ITEM 5. FEES AND COMPENSATION
Fees
CBAM is entitled to advisory fees and/or incentive compensation, and Clients pay such fees,
and bear such expenses, as is set forth in the relevant Client Documentation.
Funds and SMAs
CBAM generally receives a monthly or quarterly management fee at the end of the applicable
period and a performance-based fee for managing Funds and SMAs. The amount of this fee
is established on a case-by-case basis for each Client and therefore is negotiable. The
performance or incentive fee typically constitutes a percentage of appreciation, or net
realized gains, of the portfolio, subject to the terms and conditions set forth in the relevant
Client Documentation. Clients, investors, and prospects should review this documentation
carefully before making any investment decision. To the extent there is a deviation between
the general descriptions provided in this brochure and the provisions and disclosures in such
Client Documentation applicable to a specific Client, the terms of the Client Documentation
shall govern. SMAs that charge a performance fee will be “Qualified Clients” and investors in
Funds that pay performance fees will be “Qualified Purchasers”. As such, there is no set fee
schedule. Performance fees are structured in accordance with the Advisers Act.
CLOs
As compensation for its services as the collateral manager of CLOs, CBAM is entitled to a
senior management fee, a subordinated management fee, and in certain cases, an incentive
management fee. CLO fees are calculated by the CLO trustee and not the collateral manager,
and only the CLO trustee has the authority to cause such fees to be paid by the CLO. The
senior and subordinated fees are typically paid quarterly in arrears, consistent with the
Indenture.
Private Investment Vehicles on behalf of Certain Clients
From time to time, CBAM has entered into arrangements with, or establishes private
investment vehicles for certain Clients, including CBAM affiliates, and/or their respective
partners, principals, employees and family members, including Eldridge and its direct and
indirect subsidiaries, and each of their respective directors, officers, and employees (“CBAM
Related Parties”), where CBAM was compensated through a sharing of fees and
remuneration earned by such Clients in connection with specific investment activity. This
often involves direct lending, participation in a bridge commitment or participation in an
underwriting commitment. Such arrangements create conflicts of interest because there is
an incentive for CBAM to favor the interests of such Clients over those of other Clients.
Similarly, such fee arrangements can create an incentive to direct such investments to certain
Clients, including CBAM Related Parties, to participate in the fee sharing arrangement.
Clients and investors who are not party to an arrangement will not be offered the opportunity
to review or receive the economic or other benefits of thearrangement.
General
Fees vary across Clients based on the type of service provided, size of the account, and the
relationship between CBAM and the Client. In some cases, fees charged will vary among
investors in the same Fund. Fees are negotiable and paid more or less frequently depending
upon the terms of the Client Documentation. CBAM, at its sole discretion, can, and has in the
past, reduce, waive or calculate the fees differently with respect to any investor, whether
through different classes or through separate written agreements with investors. Likewise,
terms such as fees or termination will be more favorable to SMAs than Funds. CBAM
generally intends to waive fees with respect to CBAM employees.
In addition to the fees described above and subject to the terms of Client Documentation,
Clients are subject to a variety of expenses, which can include advisory or other fees paid to
third parties or CBAM, or other CBAM Related Parties. For example, when CBAMinvests Client
assets in investments that charge additional fees, such as money market funds, short term
investment vehicles, tax blocker entities, co-investment vehicles and other eligible
investments, the Client bears those fees. In the case of CLOs, additional advisory fees related
to eligible investments (e.g., cash sweep) are often paid to an affiliate of the CLO trustee.
These circumstances will result in the payment, and in some cases, in the receipt byCBAM or
a CBAM Related Party, of multiple layers of fees. CBAM has an incentive to select investments
that increase the total fees paid to CBAM and/or other CBAM Related Parties.
Expenses
In addition to the fees described above, Clients often bear (or reimburse CBAM, as the case
may be) the costs and expenses described below, to the extent permitted under Client
Documentation:
• Costs and expenses are incurred in connection with the formation, qualification and
registration and/or exemption from qualification and registration of a Client, or of the
interests thereon and offering thereof, and distribution and processing of such
interests under applicable U.S. federal and state law and foreign law. These expenses
can include but are not limited to legal, accounting and auditing fees and expenses,
printing and duplication expenses, mailing expenses, filing fees, solicitation and
marketing expenses and other related expenses, and insurance (e.g., “directors and
officers” or similar professional liability insurance).
• Costs and expenses relating to a Client’s portfolio operations, as set forth in greater
detail in the Client Documentation, which will generally include, but are not limited
to, the following: (i) all fees, costs and expenses related to the purchase, holding and
sale of portfolio investments including assignment fees, delayed compensation and
other costs customarily related to trading in relevant markets; (ii) fees and expenses
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