Item 5: Fees and Compensation
The Fund governing documents set forth in detail each Fund’s fee and expense structure.
Investors should consult the Fund governing documents for further information on fees
and expenses.
AAF is generally compensated for its services through the receipt of management fees
and performance-based compensation. AAF’s compensation, as well as other costs and
expenses associated with the provision of investment advisory services by AAF, is
discussed generally below and in more detail in the Fund governing documents of the
Funds and associated investment advisory agreements.
A. Compensation
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AAF has entered into investment advisory agreements with each of the Funds that set
forth the compensation to be paid to AAF. AAF charges management fees (typically
1.5%) based on a percentage of invested assets of each Fund. AAF or the general partner
of the Fund shall, in their sole discretion, have the right to reduce or waive the
management fee chargeable with respect to any limited partner without the consent of,
or notice to, any other limited partner.
This management fee is subject to reductions from organizational expenses in excess of
the Fund’s organizational expense cap, placement agent fees, and transaction, break-up
and other fees and expenses of Aon IP Advantage Fund. Management fees generally
will be calculated and payable to AAF in arrears.
Funds may also pay a performance-based fee, as further described in Item 6.
B. Additional Fees and Expenses
In addition to the fees described above, the Funds bear costs associated with
investments, accounts, and maintaining their investments as set forth in the Fund
governing documents, including the following non-exhaustive list of items:
Custodial fees and charges
Administrative, offering, and operating expenses, including but not limited to
ordinary and recurring legal, accounting, escrow, recordkeeping, administration,
fund accounting, and third-party administrator expenses
Clerical expenses, including those incurred in preparing, printing and mailing
reports and tax information to investors and authorities, expenses for specialized
administrative services, filing fees, and taxes
Valuation and appraisal expenses
Investment-related expenses associated with the sourcing, due diligence,
reasonable travel costs, and transaction expenses related to prospective
investments, regardless of whether the investments are actually consummated
Expenses related to the holding, monitoring, and refinancing or disposition of
investments
Information technology expenses, including the cost of accounting, financial
covenant monitoring, operations and IT software packages
Extraordinary expenses, including litigation, indemnification and contribution
expenses
Expenses incurred to collect on investments, including attorneys’ fees and costs
Insurance costs, including directors’ and officer’s liability insurance
Expenses associated with the appointment of fund officers in compliance with
Cayman Islands anti-money laundering regulations
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Fees and reimbursable expenses to members of a Fund’s Board of Directors, if
applicable
Taxes, duties and other governmental charges
Transfer and registration fees or similar expenses
Costs associated with foreign exchange transactions
Bank service fees
Organizational expenses, including the cost of the offering and ongoing sale of
Fund interests up to an organizational expense cap set forth in the Fund governing
documents
Costs of winding-down a Fund
C. Allocation of Fees, Costs, and Expenses
AAF will incur fees, costs, and expenses on behalf of one or more Clients. To the extent
that such fees, costs, and expenses are incurred on behalf of more than one Client, the
Clients will bear an allocable portion of such fees, costs and expenses in proportion to
the size of the Client’s investment, subject to the terms of the applicable LPAs and other
governing documents of the Clients or in such other manner as AAF considers fair and
reasonable. Although AAF endeavors to allocate such fees, costs and expenses on a fair
and reasonable basis, there can be no assurance that such fees, costs, and expenses
will in all cases be allocated appropriately.
Item 6: Performance-Based Compensation and Side-By-Side
Management
“Side-by-side management” refers to the simultaneous management of multiple types of
Client accounts, investment products, or both. In such situations, there can be differential
fee arrangements (such as performance fees) that can create an opportunity or incentive
for a manager to favor certain accounts (or types of accounts) over others (including with
respect to the time and attention to investment opportunities). Similar incentives are
subject to arise where a manager or its personnel (including its officers and directors) or
affiliates have different pecuniary interests (e.g., personal investments) in accounts.
The general partner of each Fund will receive a performance fee from the Fund (which
will be in addition to the management fee described above), calculated as a share of the
net profits of that Fund, based on a percentage of such profits, which may vary from Fund
to Fund. In addition, an affiliate of AAF receives a performance fee from the Sidecar
Investment Vehicle. Such performance fee is commonly referred to as “carried interest.”
The payment of the carried interest is set forth in the governing documents of each Fund
and the operating agreement of the Sidecar Investment Vehicle. AAF has the ability to
waive, reduce or calculate differently all or a portion of such performance compensation.
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