ITEM 5 – FEES AND COMPENSATION
General Information Regarding Fees
The Advisers and the related affiliated General Partners generally receive management
fees and performance based compensation (such as carried interest allocations and
incentive allocations) in connection with the investment management and administrative
services the Advisers and the General Partners provide to the Funds and other clients.
Such management fees and performance based compensation are established at the time
of establishment of the relevant Fund and may be negotiated with participating investors
prior to their investment. Specific details of the compensation and method of calculation
are set forth in the offering materials, disclosure documents, management agreements
and other governing documents of the Funds, and may be changed during the term of
the relationship.
Management Fees
ARI receives an annual management fee payable quarterly, in advance or in arrears, from
each ARS Fund to which it provides investment advisory services (the “ARS
Management Fee”). The ARS Management Fee is payable pursuant to a management
agreement between the ARS Funds and ARI based on a percentage of the aggregate
capital of limited partners committed and/or under management, subject to the terms
disclosed in each ARS Fund’s governing documents. The ARS Funds will deduct from
each limited partner’s capital account such limited partner’s pro rata share of the ARS
Management Fee as it becomes due on a quarterly basis.
AI receives an annual management fee payable monthly, in advance, from the ARPS
Fund (the “ARPS Management Fee”). The ARPS Management Fee is payable pursuant
to a management agreement between the ARPS Fund and AI and is based upon the net
asset value of an investor’s capital account. The ARPS Fund will deduct from each limited
partner’s capital account such limited partner’s pro rata share of the ARPS Management
Fee as it becomes due on a monthly basis.
Carried Interest Allocation/Incentive Allocation
The General Partners may also receive performance based compensation. The ARS Funds
may pay a carried interest allocation to their respective General Partners in connection
with ARS Fund distributions (a “Carried Interest Allocation”), subject to the terms of their
governing documents. The investors in the ARPS Fund are subject to a reallocation of a
percentage of the net profits allocated to such investor’s capital account to the General
Partner as an incentive allocation, subject to a high water mark provision, as set forth in
the governing documents for the ARPS Fund (the “Incentive Allocation”).
While the Carried Interest Allocation is the only performance based compensation
payable by the ARS Funds to affiliates of ARI and related persons, certain (i) unaffiliated
joint venture partners of ARS Fund portfolio companies (or their subsidiary affiliates)
and/or (ii) executives or contractors of such portfolio companies (or their subsidiary
affiliates), may receive performance-based or other additional compensation from the
portfolio companies, in connection with transactions involving a portfolio company or its
assets. Such arrangements are negotiated at arms’ length and, importantly, none of the
persons or entities that receive such compensation are affiliates or employees of, or
otherwise related to, Almanac.
Expenses
Fund organizational and offering expenses are generally paid by the Fund, as defined in
the respective Fund’s governing documents. Such organizational expenses may or may
not be subject to a cap, as set forth in the Fund’s offering materials, disclosure documents
and governing documents. The Funds also generally bear, directly or indirectly, all
expenses related to their operations.
The ARS Funds, for example, generally bear the following expenses: fees and other out-
of-pocket expenses directly related to the investigation of investment opportunities
(whether or not consummated); the acquisition, ownership, financing, hedging or sale of
its investments; entity-level taxes; legal, filing, accounting, audit, consulting, research,
and other professional services rendered to the ARS Funds; expenses of the Boards of
Advisors; insurance; litigation expenses; indemnification expenses; business-related
travel expenses of ARI employees and the Senior Advisors; financial statements, tax
returns, Schedules K-1 and other reports to investors, including reports for side letter
compliance, as well as governmental returns, reports and other filings; printing and
mailing costs; meetings of investors; fees or other governmental charges levied against
the ARS Funds; the dissolution and termination of the Funds; and, subject to the approval
of the Board of Advisors (as defined below in Item 11), any extraordinary expenses. The
General Partners may receive additional compensation in connection with management
and other services performed for certain portfolio companies of the ARS Funds, and such
additional compensation will offset in whole or in part the ARS Management Fees
otherwise payable to ARI. ARS Fund expenses are disclosed in each ARS Fund’s
governing documents. Likewise, the Co-Investment Vehicles generally bear all expenses
specifically related to such entities, which are similar in nature to those incurred by the
ARS Funds.
In circumstances where one or more Co-Investment Vehicle invests alongside the ARS
Fund into a specific investment, direct costs pertaining to such investment will typically
be allocated between the ARS Fund and the respective Co-Investment Vehicles, pro rata
based on the participation and/or ownership percentages that the respective Co-
Investment Vehicles hold in such investment. However, if an investment opportunity is
ultimately not consummated, such expenses will be borne disproportionately by the ARS
Fund. In circumstances where more than one ARS Fund or Co-Investment Vehicle
benefits from an incurred cost, such costs are typically allocated among the ARS Funds
...