Item 5—Fees and Compensation
Twin Brook receives a base management fee (the “Base Management Fee”) and an
incentive fee (the “Incentive Fee” and, together with the Base Management Fee, “Advisory
Fees”) for its advisory services. Pursuant to an administration agreement (the “Administration
Agreement”), Angelo Gordon serves as the Company’s administrator and is reimbursed by the
Company for its allocable portion of certain administrative expenses. Investors bear the fees and
expenses indirectly as a part of their investment in a Client and could also be subject to other
expenses in connection with their investment. The fees paid to the Firm, and other relevant
expenses, are summarized below and more detailed descriptions are provided in the relevant
governing and offering documents.
Company Base Management Fee
Twin Brook receives a Base Management Fee from the Company, quarterly in arrears,
that is calculated as a percentage of the average value of the Company’s gross assets (excluding
cash and cash equivalents) at the end of the two most recently completed calendar quarters,
adjusted for any share issuances or repurchases during the current calendar quarter. The rate of
the Base Management Fee will depend on whether the Company has reached particular
milestones, as described below. First, prior to the occurrence of an initial public offering of the
Company’s common stock that results in an unaffiliated public float of at least the lower of (i)
$60 million and (ii) 17.5% of the aggregate capital commitments received by the Company prior
to the date of such initial public offering (a “Qualified IPO”), the Base Management Fee is
calculated at an annual rate of 0.60% of the Company’s gross assets, excluding cash and cash
equivalents. Second, upon the occurrence of a Qualified IPO, the Base Management Fee will be
calculated at an annual rate of 1.25% of the Company’s gross assets, excluding cash and cash
equivalents. The Base Management Fee for any partial month or quarter will be appropriately
pro-rated.
Company Incentive Fee
Additionally, the Firm is eligible to receive an Incentive Fee that consists of two parts: (i)
an incentive fee based on income (the “Income Fee”) and (ii) an incentive fee based on capital
gains (the “Capital Gains Fee”). Each of these is summarized below and described in greater
precision and detail in the governing and offering documents:
The Income Fee (at a rate of 16.75%) is calculated and payable quarterly in arrears based
on the difference between the Company’s income accrued (excluding capital gains or losses
(whether or not realized)) during the relevant calendar quarter and the Company’s operating
expenses for such quarter (“Pre-Incentive Fee Net Investment Income”). The Income Fee is
subject to a specified “Hurdle Amount” and a “catch up” feature and will be appropriately pro-
rated when applied to any period of less than three months (i.e., in the Company’s initial quarter
or in the event of mid-quarter termination) and adjusted for share issuances or repurchases during
a quarter.
The Capital Gains Fee is determined and payable in arrears as of the end of each fiscal
year (or upon termination) in an amount equaling 16.75% of the Company’s realized capital
gains (net of realized and unrealized capital losses/depreciation) on a cumulative basis through
the end of the fiscal year, less the aggregate amount of any previously paid Capital Gains Fees.
No Feeder Fund Management and Incentive Fees
No separate management fee or incentive fees will be paid by the Feeder Fund to Twin
Brook. However, because the Feeder Fund invests in the Company, investors in the Feeder Fund
bear their indirect proportionate share of the management fees and incentive fees the Company
pays to Twin Brook.
Other Expenses
In addition to Advisory Fees, Clients are generally responsible for (and investors bear)
other costs and expenses set forth in the Client’s governing and offering documents and other
relevant agreements (e.g., the investment advisory agreement). Other costs and expenses often
include, among others; (i) legal, accounting, custodial and administration expenses (including
reimbursement payments made by the Company to Angelo Gordon under the Administration
Agreement) associated with the organization and operation of Clients; and (ii) the conduct of the
investment and trading program including deal sourcing expenses, which can include costs
related to advertising, research, as well as costs incurred to attend or sponsor networking and
other similar events hosted by both for-profit and not-for-profit organizations, which can include
organizations affiliated with current or prospective investors.
As set forth in more detail in the Clients’ governing and offering documents and in
addition to the Advisory Fees, Clients will be subject to brokerage commissions, transaction fees,
and other related costs and expenses, including but not limited to, charges imposed by
custodians, brokers, lenders and other third parties such as fees charged by auditors, attorneys,
administrators or custodians, deferred sales charges, odd-lot differentials, transfer taxes, wire
transfer and electronic fund fees, and other fees and taxes on brokerage accounts and securities
transactions. Such charges, fees and commissions are in addition to Twin Brook’s fees. Twin
Brook does not receive any portion of these commissions, fees, and costs. The factors that Twin
Brook considers when selecting brokers or dealers for Client transactions are further described in