Item 5. Fees and Compensation
FAIA is compensated for its advisory services through asset-based management fees and other sources of
income, which are significant. In addition, affiliates of FAIA, including Fairway, are eligible to earn
various fees and income as described below that will, if earned, reduce the returns to equity investors in
each Fairway Fund, as well as the value of the Funds’ assets, which are provided as collateral to debt
investors in those Fairway Funds that accept debt investments.
Management Related Fees: FAIA earns management fees, as disclosed in each Fairway Fund’s Offering
Documents (“Management Fees”). The structure and calculation of FAIA’s Management Fees is materially
different for the different Fairway Funds. Management Fees for Fund VII and Fund VIIQP are 2.0% of the
total of each Fund’s assets under management (“AUM”). Management Fees for Fund XIII are 2.0% of all
Fund assets, including all capital contributions made during the Fund’s raise period, as if made at the Fund’s
initial closing. Management Fees for FAVS are 1.5% of all capital commitments made by FAVS investors,
less (i) the aggregate amount of all capital contributions returned to investors following the sale of any
FAVS asset, and (ii) following FAVS’ investment period, the aggregate amount of all capital commitments
that have not then been called by the Manager. Management Fees for FVGPF and FBGPF, including fees
payable to Vivo Investments, LLC (“Vivo”), the Co-Manager of FVGPF, and fees payable to Bamboo
Equity Partners, LLC (“Bamboo”), the Co-Manager of FBGPF, are 2.0% of all capital commitments made
by investors in each Fund, less (i) during the Fund’s investment period, the aggregate amount of all capital
contributions returned to investors, and (ii) following the Fund’s investment period, the aggregate amount
of all capital contributions returned to investors and the aggregate amount of all capital commitments that
have not then been called by the Co-Managers. In the third quarter of 2022, the Managers of FBGPF
concluded that, because that Fund did not reach its intended scale, the Managers would waive the
management fees that would otherwise be due to FAMG IV in order to help absorb some of the costs of
running a Fund of its size. This additional revenue will be retained by FBGPF in an effort to benefit the
investors. Management Fees for each of the Fairway Funds are deemed earned and accrued daily and are
paid monthly, as and when cash is available to pay them. Management Fees are paid from each Fairway
Fund prior to any distributions made to investors in the Fund.
The Management Fee payable by FVGPF or FBGPF is shared between FAMG IV and Vivo or Bamboo,
whichever is the Co-Manager of that entity. Each Fairway Fund’s Manager or General Partner has also
previously entered into, or may in the future, in its sole discretion, enter into additional agreements or “side
letters” with certain investors to provide specific investors specified benefits in addition to the benefits
available to all other similarly situated investors, such as a waiver of any early redemption lockup periods
or fees, or a reimbursement of all or a portion of an acquisition fee, Management Fee, or a share of profits
interests paid to the Manager or General Partner, or similar benefits and rights not extended to other
investors pursuant to the Fund’s Offering Documents.
Additional Management Compensation: In addition to the Management Fee, FAMG III (the Manager of
FAVS) is entitled to receive a portion of any “available cash” (as that term is used in the FAVS Offering
Documents) generated by FAVS according to its distribution waterfall (the “Waterfall”) set forth in the
FAVS Offering Documents. The FAVS Waterfall requires payments of all interest and principal due on
any debt obligations, Fund expenses, and the Management Fee to be paid prior to paying a preferred return
to FAVS investors and returning their initial capital contributions. After payment of all expenses, any
accrued but unpaid preferred return, and the return of investors’ capital contributions, any remaining
available cash, as determined by FAMG III, is then split between FAVS investors and FAMG III as follows:
FAMG III is entitled to receive 20% to 30% of any available cash, with investors receiving the other 70%
to 80%, depending on class of membership interests receiving a distribution.
FAMG VI is also entitled to receive 25% of any cash available for distribution by Fund XIII after paying
all fund expenses (including the management fee and any other fees payable to FAMG VI or Fairway
affiliates), setting aside any cash reserves FAMG VI reasonably determines to be prudent and in the best
interests of the Fund as a whole, returning Fund XIII investors’ initial capital contributions, and paying
those investors a preferred return of 8%.
FAMG IV is not entitled to receive any portion of any cash available for distribution from FVGPF or
FBGPF. Instead, after payment of all applicable expenses by FVGPF and FBGPF, including the
Management Fee payable to FAMG IV and Vivo or Bamboo, respectively, 100% of each Fund’s net income
is distributed to investors. The Co-Managers of FVGPF and FBGPF, however, may receive a portion of
any distributable cash or net income generated by certain of the entities in which those Funds invest. When
that happens, the Funds’ Offering Documents provide that the Fund will pay the Manager or General Partner
prior to calculating and distributing any net income to investors.
As explained in more detail in FAIA’s brochure dated March 31, 2022, the General Partner of Funds VII
and VIIQP is not entitled to receive any portion of available cash generated at the Fund level. This is a
change from the original Offering Documents for those Funds. FAMG IV’s or FAMG VI’s affiliates,
however, may receive a portion of any distributable cash or net income generated by certain of the entities
in which Funds VII and VIIQP may invest.
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