Item 5. Fees and Compensation
Funds.
Management Fees. For the services we provide to the Funds as their investment adviser,
we receive management fees paid quarterly in advance. These management fees are
calculated as to each investor in the Feeder Fund, with the amount of the management
fee as to each such investor equal to a specified percentage (the “quarterly management
fee rate”) times the net asset value of the investor’s investment in the Feeder Fund as of
the last day of the immediately preceding calendar quarter. The quarterly management
fee rate generally ranges from between 0.25% (i.e., approximately 1.00% per year) to
0.375% (i.e., approximately 1.50% per year), depending on the investor. While our
management fees are not generally negotiable, we may vary (or waive altogether) the
management fees as to particular investors by separate agreement.
Performance Fees and Allocations. As the general partner of the Onshore Feeder, we are
generally entitled to receive an “incentive allocation,” calculated annually as to each limited
partner (and upon any withdrawal) in an amount equal to a specified percentage (the
“incentive allocation rate”) times any increase in the net asset value of the limited partner’s
investment in the Onshore Feeder over the current year (prorated for partial mid-year
withdrawals), but only to the extent that increase exceeds a high water mark. The incentive
allocation rate ranges from between 10% to 20%, depending on the limited partner.
The Feeder Fund generally pays incentive fees or makes incentive allocations at the end
of each calendar year and whenever Fund investors withdraw capital, but then only in
relation to the amount of capital withdrawn. For each period, the foregoing fees and
allocations are the aggregate of amounts calculated separately for each investor or group
of investors in the Feeder Fund. They are not generally negotiable, but our agreements
with the Fund(s) give us the authority to vary (or waive altogether) them for particular
investors. Once paid, incentive fees and incentive allocations are not reduced by losses
incurred in later periods.
Withdrawal Fees. Investors in our Feeder Fund may, when subscribing for interests in the
fund, agree to restrictions on their ability to withdraw capital (“lock-up restrictions”). As to
investors who seek to withdraw capital other than pursuant to these lock-up restrictions,
we may charge “withdrawal fees” ranging from 1.5% to 3.5% of the amount redeemed or
withdrawn payable to ACM.
Managed Account
Management Fees. For the services we provide to the Managed Account as its investment
adviser, we receive management fees paid quarterly in arrears. The amount of each
monthly installment of the management fee is equal to 0.25% (i.e., approximately 1.0%
per year) times the net asset value of the assets in the Managed Account as of the last
business day immediately following the calendar quarter.
Performance Fees. The Managed Account also pays us an “incentive fee,” calculated
annually (and upon any withdrawal from the account) in an amount equal to 10% of the
amount by which the NAV of the Account (before application of the current Performance
Fee and after taking into account the Management Fee and other expenses borne by the
Account) exceeds the Hurdle; however, the Performance fee is only paid on the amount of
outperformance that exceeds the loss carryforward account balance.
Co-Investment Funds
Management fees, performance-based fees and other forms of compensation payable to
us by a Co-Investment Fund together with other terms governing the management of the
Co-Investment Fund sponsored and managed by us, are established by ACM at the time
of the establishment of the relevant Co-Investment Fund. Specific details of such
compensation and its method of calculation are set out in the offering materials, disclosure
documents, management agreements and/or governing documents of the C-Investment
Fund. Fee terms for a Co-Investment Fund may be changed during the term of the relevant
relationship. The share of compensation earned by ACM or its affiliates in respect of a Co-
Investment Fund may vary among investors pursuant to the terms of the governing
documents, side letter agreements or other arrangements with specific investors in such
Co-Investment Fund, whereby such investors receive direct or indirect reductions of
management fees or other compensation otherwise payable with respect to their
investments managed by ACM. Such arrangements may include ACM granting certain
preferential terms to certain investors in a Co-Investment Fund. Where a strategic investor
participates in a Co-Investment Fund through a dedicated investment vehicle as part of
such arrangement, such vehicle may be granted terms, including management fees or
carried interest,that may be more favorable than those applicable to other investors.
Other Fees and Expenses
The Feeder Fund bears all of its operating expenses and its pro rata share of the operating
expenses of the Master Fund as defined in its offering memoranda. Similarly, the Managed
Account bears all of its operating expenses as defined in its investment adviser agreement.
These operating expenses include:
• brokerage and execution charges and commissions;
• custodial charges;
• fees for quotation and other data services;
• consulting and software licensing fees related to accounting, trading, portfolio
management and risk management systems;
• research subscriptions and expenses;
• legal and consulting fees related to investment research;
• broken deal fees;
• expenses to register securities and transfer taxes;
• U.S. federal, state and local taxes, filing and registration fees;
• expenses relating to investor and potential investor communications and
(including travel costs);
• accounting and the preparation and mailing of financial, tax and performance
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