimately is not consummated, all broken deal expenses relating to such proposed transaction will be borne by the Fund(s), and not by any potential co-investors, that were to have participated in such transaction. In certain circumstances, Arlington expects that co-investors or other parties will negotiate the right to share a portion of fees relating to a particular investment, and the above-described Management Fee offset percentages will be applied after excluding any amounts paid to such persons.
Operating Executives
Additionally, as further described herein and in the applicable Private Placement Memorandum and/or Limited Partnership Agreement of each Fund, it is Arlington’s practice to use or retain certain operating executives (each, an “Operating Executive”) to provide services to (or with respect to) one or more Funds or certain current or prospective portfolio companies in which one or more Funds invest. Such Operating Executives generally provide services in relation to the identification, acquisition, due diligence, holding, improvement and disposition of portfolio companies, including operational aspects of such companies. In certain circumstances, these services also include serving in management or policy-making positions for portfolio companies. Operating Executives receive compensation, including, but not limited to cash fees, retainers, transaction fees, a profits or equity interest in a portfolio company, remunerations from Arlington and/or its Funds or affiliates, or other compensation, which typically is determined according to one or more methods, including the value of the time (including an allocation for overhead and other fixed costs) of such Operating Executives, a percentage of the value of the portfolio company, the invested capital exposed to such portfolio company, amounts charged by other providers for comparable services and/or a percentage of cash flows from such company. Operating Executives also generally will be reimbursed for certain travel and other costs in connection with their services. As described above, no such compensation or reimbursed amounts will offset the Management Fee. The use of Operating Executives subjects the Advisers to conflicts of interest, as discussed under “Conflicts of Interest,” below. please register to get more info

AME does not directly receive a carried interest allocation (“Carried Interest”) for its advisory services to the Funds. Rather, each of ACP GP II, ACP GP III and ACP GP IV receives a Carried Interest equal to 20% of all aggregate realized profits from each of Fund II, Fund III and Fund IV, respectively, as more fully described in the applicable Fund’s Limited Partnership Agreement. Upon dissolution of any of the Funds, and with respect to Fund IV, at the end of such Fund’s commitment period and each of the second and fourth anniversary thereof, the relevant General Partner shall be obligated to return to the relevant Fund the greater of (i) the amount such that each limited partner receives its contributed capital plus a preferred return of 8% per annum, or (ii) the amount (if positive) of distributions that such General Partner received in the aggregate, in excess of 20% of such Fund’s cumulative net profits. Any amount repaid to a Fund cannot exceed the after-tax amount of Carried Interest that is distributed to such Fund’s General Partner. The Advisers do not advise Funds not subject to a Carried Interest, although the Advisers generally have the authority to waive Carried Interest with respect to certain affiliated partners as described under “Fees and Compensation.” The existence of performance-based compensation has the potential to create an incentive for the Advisers to make more speculative investments on behalf of a Fund than they would otherwise make in the absence of such an arrangement, although Arlington generally considers performance-based compensation to better align its interests with those of its investors. please register to get more info

AME provides investment advice to the Funds. Certain of the Funds include investment partnerships or other investment entities formed under domestic or foreign laws and operated as exempt investment pools under the Investment Company Act of 1940, as amended. The investors participating in the Funds may include individuals, banks or thrift institutions, other investment entities, university endowments, sovereign wealth funds, family offices, pension and profit-sharing plans, trusts, estates or charitable organizations or other corporations or business entities and may include, directly or indirectly, principals or other employees of AME and its affiliates and members of their families, or other service providers retained by AME. Fund II, Fund III and Fund IV are closed to new investors. Otherwise, however, Fund II, Fund III and Fund IV each has a stated minimum investment amount of $5 million for third-party investors though such limits were waived for certain investors. The Funds’ interests were offered and sold solely to accredited investors within the meaning of the rules promulgated under the U.S. Securities Act of 1933, as amended (the “Securities Act”) who are also qualified clients (or qualified knowledgeable employees or owners of the Advisers). please register to get more info

General
Arlington intends to make control position investments primarily in U.S. middle-market companies operating within certain government-regulated and adjacent verticals, including: (i) aerospace & defense; (ii) government services & technology; (iii) healthcare; and (iv) business services & software (collectively, the “ACP Verticals”). There can be no assurance that the Advisers will achieve the investment objectives of any Fund and a loss of investment is possible.
Investment and Operating Strategy
Arlington employs a thesis-driven approach to capitalize on opportunities in the ACP Verticals, identifying sub-themes within the ACP Verticals that demonstrate strong, sustainable growth characteristics. Specifically, Arlington targets companies operating in fragmented industries, amenable to a buy-and-build strategy, serving unwavering bi-partisan priorities with long-term funding and growth trends, as Arlington believes these companies can help insulate the Funds’ portfolios’ sensitivity to change due to political trade winds. Arlington seeks to make investments in companies that it believes possess identifiable “Franchise Value”, which Arlington defines as sustainable and differentiating characteristics that create the potential for strategic value and, therefore, premium valuations upon exit. In Arlington’s view, characteristics emblematic of such Franchise Value typically include: (i) high barriers-to-entry or substitution; (ii) deeply rooted customer relationships; (iii) distribution capabilities that are difficult to replicate; (iv) regulatory protection; (v) defensible or enduring cost structure advantages; and (vi) proprietary technology or specialized processes. Arlington seeks to leverage its Washington, D.C. network and contacts throughout the U.S. when operating in regulated industries that possess stable and defensive characteristics, such as aerospace & defense; government services & technology; healthcare; and business services & software. Arlington believes that companies with identifiable Franchise Value in the middle market, particularly in the ACP Verticals, can significantly enhance their appeal to larger strategic acquirers who are seeking to expand their footprint in the sector or sub-sector given the high barriers to entry and extensive regulatory framework. Investment Approach Arlington’s investment approach is designed to source quality investment opportunities in its ACP Verticals while maintaining strict pricing and leverage discipline. Key elements of Arlington’s approach include but are not limited to the following:
• partnering with industry veterans possessing significant knowledge in a specific industry and who have many years of experience running businesses (an “Operating Executive”);
• a highly disciplined approach to pricing and leverage;
• being a preferred partner to founding management;
• creatively structuring investments to bridge valuation gaps and mitigate risk;
• investing in repeatable themes and continuing strategies that Arlington believes present compelling investment opportunities for multiple funds; and
• seeking accelerated value creation through add-on investments. Investment Process Arlington adheres to a disciplined investment process to source, diligence, manage and exit its investments. Managing Policy Risk Arlington believes its thesis-driven approach to investing enables it to manage market risk at the beginning of the investment process. Arlington focuses on identifying sustainable, long- term trends within the ACP Verticals that serve bi-partisan initiatives with the potential to transcend administration and congress change. Arlington believes it is able to accurately identify these trends through information provided through its Washington, D.C. network and other contacts throughout the U.S. around potential shifts in policy and priorities, enabling Arlington to shape or adjust its overall view of the direction of the sectors. Sourcing Arlington focuses on proactive generation of investment opportunities outside of highly competitive bidding processes. Arlington believes that its visibility and local network in Washington, D.C. and throughout the U.S. provide a competitive advantage in originating opportunities within industries that are government-regulated or adjacent to them. Due Diligence In advance of committing significant resources of the Funds to a given opportunity, Arlington will assess: (i) its relevant industry experience, either in-house or through an Operating Executive; (ii) the potential for post-investment value creation; (iii) the pricing expectations and non-economic motivations of the seller; (iv) key risk factors and potential mitigants; and (v) transaction timing and structuring considerations. Transaction Structuring Arlington typically maintains control of the board of directors of each of its portfolio companies, which generally provides Arlington with the necessary control to make any changes at the companies it deems necessary. The independent board members of Arlington’s portfolio companies have included former admirals, generals, presidential cabinet members, ambassadors, and congressmen, as well as prominent industry executives, senior policy/secretarial department officials and former Arlington portfolio company CEOs that are invited to sit on the boards of existing portfolio companies. Arlington’s investment professionals have a particular expertise in structuring transactions with founding management that seeks to optimize the financial and operational benefits for the business. In structuring transactions, Arlington will apply reasonable levels of debt financing and will seek to provide Arlington with sufficient downside protection. Investment Oversight Arlington believes that making control investments and taking an active role post- acquisition is critical to generating returns. As such, Arlington is involved post-investment in its portfolio companies and actively works with its portfolio companies to identify and complete add- on and strategic acquisitions, access new government contracts and clients, improve operations, augment and upgrade management teams as needed, introduce outside industry executives and board members, and refine company business models as necessary. The growth plan and operational objectives for a company are set forth in Arlington’s investment thesis and continually evaluated in light of current economic conditions and market opportunities. Exit Planning Arlington’s plans for exit begin prior to the closing of an investment. During the due diligence process, Arlington assesses the attractiveness of the industry segment and the prospect for multiple exit opportunities. Prior to committing capital to a portfolio company, Arlington seeks to identify the likely exit options, including not only sales to strategic buyers, but also sales to financial buyers, public equity offerings and recapitalizations. Arlington’s investment professionals analyze the viability of anticipated exit strategies during the investment decision-making process and potential exit opportunities are continually evaluated throughout Arlington’s ownership of the portfolio investment.
Risks of Investment
In addition to the general risks of loss associated with the Funds’ investments, prospective investors should carefully consider the following risk factors. As a result of these factors, as well as other risks inherent in any investment, there can be no assurance that any Fund will meet its investment objectives or otherwise be able to successfully carry out its investment program. Economic and Industry Risk Although investments of the type sought by the Funds offer the opportunity for attractive returns, such investments are sensitive to any general downward swing in the economy or in the industrial, government or economic sectors in which the acquired business operates. The Funds’ investments consequently involve a high degree of financial risk, and the possibility of partial or total loss of capital exists. Prospective investors should not subscribe unless they can readily bear the consequences of such loss. Uncertain Economic, Social and Political Environment Consumer, corporate and financial confidence may be adversely affected by current or future tensions around the world, fear of terrorist activity and/or military conflicts, localized or global financial crises or other sources of political, social or economic unrest. Such erosion of confidence may lead to or extend a localized or global economic downturn. A climate of uncertainty may reduce the availability of potential investment opportunities, and increases the difficulty of modeling market conditions, potentially reducing the accuracy of financial projections. In addition, limited availability of credit for consumers, homeowners and businesses, including credit used to acquire businesses, in an uncertain environment or economic downturn may have an adverse effect on the economy generally and on the ability of a Fund and its portfolio companies to execute their respective strategies and to receive an attractive multiple of earnings on the disposition of businesses. This may slow the rate of future investments by a Fund and result in longer holding periods for investments. Furthermore, such uncertainty or general economic downturn may have an adverse effect upon a Fund’s portfolio companies. Market Conditions The capital markets have experienced great volatility and financial turmoil. Moreover, governmental measures undertaken in response to such turmoil (whether regulatory or financial in nature) may have a negative effect on market conditions. General fluctuations in the market prices of securities and economic conditions generally may reduce the availability of attractive investment opportunities for a Fund and may affect a Fund’s ability to make investments. Instability in the securities markets and economic conditions generally (including a slow-down in economic growth and/or changes in interest rates or foreign exchange rates) may also increase the risks inherent in a Fund’s investments and could have a negative impact on the performance and/or valuation of the portfolio companies. Fund’s performance can be affected by deterioration in the capital markets and by market events, such as the onset of the credit crisis in the summer of 2007 or the downgrading of the credit rating of the United States in 2011, which, among other things, can impact the public market comparable earnings multiples used to value privately held portfolio companies and investors’ risk-free rate of return. Movements in foreign exchange rates may adversely affect the value of investments in portfolio companies and a Fund’s performance. Volatility and illiquidity in the financial sector may have an adverse effect on the ability of a Fund to sell and/or partially dispose of its portfolio company investments. Such adverse effects may include the requirement of a Fund to pay break-up, termination or other fees and expenses in the event such Fund is not able to close a transaction (whether due to the lenders’ unwillingness to provide previously committed financing or otherwise) and/or the inability of a Fund to dispose of investments at prices that the relevant General Partner believes reflect the fair value of such investments. The impact of market and other economic events may also affect a Fund’s ability to raise funding to support its investment objective. Deterioration of Credit Markets May Affect Ability to Finance and Consummate Investments A deterioration of the global credit markets can make it more difficult for investment funds such as the Funds to obtain favorable financing for investments. A widening of credit spreads, coupled with the deterioration of the sub-prime and global debt markets and a rise in interest rates, for example, will likely reduced investor demand for high yield debt and senior bank debt significantly, which can in turn lead some investment banks and other lenders to be unwilling to finance new private equity investments or to only offer committed financing for these investments on unattractive terms. In the event that such marketplace events occur, a Fund’s ability to generate attractive investment returns may be adversely affected to the extent such Fund is unable to obtain favorable financing terms for its investments and such events may have an adverse impact on the availability of credit to businesses generally and could lead to an overall weakening of the U.S. and global economies. The occurrence of such marketplace events also may restrict the ability of a Fund to realize its investments at favorable times or for favorable prices. Available Investments; Limited Liquidity of Investments The leveraged buyout and private equity investment industry in which Arlington and the Funds are engaged is highly competitive. Further, the identification of suitable investments is a difficult task, and there can be no assurance that the Funds will be able to implement their investment objectives. There is no assurance that the General Partners will be able to identify sufficient attractive investment opportunities to enable the full amount of capital committed to the Funds to be invested. However, Fund limited partners will be required to bear annual management fees through the applicable Fund during the commitment period based on the entire amount of the limited partners’ commitments to such Fund and other expenses as set forth in the applicable Limited Partnership Agreement. The General Partners also may encounter significant competition for many of the investments selected. Many of Arlington’s competitors may have greater financial and other resources and may have better access to suitable investment opportunities. Furthermore, investments made by the Funds, to a large degree, will have limited liquidity. The Funds’ exit strategies with respect to one or more investments can be affected adversely by numerous factors, many of which may be unforeseen or unexpected at the time each investment is made. Moreover, the limited liquidity of investments may adversely affect the Funds’ abilities to implement exit strategies in the face of unexpected developments. No Assurance of Profit, Cash Distributions, or Appreciation, or Rate of Return The Funds are entirely dependent upon Arlington and the Partners. While the General Partners intend to make investments that have estimated returns commensurate with the risks undertaken, there can be no assurance of success. There can be no assurance that investments by the Funds will achieve returns comparable to those achieved in the transactions undertaken previously by Arlington or will achieve targeted returns, or even that an investment, once made, will be profitable and that an investor’s interest in such investment will have economic value. Further, a Fund’s investment portfolio may consist primarily of securities issued by privately held companies, and operating results in a specific period will be difficult to predict. Such investments involve a high degree of business and financial risk that can result in substantial losses. Historical returns achieved by Arlington in the Funds are not predictions of future performance. There can be no assurance that investments will generate cash flow available for distribution to investors or that the General Partners will be able to liquidate investments on favorable terms. No Diversification Requirement; Junior Securities; Risk of Loss The Limited Partnership Agreements permit the General Partners to invest a certain percentage of total commitments in a single investment. Although the General Partners expect that the Funds will have a moderate degree of diversification, the General Partners are authorized, at any time, to invest its assets in only a few investments. Thus, the unfavorable performance by investments in one industrial or economic sector could have a substantial adverse impact on the aggregate returns realized by investors. Furthermore, to the extent that the capital raised is less than the targeted amount, the Funds may invest in fewer portfolio companies and thus be less diversified. In addition, the General Partners may also make opportunistic investments in other assets that offer particularly attractive returns. Moreover, the securities in which the Funds may invest may be among the most junior in a portfolio company’s capital structure and thus subject to the greatest risk of loss. Generally, there will be no collateral to protect an investment once made. Restrictions on Transfer; No Market for Interests in the Funds; Illiquidity of Interests There are substantial restrictions upon the transferability of Fund interests under the Limited Partnership Agreements and the interests in Funds are not registered under any Federal or state securities laws or the securities laws of any other jurisdiction and therefore are subject to the restrictions on transfer contained in such laws. Investors will not be able to transfer, sell or otherwise dispose of their interests in any manner that will violate the securities laws of any jurisdiction. The interests in the Funds are not redeemable or transferable except with the consent of the General Partners, which consent the General Partners may withhold in their sole discretion. In addition, withdrawals of Fund interests are not permitted. There is no market for the interests and none is expected to develop. Consequently, investors may not be able to liquidate their interests for a lengthy period of time, which may not be prior to the time any Fund liquidates the investments it makes. In addition, any such liquidation may be in the form of non-cash distributions to the investors. An investment in any Fund should be viewed as an illiquid investment. It is uncertain as to when profits, if any, will be realized. Losses on unsuccessful investments may be realized before gains on successful investments are realized. The return of capital and the realization of gains, if any, generally will occur only upon the partial or complete disposition of an investment. While an investment may be sold at any time, it is generally expected that this will not occur for a number of years after the initial investment. Before such time, there may be no current return on the investment. Furthermore, the expenses of operating a Fund (including the annual management fee payable to the relevant General Partner) may exceed such Fund’s income, thereby requiring that the difference be paid from such Fund’s capital, including unfunded commitments. Lack of Sufficient Investment Opportunities The business of identifying, structuring and completing private equity transactions is highly competitive and involves a high degree of uncertainty. It is possible that a Fund will never be fully invested if enough sufficiently attractive investments are not identified. However, a Fund’s limited partners will be required to bear management fees during such Fund’s commitment period based on the entire amount of such limited partners’ commitments and other expenses as set forth in the relevant Fund’s Limited Partnership Agreement. Use of Leverage The types of transactions that the Funds carry out will involve equity investments in businesses undertaking a significant amount of debt. Leverage generally magnifies both the Funds’ opportunities for gain and their risks of loss from any particular investment. The cost and availability of leverage is highly dependent on the state of the broader credit markets, which state is difficult to accurately forecast. During times when credit markets are tight, it may be difficult to obtain or maintain the desired degree of leverage. The use of borrowed funds increases the sensitivity of such investments to adverse economic and commercial developments, competitive pressures, an adverse economic environment, as well as to risks relating to fluctuations in interest rates and could accelerate and magnify declines in the value of any Fund’s investments in the leveraged portfolio companies in a down market. Moreover, lenders of borrowed funds will likely insist on the inclusion of affirmative and negative covenants that may affect the operating flexibility of particular investments, in addition to the burden of debt service, and may impair a leveraged portfolio company’s ability to finance future operations and capital needs. In the event any portfolio company cannot generate adequate cash flow to meet its debt service, any Fund may suffer a partial or total loss of capital invested in the portfolio company, which could adversely affect the returns of such Fund. Furthermore, should the credit markets be tight at the time a Fund determines that it is desirable to sell all or a part of a portfolio company, such Fund may not achieve an exit multiple or enterprise valuation consistent with its forecasts. Moreover, the companies in which a Fund will invest generally will not be rated by a credit rating agency. A Fund may also borrow money or guaranty indebtedness (such as a guaranty of a portfolio company’s debt) or otherwise be liable therefor, and in such situations, it is not expected that such Fund would be compensated for providing such guarantee or exposure to such liability. The use of leverage by a Fund also will result in interest expense and other costs to such Fund that may not be covered by distributions made to such Fund or appreciation of its investments. A Fund may incur leverage on a joint and several basis with one or more other investment funds and entities managed by the Advisers and may have a right of contribution, subrogation or reimbursement from or against such entities. In addition, to the extent a Fund incurs leverage (or provides such guaranties), such amounts may be secured by capital commitments made by such Fund’s investors and such investors’ contributions may be required to be made directly to the lenders instead of such Fund. Subscription Lines A Fund may enter into a subscription line with one or more lenders in order to finance its operations (including the acquisition of the Fund’s investments). Fund-level borrowing subjects limited partners to certain risks and costs. For example, because amounts borrowed under a subscription line typically are secured by pledges of the relevant General Partner’s right to call capital from the limited partners, limited partners may be obligated to contribute capital on an accelerated basis if the Fund fails to repay the amounts borrowed under a subscription line or experiences an event of default thereunder. Moreover, any limited partner claim against the Fund would likely be subordinate to the Fund’s obligations to a subscription line’s creditors. In addition, Fund-level borrowing will result in incremental partnership expenses that will be borne by investors. These expenses typically include interest on the amounts borrowed, unused commitment fees on the committed but unfunded portion of a subscription line, an upfront fee for establishing a subscription line, and other one-time and recurring fees and/or expenses, as well as legal fees relating to the establishment and negotiation of the terms of the borrowing facility. Because a subscription line’s interest rate is based in part on the creditworthiness of the relevant Fund’s limited partners and the terms of the applicable Limited Partnership Agreement, it may be higher than the interest rate a limited partner could obtain individually. To the extent a particular limited partner’s cost of capital is lower than the Fund’s cost of borrowing, Fund-level borrowing can negatively impact a limited partner’s overall individual financial returns even if it increases the Fund’s reported net returns in certain methods of calculation. A credit agreement may contain other terms that restrict the activities of a Fund and the limited partners or impose additional obligations on them. For example, a subscription line may impose restrictions on the relevant General Partner’s ability to consent to the transfer of a limited partner’s interest in the Fund. In addition, in order to secure a subscription line, the relevant General Partner may request certain financial information and other documentation from limited partners to share with lenders. The General Partner will have significant discretion in negotiating the terms of any subscription line and may agree to terms that are not the most favorable to one or more limited partners. Fund-level borrowing involves a number of additional risks. For example, drawing down on a subscription line allows the General Partner to fund investments and pay partnership expenses without calling capital, potentially for extended periods of time. Calling a large amount of capital at once to repay the-then current amount outstanding under a subscription line could cause short- term liquidity concerns for limited partners that would not arise had the relevant General Partner called smaller amounts of capital incrementally over time as needed by a Fund. This risk would be heightened for a limited partner with commitments to other funds that employ similar borrowing strategies or with respect to other leveraged assets in its portfolio; a single market event could trigger simultaneous capital calls, requiring the limited partner to meet the accumulated, larger capital calls at the same time. A Fund may also utilize Fund-level borrowing when the General Partner expects to repay the amount outstanding through means other than Limited Partner capital, including as a bridge for equity or debt capital with respect to an investment. If the Fund ultimately is unable to repay the borrowings through those other means, limited partners would end up with increased exposure to the underlying investment, which could result in greater losses. Risk of Temporary Financing To the extent a Fund provides bridge financing to facilitate portfolio company investments, it is possible that all or a portion of such bridge financing will not be recouped within the time period specified in the relevant Limited Partnership Agreement, in which case the investment would be treated as a permanent investment of the Fund. As a result, the Fund’s portfolio could become more concentrated with respect to such investment than initially expected or otherwise provided for under the Fund’s investment limitations. Restricted Nature of Investment Positions Generally, there will be no readily available market for a substantial number of any Fund’s investments, and hence, most of such Fund’s investments will be difficult to value. Certain investments may be distributed in kind to the limited partners of a Fund and it may be difficult to liquidate the securities received at a price or within a time period that is determined to be ideal by such partners. After a distribution of securities is made to the partners, many partners may decide to liquidate such securities within a short period of time, which could have an adverse impact on the price of such securities. The price at which such securities may be sold by such partners may be lower than the value of such securities determined pursuant to the applicable Limited Partnership Agreement, including the value used to determine the amount of Carried Interest available to the Advisers with respect to such investment. Importance of Certain Personnel Control over the operation of the Funds will be vested entirely with the Advisers, and any Fund’s future profitability will depend largely upon the business and investment acumen of the Partners. The loss or reduction of service of one or more of the Partners could have an adverse effect on such Fund’s ability to realize its investment objectives. In addition, subject to the requirements set forth in the relevant Limited Partnership Agreement(s), the Advisers currently, and may in the future, manage other investment funds besides the currently-existing Funds and Arlington’s investment professionals may need to devote substantial amounts of their time to the investment activities of such other funds, which may pose conflicts of interest in the allocation of the time of Arlington’s investment professionals. Fund limited partners generally have no right or power to take part in the management of the Funds, and as a result, the investment performance of any Fund will depend entirely on the actions of the Advisers. Although the General Partners will monitor the performance of each Fund investment, it will primarily be the responsibility of each portfolio company’s management to operate such portfolio company on a day to day basis. Although the Funds generally intend to invest in companies with strong management or recruit strong management to such companies, there can be no assurance that the management of such companies will be able or willing to successfully operate a company in accordance with the relevant Fund’s objectives. Projections Projected operating results of a company in which a Fund invests will be based primarily on financial projections prepared by such company’s management, with adjustments to such projections made by the relevant General Partner in its discretion. In all cases, projections are only estimates of future results that are based upon information received from the company and third parties and assumptions made at the time the projections are developed. There can be no assurance that the results set forth in the projections will be attained, and actual results may be significantly different from the projections. Also, general economic factors, which are not predictable, can have a material effect on the reliability of projections. Conflicting Investor Interests Fund limited partners may have conflicting investment, tax, and other interests with respect to their investments in the Funds, including conflicts relating to the structuring of investment acquisitions and dispositions. Conflicts may arise in connection with decisions made by a General Partner regarding an investment that may be more beneficial to one Limited Partner than another, especially with respect to tax matters. In structuring, acquiring and disposing of investments, the General Partner generally will consider the investment and tax objectives of the respective Fund and its limited partners as a whole, not the investment, tax, or other objectives of any Limited Partner individually. Need for Follow-On Investments Following its initial investment in a given portfolio company, a Fund may decide to provide additional funds to such portfolio company or may have the opportunity to increase its investment in a portfolio company, whether for opportunistic reasons, to fund the needs of the business, as an equity cure under applicable debt documents or for other reasons. There is no assurance that any Fund will make follow-on investments or that any Fund will have sufficient funds to make all or any of such investments. Any decision by a Fund not to make follow-on investments or its inability to make such investments may have a substantial negative effect on a portfolio company in need of such an investment (including an event of default under applicable debt documents in the event an equity cure cannot be made) or may result in a lost opportunity for such Fund to increase its participation in a successful operation. Lack of Investor Participation No investor has the right, power or authority to participate in the ordinary and routine management of any Fund’s affairs or to exercise any control over the decisions of the General Partners. The General Partners have the exclusive right to manage, control and operate the affairs and business of the Funds and to make all decisions relating thereto. Accordingly, no prospective investor should purchase any interests unless such prospective investor is willing to entrust all aspects of management to the respective General Partner. Although Arlington actively monitors the status of its investments and the performance of the officers and managers operating portfolio companies, the success of an investment will depend, to a large extent, upon the quality of the officers and managers of each portfolio company. Investors have no right or power to take part in or direct the management of any investment. Failure To Satisfy Investment Calls If investors fail to satisfy capital calls, the ability of the Funds to make investments would be adversely affected. If an investor fails to satisfy a capital call, it is obligated to pay interest on the capital call obligation until satisfied by such investor or any other investor or investors. In addition, non-defaulting investors have the right to purchase the defaulting investor’s interest in the applicable Fund for its defaulted value (as defined in the Partnership Agreement), provided that such non defaulting investors satisfy the defaulting investor’s pending capital call and agree to satisfy the defaulting investor’s future capital call obligation. As a result, an investor who fails to satisfy capital calls risks losing a portion of its investment in the applicable Fund. Board Participation Each General Partner seeks to have its respective Fund represented on the boards of directors (or comparable governing bodies) of certain of their portfolio companies. While such representation is expected to enhance each Fund’s ability to manage its investments, it may also impair a Fund’s ability to sell the related securities because such Fund may be subject to fiduciary duties and other potential legal claims. The Funds will indemnify the respective fund manager for claims arising from such board representation, respectively. Serving on the board of directors of a portfolio company exposes each Fund’s representatives, and ultimately such Fund, to potential liability. Not all portfolio companies may obtain insurance with respect to such liability, and the insurance that portfolio companies do obtain may be insufficient to adequately protect officers and directors from such liability. Investments in Countries Outside the United States The Funds may invest in portfolio companies that are organized or headquartered or have substantial sales or operations outside of the United States, its territories, and possessions. Such investments may be subject to additional risks due to, among other things, potentially unsettled points of applicable governing law, the risks associated with fluctuating currency exchange rates, capital repatriation regulations (as such regulations may be given effect during the term of the relevant Fund), the application of complex U.S. and non-U.S. tax rules to cross-border investments, possible imposition of non-U.S. taxes on such Fund and/or such Fund’s limited partners with respect to such Fund’s income, and possible non-U.S. tax return filing requirements for such Fund and/or such Fund’s limited partners. Additional risks of non-U.S. investments include: (a) economic dislocations in the host country; (b) less publicly available information; (c) less well-developed and/or more restrictive laws, regulations, regulatory institutions and judicial systems; (d) greater difficulty of enforcing legal rights in a non-U.S. jurisdiction; (e) civil disturbances; (f) government instability; and (g) nationalization and expropriation of private assets. Moreover, non-U.S. companies may not be subject to uniform accounting, auditing and financial reporting standards, practices and requirements comparable to those that apply to U.S. companies. Significant Adverse Consequences for Default The Limited Partnership Agreements provide for significant adverse consequences in the event a Fund limited partner defaults on its commitment or other payment obligations. In addition to losing its right to potential distributions from a Fund, a defaulting Fund limited partner may be forced to transfer its interest in such Fund for an amount that is less than the fair market value of such interest and that may be paid over a period of up to ten years, without interest. Dilution Limited partners admitted or that increase their respective commitments to a Fund at subsequent closings will participate in then–existing investments of such Fund, thereby diluting the interest of existing limited partners in such investments. Although any such new Fund limited partner may be required to contribute its pro rata share of previously made capital contributions, there can be no assurance that this contribution will reflect the fair value of such Fund’s existing investments at the time of such contributions. A General Partner’s Carried Interest The fact that a General Partner’s carried interest is based on a percentage of net profits has the potential to create an incentive for such General Partner to cause a Fund to make riskier or more–speculative investments than it otherwise would make in the absence of such an arrangement, although Arlington generally considers performance-based compensation to better align its interests with those of its investors. Co-Investments The Advisers may, in their sole discretion, provide or commit to provide co-investment opportunities to one or more Fund limited partners and/or other persons. Conflicts of interest may arise in the allocation of such co-investment opportunities. The allocation of co-investment opportunities, which may be made to one or more persons for any number of reasons as determined by the Advisers in their sole discretion, may not be in the best interests of a Fund or any applicable individual Fund limited partner. In exercising their sole discretion in connection with such co- investment opportunities, the Advisers may consider some or all of a wide range of factors, which may include the likelihood that an investor may invest in a future fund sponsored by the Advisers. Any Fund may co-invest with third parties through partnerships, joint ventures or other entities or arrangements. Such investments may involve risks not present in investments where a third-party is not involved, including the possibility that a third-party co-venturer or partner may at any time have economic or business interests or goals that are inconsistent with those of the relevant Fund, or may be in a position to take action contrary to the investment objectives of such Fund. In addition, a Fund may in certain circumstances be liable for actions of its third-party co-venturer or partner. Public Company Holdings A Fund’s investment portfolio may contain debt and/or equity securities issued by publicly held companies. Such investments may subject such Fund to risks that differ in type or degree from those involved with investments in privately held companies. Such risks include, without limitation, greater volatility in the valuation of such companies, increased obligations to disclose information regarding such companies, limitations on the ability of such Fund to dispose of such securities at certain times, increased likelihood of shareholder litigation and insider trading allegations against such companies’ executives and board members, including any Partners serving in such capacity, and increased costs associated with each of the aforementioned risks. Lack of Unilateral Control Even if a Fund is the majority investor or controlling shareholder, as applicable, of a portfolio company, in certain circumstances it may not have unilateral control of the portfolio company. To the extent a Fund invests alongside third parties, such as institutional co-investors or private equity finds of other sponsors, the relevant portfolio companies may be controlled or influenced by persons who have economic or business interests, investment or operational goals, tax strategies or other considerations that differ from or are inconsistent with those of such Fund or its limited partners. Such third parties may be in a position to take action contrary to such Fund’s business, tax or other interests, and such Fund may not be in a position to limit such contrary actions or otherwise protect the value of its investment. Hedging Arrangements; Related Regulations The relevant General Partner may (but is not obligated to) endeavor to manage a Fund’s or any applicable portfolio company’s currency exposures, interest rate exposures or other exposures, using hedging techniques where available and appropriate. Funds may incur costs related to such hedging arrangements, which may be undertaken in exchange-traded or over-the-counter (“OTC”) contexts, including futures, forwards, swaps, options and other instruments. There can be no assurance that adequate hedging arrangements will be available on an economically viable basis or that such hedging arrangements will achieve the desired effect, and in some cases hedging arrangements may result in losses greater than if hedging had not been used. In some cases, particularly in OTC contexts, hedging arrangements will subject a Fund to the risk of a counterparty’s inability or refusal to perform under a hedging contract, or the potential loss of assets held by a counterparty, custodian or intermediary in connection with such hedging. OTC contracts may expose a Fund to additional liquidity risks if such contracts cannot be adequately settled. Certain hedging arrangements may create for the relevant General Partner and/or one of its affiliates an obligation to register with the U.S. Commodity Futures Trading Commission or other regulator or comply with an applicable exemption. Losses may result to the extent that the CFTC or other regulator imposes position limits or other regulatory requirements on such hedging arrangements, including under circumstances where the ability of a Fund or a portfolio company thereof to hedge its exposures becomes limited by such requirements. Currency and Foreign Exchange Risks Each Fund’s books and records will be denominated in United States dollars, and distributions will generally be made in United States dollars. However, each Fund may make investments in other currencies, and changes in the exchange rates between such currencies and the United States dollar could have an adverse effect on each such Fund, including the amounts available for distribution and the value of securities to be distributed in-kind. Absence of Certain Statutory Regulation Neither Arlington nor the General Partners are registered as investment companies under the Investment Company Act of 1940. Therefore, investors will not have the rights or protections provided by such act. Neither Arlington nor the General Partners are registered as a broker-dealers under the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”), or with the Financial Industry Regulatory Authority (“FINRA”), and consequently are not subject to the record-keeping and specific business practice provisions of the Exchange Act or the rules of FINRA. Regulatory Compliance Certain of a Fund’s investments may result in reporting and compliance obligations under the Exchange Act and/or the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The cost of compliance will be borne by such Fund. Changes in Applicable Law The Adviser must comply, and must cause the Funds to comply with various legal requirements, including, but not limited to, requirements imposed under United States federal tax law and federal and state securities laws. If any of the laws and regulations currently in effect should change or any new laws or regulations should be enacted, the legal requirements to which the Adviser, the Funds and the investors may be subject to could differ materially from current requirements and may materially and adversely affect the Adviser, the Funds and the investors. Impact of Government Regulation, Reimbursement and Reform Certain industry segments in which a Fund may invest, including various segments of the aerospace/defense, government services, healthcare services, and business/information services industries, are (or may become) (i) highly regulated at both the federal and state levels in the United States and internationally and (ii) subject to frequent regulatory change. Certain segments may be highly dependent upon various government (or private) reimbursement programs. While each Fund intends to invest in companies that seek to comply with applicable laws and regulations, the laws and regulations relating to certain industries, including in particular the aerospace/defense, government services, healthcare services, and business/information services industries, are complex, may be ambiguous or may lack clear judicial or regulatory interpretive guidance. An adverse review or determination by any applicable judicial or regulatory authority of any such law or regulation, or an adverse change in applicable regulatory requirements or reimbursement programs, could have a material adverse effect on the operations and/or financial performance of the companies in which a Fund may invest. Monetary Policy and Governmental Intervention In response to the global financial crisis commencing in the summer of 2007, the Board of Governors of the Federal Reserve System (the “Federal Reserve”) and global central banks, including the European Central Bank, in addition to other governmental actions to stabilize markets and seek to encourage economic growth, acted to hold interest rates to historic lows. These and other actions by the Federal Reserve and other central bankers, including changes in policies, may have a significant effect on interest rates and on the U.S. and world economies generally, which in turn may affect the performance of a Fund’s investments on an absolute and/or relative basis. In addition, the consequences of the extensive changes to the regulation of various markets and market participants contemplated by the legislation and increased regulation arising out of the global financial crisis have not been fully implemented in all cases and therefore the ultimate effects thereof are difficult to predict or measure with certainty. More recently, in response to interagency guidance on leveraged lending by the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation intended to curtail certain leveraged lending to market participants such as private equity firms in connection with their investment activities, private equity funds may need to finance portfolio investments with a greater proportion of equity relative to prior periods and the terms of debt financing may be less flexible for borrowers compared to prior periods. These developments may impair a Fund’s ability to consummate transactions and/or cause such Fund to enter into transactions on less favorable terms. Enhanced Scrutiny and Certain Effects of Potential Regulatory Changes There continue to be discussions regarding enhanced governmental scrutiny and/or increased regulation of the private equity industry. There can be no assurance that any such scrutiny or regulation will not have an adverse impact on a Fund’s activities, including the ability of such Fund to effectively and timely address such regulations, implement operating improvements or otherwise execute its investment strategy or achieve its investment objectives. The combination of such scrutiny of private equity firms (along with other alternative asset managers) and their investments by various politicians, regulators and market commentators, and the public perception that certain alternative asset managers, including private equity firms, contributed to the recent downturn in the U.S. and global financial markets, may complicate or prevent a Fund’s efforts to structure, consummate and/or exit investments, both in general and relative to competing bidders outside of the alternative asset space. As a result, a Fund may invest in fewer transactions or incur greater expenses or delays in completing or exiting investments than it otherwise would have. Additionally, Congress has considered proposed legislation that would treat certain income allocations to service providers by partnerships such as the Funds (including any carried interest) as ordinary income for U.S. federal income tax purposes that under current law is treated as an allocation of the partnership’s income, which may be taxed at lower rates than ordinary income. Enactment of any such legislation, whether during or after the initial closing of a Fund, could adversely affect the ability of the principals, employees or other individuals associated with a Fund or the applicable General Partner who were or may in the future be granted direct or indirect interests in the applicable General Partner, to benefit from carried interest taxed at lower rates. This may reduce such persons’ after-tax returns from such Fund and its General Partner, which could make it more difficult for such General Partner and its affiliates to incentivize, attract and retain individuals to perform services for such Fund. These same issues may also apply to officers, directors and employees of a Fund’s portfolio companies if such persons receive a profits interest in such companies. Dynamic Investment Strategy. While each General Partner generally intends to seek attractive returns for a Fund through the investment strategy and methods described herein, the relevant General Partner may pursue additional investment strategies and may modify or depart from its initial investment strategy, investment process or investment techniques to the extent it determines such modification or departure to be appropriate and consistent with the relevant Limited Partnership Agreement(s). A General Partner may pursue investments outside of the industries and sectors in which Arlington has previously made investments or has internal operational experience. Limited Liability of Arlington and the Advisers; Indemnification The Limited Partnership Agreements provide that the General Partners, the Advisers, their respective directors, partners, members, shareholders, officers, employees, or agents will not be personally liable, responsible or accountable in damages or otherwise to the Funds or to any investor for any breach of fiduciary duty. The foregoing provisions will not be construed so as to provide for the exculpation or indemnification of any such party for any liability (including liability under federal securities laws which, under certain circumstances, impose liability even on persons that act in good faith), to the extent (but only to the extent) that such liability may not be waived, modified or limited under applicable law. The Limited Partnership Agreements also provide that, to the maximum extent permitted by applicable law, the Funds will indemnify their respective General Partners, the Advisers, and their respective affiliates and their respective directors, partners, members, shareholders, officers, employees or agents (each, an “Indemnified Person”) from and against any claims, losses, liabilities, damages, costs or expenses (including, without limitation, attorney fees, judgments and expenses in connection therewith and amounts paid in defense and settlement thereof) to which any Indemnified Person may directly or indirectly become subject in connection with the relevant Fund or in connection with any involvement with a portfolio company of such Fund (including, without limitation, serving as an officer, director, consultant or employee of any portfolio company), except for in the limited circumstances set forth in the relevant Limited Partnership Agreement. The Limited Partnership Agreements also provide that attorneys’ fees and expenses incurred by an Indemnified Person in connection with any matter for which indemnification may be sought under each Limited Partnership Agreement will be paid by the respective Fund.

Material Non-Public Information; Other Regulatory Restrictions As a result of the operations of Arlington, Arlington frequently comes into possession of confidential or material non-public information. Therefore, Arlington and its affiliates may have access to material, non-public information that may be relevant to an investment decision to be made by a Fund. Consequently, a Fund may be restricted from initiating a transaction or selling an investment which, if such information had not been known to it, may have been undertaken on account of applicable securities laws or Arlington’s internal policies. Similarly, anti-money laundering, anti-boycott and economic and trade sanction laws and regulations in the United States and other jurisdictions may prevent Arlington or the funds from entering into transactions with certain individuals or jurisdictions. The United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) and other governmental bodies administer and enforce laws, regulations and other pronouncements that establish economic and trade sanctions on behalf of the United States. Among other things, these sanctions may prohibit transactions with or the provision of services to, certain individuals or portfolio companies owned or operated by such persons, or located in jurisdictions identified from time to time by OFAC. Additionally, antitrust laws in the United States and other jurisdictions give broad discretion to the U.S. Federal Trade Commission, the United States Department of Justice and other U.S. and non- U.S. regulators and governmental bodies to challenge, impose conditions on, or reject certain transactions. In certain circumstances, antitrust restrictions relating to one Fund’s acquisition of a portfolio company may preclude other Funds from making an attractive acquisition or require one or more other Funds to sell all or a portion of certain portfolio companies owned by them. As a result of any of the foregoing, a Fund may be adversely affected because of Arlington’s inability or unwillingness to participate in transactions that may violate such laws or regulations, or by remedies imposed by any regulators or governmental bodies. Any such laws or regulations may make it difficult or may prevent a Fund from pursuing investment opportunities, require the sale of part or all of certain portfolio companies on a timeline or in a manner deemed undesirable by Arlington or may limit the ability of one or more portfolio companies from conducting their intended business in whole or in part. Consequently, there can be no assurance that any Fund will be able to participate in all potential investment opportunities that fall within its investment objectives. Valuation of Investments Generally, the relevant General Partner will determine the value of all of a Fund’s investments for which market quotations are available based on publicly available quotations. However, market quotations will be unavailable for virtually all of a Fund’s investments because, among other things, the securities of portfolio companies held by such Fund generally will be illiquid and not quoted on any exchange. Each General Partner will determine the value of all of the Fund’s investments that are not readily marketable based on ASC 820 guidelines as promulgated by the Financial Accounting Standards Board and any subsequent valuation guidelines required of an investment fund reporting under generally accepted accounting principles as promulgated in the United States. There can be no assurance that the relevant General Partner will have all of the information necessary to make valuation decisions in respect of these investments, or that any information provided by third parties on which such decisions are based will be correct. There can be no assurance that the valuation decision of a General Partner with respect to an investment will represent the value realized by the relevant Fund on the eventual disposition of such investment or that would, in fact, be realized upon an immediate disposition of such investment on the date of its valuation. Accordingly, the valuation decisions made by such General Partner may cause it to ineffectively manage the relevant Fund’s investment portfolios and risks, and may also affect the diversification and management of such Fund’s portfolio of investments. Contingent Liabilities Upon Disposition In connection with the disposition of an investment, a Fund and the applicable General Partner may be required to make (and/or be responsible for another person’s or entity’s breach of) representations and warranties, e.g., about the business and financial affairs of the applicable portfolio company, the condition of its assets and the extent of its liabilities, in each case generally in the nature of representations and warranties typically made in connection with the sale of similar businesses, and may be responsible for the content of disclosure documents under applicable securities laws. They may also be required to indemnify the purchasers of such investment or underwriters to the extent that any such representations or disclosure documents are inaccurate. These arrangements may result in contingent liabilities, which would be borne by the applicable Fund and, ultimately, its investors. Unfunded Pension Liabilities Portfolio Companies Recent court decisions have found that, where an investment fund owns 80% or more (or under certain circumstances less than 80%) of a portfolio company, such fund (and any other 80%- owned portfolio companies of such fund) might be found liable for certain pension liabilities of such a portfolio company to the extent the portfolio company is unable to satisfy such liabilities. Although each Fund intends to manage its investments to minimize any such exposure, a Fund may, from time to time, invest in a portfolio company that has unfunded pension fund liabilities, including structuring the investment in a manner where such Fund may own an 80% or greater interest in such a portfolio company. If a Fund (or other 80%-owned portfolio companies of such Fund) were deemed to be liable for such pension liabilities, this could have a material adverse effect on the operations of such Fund and the companies in which the Fund invests. Director Liability A Fund will seek to obtain the right to appoint one or more representatives to the board of directors (or similar governing body) of the companies in which it invests. Serving on the board of directors (or similar governing body) of a portfolio company exposes the relevant Fund’s representatives, and ultimately the relevant Fund, to potential liability. Not all portfolio companies may obtain insurance with respect to such liability, and the insurance that portfolio companies do obtain may be insufficient to adequately protect officers and directors from such liability. In addition, involvement in litigation can be time consuming for such persons and can divert the attention of such persons from such Fund’s investment activities. Cybersecurity Risks Recent events have illustrated the ongoing cybersecurity risks to which operating companies are subject. To the extent that a portfolio company is subject to cyber-attack or other unauthorized access is gained to a portfolio company’s systems, such portfolio company may be subject to substantial losses in the form of stolen, lost or corrupted (i) customer data or payment information; (ii) customer or portfolio company financial information; (iii) portfolio company software, contact lists or other databases; (iv) portfolio company proprietary information or trade secrets; or (v) other items. In certain events, a portfolio company’s failure or deemed failure to address and mitigate cybersecurity risks may be the subject of civil litigation or regulatory or other action. Any of such circumstances could subject a portfolio company, or the relevant Fund, to substantial losses. In addition, in the event that such a cyber-attack or other unauthorized access is directed at Arlington or one of its service providers holding its financial or investor data, Arlington, its affiliates or the Funds may also be at risk of loss, despite efforts to prevent and mitigate such risks. Reliance on Government Contracts A Fund may invest in portfolio companies that are heavily dependent on U.S. government contracts, which may be only partially funded. These contracts are subject to the government’s political and budgetary constraints (which can change), changes in short-range and long-range plans, the timing of contract awards, the congressional budget authorization and appropriation processes, the government’s ability to terminate contracts for convenience or for default, as well as other risks such as contractor debarment in the event of certain violations of legal and regulatory requirements. Portfolio companies providing services under U.S. government contracts are also subject to extensive regulation and audit by agencies of the U.S. government. If such portfolio companies are subject to adverse audits or regulatory or legal actions by the U.S. government, such portfolio companies could be subject to liabilities, penalties, and disqualification from future government contracts, adversely affecting the business and results of a Fund. In addition, the possibility of a partial federal government shutdown in the U.S. could potentially delay award of U.S. government contracts and timing of payments.
Conflicts of Interest
Arlington and its related entities engage in a broad range of advisory and non-advisory activities, including investment activities for their own account and for the account of multiple Funds, and providing transaction-related, investment advisory, legal, management and other services to Funds and portfolio companies. Arlington will devote such time, personnel and internal resources as are necessary to conduct the business affairs of the Funds in an appropriate manner, as required by the relevant Limited Partnership Agreements, although the Funds and their respective investments will place varying levels of demand on these over time. In the ordinary course of Arlington conducting its activities, the interests of a Fund may conflict with the interests of Arlington, one or more other Funds, portfolio companies or their respective affiliates. Certain of these conflicts of interest are discussed herein. Fund IV is currently pursuing new portfolio company investments. As stated earlier, pursuant to their respective Limited Partnership Agreements, Fund II and Fund III are unable to make new portfolio company investments. During the commitment period of a Fund all appropriate investment opportunities generally will be pursued through such Fund, subject to certain limited exceptions set forth in the Fund’s Limited Partnership Agreement and the Adviser’s allocation policies. The Advisers’ investment staff will continue to manage and monitor all Arlington Funds over the life of each of the Funds. Arlington believes that the significant investment of the Partners in the Funds, as well as the Advisers’ interest in the Carried Interest, operate to align, to some extent, the interests of the Advisers with the interests of each Fu please register to get more info

AME and its management persons have not been subject to any material legal or disciplinary events required to be discussed in this Brochure. please register to get more info

AME is affiliated with other Arlington investment advisers registered with the SEC under the Advisers Act pursuant to AME’s registration in accordance with SEC guidance. These advisers are ACP GP II, ACP GP III, ACP GP IV, Manager II, Manager III, Manager IV and Manager V. These affiliated investment advisers serve as managers or general partners of Funds and other pooled vehicles and share common owners, officers, partners, employees, consultants or persons occupying similar positions. please register to get more info

PERSONAL TRADING
The Advisers have adopted the Arlington Code of Ethics and Securities Trading Policy and Procedures (the “Code”), which sets forth standards of conduct that are expected of Arlington principals and employees and addresses conflicts that arise from personal trading. The Code requires certain Arlington personnel to report their personal securities transactions, prohibits or requires pre-clearance for Arlington personnel from directly or indirectly acquiring beneficial ownership or disposing of securities in an initial public offering, and prohibits Arlington personnel from directly or indirectly acquiring beneficial ownership of securities with limited exceptions, without first obtaining approval from the Arlington Chief Compliance Officer. In addition, the Code requires such personnel to comply with procedures designed to prevent the misuse of, or trading upon, material non-public information. A copy of the Code will be provided to any limited partner or prospective limited partner of the Fund upon request to Deneshea Phelps, the Arlington Chief Compliance Officer, at (202) 337-7500. Personal securities transactions by employees who manage client accounts are required to be conducted in a manner that prioritizes the client’s interests in client eligible investments. The Advisers and their affiliated persons may come into possession, from time to time, of material non-public or other confidential information about public companies which, if disclosed, might affect an investor’s decision to buy, sell or hold a security. Under applicable law, the Advisers and their affiliated persons would be prohibited from improperly disclosing or using such information for their personal benefit or for the benefit of any person, regardless of whether such person is a client of the Advisers. Accordingly, should the Advisers or any of their affiliated persons come into possession of material non-public or other confidential information with respect to any public company, the Advisers would be prohibited from communicating such information to clients, and the Advisers will have no responsibility or liability for failing to disclose such information to clients as a result of following their policies and procedures designed to comply with applicable law. Similar restrictions may be applicable as a result of the Advisers’ personnel serving as directors of public companies and may restrict trading on behalf of clients, including the Funds. Principals and employees of the Advisers and their affiliates may directly or indirectly own an interest in one or more Funds or certain co-investment vehicles. To the extent that co- investment vehicles exist, such vehicles may invest based on a fixed percentage in one or more of the same portfolio companies as the Funds. Co-invest opportunities may also be presented to certain affiliates of the Advisers, as well as third-party investors and other persons, and such co- investments may be effected through co-invest vehicles or directly in a particular portfolio company. Such co-investment opportunities generally will be allocated in the manner described under “Methods of Analysis, Investment Strategies and Risk of Loss.” The Advisers and their affiliates, principals and employees may carry on investment activities for their own account and for family members, friends or others who do not invest in the Funds, and may give advice and recommend securities to vehicles which may differ from advice given to, or securities recommended or bought for the Funds even though their investment objectives may be the same or similar. The operative documents and investment programs of certain vehicles sponsored by Arlington (the “Reference Funds”) may restrict, limit or prohibit, in whole or subject to certain procedural requirements, investments of certain other vehicles in issuers held by such Reference Funds or may give priority with respect to investments to such Reference Funds. Some of these restrictions could be waived by Fund limited partners (or their representatives) in such Reference Funds. In borrowing on behalf of a Fund, Arlington is subject to conflicts of interest between repaying its obligations and retaining such borrowed amounts for the benefit of such Fund, and in circumstances where interest accrues on any such outstanding borrowings at a rate lower than the relevant Fund’s preferred return, is expected to have incentives to cause the Fund to borrow in this manner rather than drawing down capital commitments. Where a preferred return begins to accrue after capital contributions are due (regardless of when the Fund borrows, makes the relevant investment, or pays expenses) and ceases to accrue upon return of these capital contributions, the use of borrowing to shorten the period between calling and returning capital limits the amount of time the preferred return will accrue. In circumstances where there is not a preferred return on funds borrowed in advance or in lieu of calling capital, Fund-level borrowing typically will reduce the amount of preferred return to which the limited partners would otherwise be entitled had the relevant General Partner called capital, and thus could result in the relevant General Partner receiving carried interest sooner than it would without borrowing. In addition, when the Management Fee is calculated as a percentage of invested capital, a limited partner may pay Management Fees on borrowed amounts used to fund investments that have not yet been realized even though such amounts would not accrue preferred return as described above. It is expected that the costs relating to the establishment and/or maintenance of a subscription line of credit will be significant, and there can be no assurance that the benefits to limited partners will be commensurate with such costs. please register to get more info

The Advisers focus on securities transactions of private companies and generally purchase and sell such companies through privately-negotiated transactions in which the services of a broker-dealer may be retained. However, the Advisers may also distribute securities to investors in a Fund or sell such securities, including through using a broker-dealer, if a public trading market exists. Although the Advisers do not intend to regularly engage in public securities transactions, to the extent they do so, they follow the brokerage practices described below. If the Advisers sell publicly traded securities for a Fund, it is responsible for directing orders to broker-dealers to effect securities transactions for accounts managed by the Advisers. In such event, the Advisers will seek to select brokers on the basis of best price and execution capability. In selecting a broker to execute client transactions, the Advisers may consider a variety of factors, including: (i) execution capabilities with respect to the relevant type of order; (ii) commissions charged; (iii) the reputation of the firm being considered; and (iv) responsiveness to requests for trade data and other financial information. The Advisers have no duty or obligation to seek in advance competitive bidding for the most favorable commission rate applicable to any particular client transaction or to select any broker on the basis of its purported or “posted” commission rate, but will endeavor to be aware of the current level of the charges of eligible brokers and to reduce the expenses incurred for effecting client transactions to the extent consistent with the interests of such clients. Although the Advisers generally would seek competitive commission rates, they may not necessarily pay the lowest commission or commission equivalent. Transactions may involve specialized services on the part of the broker involved and thereby entail higher commissions or their equivalents than would be the case with other transactions requiring more routine services. Consistent with the Advisers seeking to obtain best execution, brokerage commissions on client transactions may be directed to brokers in recognition of research or deal flow furnished by them, although the Advisers generally do not make use of such services at the current time. Such research services could include economic research, market strategy research, industry research, company research, fixed income data services, computer-based quotation equipment and research services and portfolio performance analysis. As a general matter, research provided by these brokers would be used to service all of the Advisers’ Funds. However, each and every research service may not be used for the benefit of each and every Fund managed by the Advisers, and brokerage commissions paid by one Fund may apply towards payment for research services that might not be used in the service of such Fund. Research services may be shared among the Advisers and their affiliates. The Advisers do not employ any agreement or formula for the allocation of brokerage business on the basis of research services; however, the Advisers may, in their discretion, cause the Funds to pay such brokers a commission for effecting portfolio transactions in excess of the amount of commission another broker adequately qualified to effect such transactions would have charged for effecting such transactions. This may be done where the Advisers have determined in good faith that such commission is reasonable in relation to the value of brokerage and research services received. In reaching such a determination, the Advisers would not be required to place or attempt to place a specified dollar value on the brokerage or research services provided by such broker. The Advisers will periodically determine which brokers have provided research or deal flow that has been helpful in the management of the Funds. To the extent consistent with the Advisers’ goal to obtain best execution for the Funds, the Advisers may seek to place a portion of the trades that they direct with the brokers who are identified through this process. To the extent that the Adviser allocates brokerage business on the basis of research services or deal flow, it may have an incentive to select or recommend broker-dealers based on the interest in receiving such research, deal flow, or other products or services, rather than based on its Funds’ interest in receiving most favorable execution. The Advisers do not anticipate engaging in significant public securities transactions; however, to the extent that the Advisers engage in any such transactions, any orders will executed pro rata across the Fund making the investment, and within a reasonable amount of time of order receipt. To the extent that orders for the Funds are completed independently, the Advisers may also purchase or sell the same securities or instruments for several Funds simultaneously. From time to time, the Advisers may, but are not obligated to, purchase or sell securities for several client accounts at approximately the same time. Such orders may be combined or “batched” to facilitate obtaining best execution and/or to reduce brokerage commissions or other costs. Batched transactions are executed in a manner intended to ensure that no participating Fund of the Advisers is favored over any other Fund. When an aggregated order is filled in its entirety, each participating Fund generally will receive the average price obtained on all such purchases or sales made during such trading day. To the extent such orders are not batched, they may have the effect of increasing brokerage commissions or other costs. In the Advisers’ private company securities transactions on behalf of the Funds, the Advisers may retain one or more broker-dealers or investment banks, the costs of which will be borne by the relevant Fund and/or its portfolio companies. In determining to retain such parties, the Advisers may consider a variety of factors, including: (i) capabilities with respect to the type of transaction being contemplated; (ii) commissions or fees charged; (iii) reputation of the firm being considered; and (iv) responsiveness to requests for information. As a result, although the Advisers generally will seek reasonable rates for such services, the market for such services involves more subjective evaluations than public securities brokerage transactions, and the Funds may not pay the lowest commission or fee for such services. please register to get more info

The investments made by the Funds are generally private, illiquid and long-term in nature. Accordingly, the review process is not directed toward a short-term decision to dispose of securities. However, the Advisers closely monitor companies in which the Funds invest, and the Arlington Chief Compliance Officer periodically checks to confirm that each Fund is maintained in accordance with its stated objectives. Each Fund generally will provide to each of its limited partners (i) annual GAAP audited and quarterly unaudited financial statements, (ii) annual tax information necessary for each Limited Partner’s tax return and (iii) at the time of delivery of the financial statements, reports providing a description of all investments held by the Funds and a narrative summary of the status of each such investment. please register to get more info

From time to time, the Advisers may enter into solicitation arrangements pursuant to which they compensate third parties for referrals that result in a potential investor becoming a limited partner in a Fund. Any fees payable to, and related expenses incurred by, any such placement agents ultimately will be borne by the Advisers indirectly through an offset against the Management Fee, although, pursuant to the relevant placement agent or other similar agreement, direct payments and reimbursements of such fees and expenses generally will be made to a placement agent by the relevant Fund(s). please register to get more info

The Advisers maintain custody of the Funds’ assets held in the name of one or more Funds with the following qualified custodians: Citibank, N.A. and Merrill Lynch, Pierce, Fenner &
Smith Incorporated. please register to get more info

As a general policy, the Advisers do not allow clients to place limitations on the authority to manage investments on behalf of the Funds. Pursuant to the terms of the Limited Partnership Agreements, however, the Advisers have entered into Side Letters with certain limited partners whereby the terms applicable to such limited partners’ investment in the Funds are altered or varied, including, in some cases, the right to opt-out of select investments for limited legal, tax, regulatory or other similar reasons. The Advisers assume this discretionary authority pursuant to the terms of the applicable Limited Partnership Agreements and powers of attorney executed by the limited partners of each Fund. please register to get more info

The Advisers have adopted Proxy Voting Policies and Procedures (the “Proxy Policy”) to address how they will vote proxies, as applicable, for each Fund’s portfolio investments. The Proxy Policy seeks to ensure that the Advisers vote proxies (or similar instruments) in the best interest of the Funds, including where there may be material conflicts of interest in voting proxies. Each of the Advisers generally believes its interests are aligned with those of each Fund’s limited partners, for example, through the principals’ beneficial ownership interests in such Fund and therefore will not seek Limited Partner approval or direction when voting proxies. In the event that there is or may be a conflict of interest in voting proxies, the Proxy Policy provides that the Adviser may address the conflict using several alternatives, including by seeking the approval or concurrence of the Funds’ advisory boards on the proposed proxy vote or through other alternatives set forth in the Proxy Policy. Additionally, a Fund’s advisory board may approve the Adviser’s vote in a particular solicitation. The Advisers do not consider service on portfolio company boards by Arlington personnel or their receipt of management or other fees from portfolio companies to create a material conflict of interest in voting proxies with respect to such companies. In addition, the Proxy Policy sets forth certain specific proxy voting guidelines followed by the Advisers when voting proxies on behalf of a Fund. If you would like a copy of the Adviser’s complete Proxy Policy or information regarding how the Advisers voted proxies for particular portfolio companies, please contact Deneshea Phelps, the Arlington Chief Compliance Officer, at (202) 337-7500 and it will be provided to you at no charge. please register to get more info

AME does not require prepayment of management fees six months or more in advance or have any other events requiring disclosure under this item of the Brochure.
SUPPLEMENTAL INFORMATION ABOUT CERTAIN PRINCIPALS OF ARLINGTON
MANAGEMENT
Matthew L. Altman
Educational Background and Business Experience
Matthew L. Altman joined Arlington in 2001 and is a member of the Firm’s Investment Committee. Mr. Altman shares overall responsibilities for all management and investment activities of the Firm. He has primary responsibility for Arlington’s healthcare investments and shares responsibility for the Firm’s A&D investments. Mr. Altman has closed LBOs, recapitalizations and growth equity investments representing approximately $3.0 billion in value during his 21 year career in private equity. His private equity experience encompasses a wide range of industries including healthcare services, aerospace, defense, industrial manufacturing, specialty distribution and media. Prior to joining Arlington, Mr. Altman worked at Stonington Partners, a $1.0 billion private equity fund established in 1994 by the principals of Merrill Lynch Capital Partners. His responsibilities at Stonington included originating and conducting due diligence of investment opportunities, structuring and negotiating transactions, arranging public and private debt financing, designing management incentive plans and participating in portfolio company management and realizations. Mr. Altman was also directly involved in the monitoring and realization of Merrill Lynch Capital Partners’ investments. Mr. Altman earned an M.B.A. from the Stanford Graduate School of Business and received a B.A. degree, summa cum laude, from Duke University in Economics. He currently serves on the Board of Directors of Grand River Aseptic Manufacturing, Molecular Products, Ontario Systems and Tex Tech Industries, and previously served on the Board of Directors of Advanced Health Media, Avalign Technologies, Cambridge Major Laboratories, Inc., Chandler/May, Inc., Cherry Creek Radio, Consolidated Precision Products, Endeavor Robotics, Main Line Broadcasting, MB Aerospace Holdings, Micron Technologies, Inc., New Vision Group and United Flexible. Disciplinary History There are no legal or disciplinary events to disclose with respect to Mr. Altman. Other Business Activities Mr. Altman, together with certain other individuals not affiliated with Arlington, has invested in, and participated in the investment activities of an entity established to make personal investments in real estate holdings and start-up companies. Additional Compensation Mr. Altman does not receive any additional compensation that is required to be disclosed. Supervision As a Partner of Arlington, Mr. Altman is responsible for implementing and overseeing the investment strategy of the clients of Arlington. Mr. Altman is subject to the supervision of the Arlington Chief Compliance Officer with respect to compliance matters, but is not otherwise subject to the supervision of any other person.
Michael H. Lustbader
Educational Background and Business Experience
Michael Lustbader joined Arlington in 1999 and is a member of the Firm’s Investment Committee. Mr. Lustbader shares overall responsibilities for all management and investment activities of the Firm. Mr. Lustbader has primary responsibility for the Firm’s government services investments and shares responsibility for the Firm’s software and business services investments. He has 20 years of private equity and mergers and acquisitions transactional experience having been involved in approximately 50 transactions. Prior to Arlington, Mr. Lustbader worked at Lazard Frères & Co. in New York in the Telecommunications and Technology practice, where he focused on advising corporate clients on mergers and acquisitions. He has been responsible for all aspects of sourcing, evaluating, structuring and closing buyout transactions. Mr. Lustbader’s private equity experience includes outsourced business services, IT services and the A&D industry. Mr. Lustbader earned an A.B. degree, magna cum laude, from Harvard College with a major in Social Studies. He currently serves on the Board of Directors of IAI, ITI, Quantum Spatial and Tyto Athene and previously served on the Board of Directors of Apogen Techologies, CompuSearch Software Systems, MicroPact, Inc., Novetta Solutions, Polaris Alpha, SECOR International, SignalTree Solutions, Inc. and Zemax. Disciplinary History There are no legal or disciplinary events to disclose with respect to Mr. Lustbader. Other Business Activities Mr. Lustbader is not engaged in any investment-related business outside of his roles with AME and its affiliates. Additional Compensation Mr. Lustbader does not receive any additional compensation that is required to be disclosed. Supervision As a Partner of Arlington, Mr. Lustbader is responsible for implementing and overseeing the investment strategy of the clients of Arlington. Mr. Lustbader is subject to the supervision of the Arlington Chief Compliance Officer with respect to compliance matters, but is not otherwise subject to the supervision of any other person.
Peter M. Manos
Educational Background and Business Experience
Peter Manos joined Arlington in 2002, and is a member of the Firm’s Investment Committee. Mr. Manos shares overall responsibility for all management and investment activities of the Firm. Mr. Manos has primary responsibility for Arlington’s A&D investments and shares responsibility for the Firm’s healthcare investments. Mr. Manos has over 25 years of private equity, public equity and mergers and acquisitions transactional experience and has completed 50 transactions in a variety of industries representing over $4.5 billion in aggregate enterprise value. Prior to Arlington, Mr. Manos co-founded Capitol Partners, a Washington, D.C.-based LBO firm focused exclusively on healthcare investments. Previously, Mr. Manos was a Vice President at The Carlyle Group where he was a member of the aerospace and defense group and a co-founder of the firm’s healthcare investment practice. Mr. Manos began his career as an investment banker at DLJ and later at Peers & Co. His private equity and transactional experience is complemented by his operating experience as co-founder and President of iFinance, Inc., a point-of-sale credit infrastructure company. Mr. Manos earned an M.B.A. from the Harvard Business School and received a B.A. degree from Stanford University with a major in English. He is currently on the Board of Directors of Cadence Aerospace, Molecular Products, Ontario Systems, Quantum Spatial, and Tex Tech Industries and previously served on the Board of Directors of Advanced Health, Avalign Technologies, Cambridge Major Laboratories, Inc., Chandler/May, Inc., Consolidated Precision Products, Endeavor Robotics, MB Aerospace, SECOR International, TSI Group, Inc. and United Flexible. Disciplinary History There are no legal or disciplinary events to disclose with respect to Mr. Manos. Other Business Activities Mr. Manos is not engaged in any investment-related business outside of his roles with AME and its affiliates. Additional Compensation Mr. Manos does not receive any additional compensation that is required to be disclosed. Supervision As a Partner of Arlington, Mr. Manos is responsible for implementing and overseeing the investment strategy of the clients of Arlington. Mr. Manos is subject to the supervision of the Arlington Chief Compliance Officer with respect to compliance matters, but is not otherwise subject to the supervision of any other person. please register to get more info