ITEM 5 – Fees and Compensation
Each Adviser provides investment management services on a fee basis, which includes fees based
upon a Fund’s invested capital, as well as fees based on performance of the Funds. Applicable
fees are set forth in detail in each Fund’s offering documents. A brief summary of the Adviser’s
fees is provided below. Investors should refer to the relevant offering documents for a complete
understanding of how each Adviser is compensated for its advisory services.
Management and Structuring Fees
FCAP generally receives an annual management fee equal to 1% of the amount invested by the
FCAP Fund, payable quarterly in arrears, on a per class basis. FO generally receives an annual
management fee between 0.75% - 1% of the amount invested by the FO Fund, payable quarterly
in arrears, on a per class basis. Each Adviser also generally receives a structuring fee with respect
to each investment, payable upon closing of such investment. The structuring fee payable to each
Adviser may be equal to the closing fee, application fee and/or the syndication fee earned as a
result of closing the investment. The precise amount of the structuring fee for each such Fund
may vary due to a number of factors including, but not limited to, the type of investment, whether
the Adviser acts as Agent to an underlying loan and/or origination.
The Adviser or one of its affiliates also will generally receive a carried interest allocation of up to
35% of the aggregate realized profits or distributions, as applicable, to investors, which is in
addition to advisory and administrative fees and expenses, as described more fully in the
organizational documents and/or offering documents of the particular Fund. Such performance-
related compensation with respect to a Fund is subject to a performance hurdle set forth in such
Fund’s organizational documents and/or offering documents. The governing documents of the
Fund contain the method by which the performance-related compensation is calculated.
From time to time, the Adviser will use or retain certain consultants, including those that are
affiliated with the Adviser, to provide services to (or with respect to) one or more Funds or certain
current or prospective investments in which one or more Funds invest. Such consultants generally
are expected to provide services in relation to the identification, acquisition, holding,
improvement, and disposition of investments, including operational aspects of such investments.
Such consultants can be expected to receive compensation, including, but not limited to, cash
fees, discretionary bonuses (whether or not based on pre-determined milestones), a profits,
participation or equity interest in an Investment, or other compensation, the amount of which
could be determined according to one or more methods, including, but not limited to, the value
of the time (including an allocation for overhead or other fixed costs) of such consultant, a
percentage of the value of the investment and/or the invested capital exposed to such
investment. The relevant Fund typically will bear the costs of all consultant compensation as well
as fees, costs, and expenses of structuring consultant arrangements. Consultants are also
expected to be reimbursed for certain travel and other costs in connection with their services.
The foregoing compensation paid or granted, or expenses reimbursed, to such consultants will
not reduce or offset the management fees paid or payable by the Funds in accordance with the
applicable governing documents.
In some cases, the Adviser or its affiliates receive reimbursement of certain expenses from the
Funds, as described in the offering documents and periodic reports of those Funds. These
reimbursements are for expenses deemed by the Adviser in its discretion to be beneficial services
to the Funds.
Expenses
The Fund bears all its organizational, offering, and ordinary operating expenses and other fees
and expenses incurred in relation to the Fund, other than the operating expenses of the Adviser,
all as further described in the Fund’s governing documents and/or offering documents.
Organizational and initial offering fees and expenses borne by a Fund typically include all those
incurred in connection with (i) the offering and sale of interests in the Fund, (ii) the formation and
organization of the Fund and (iii) the preparation, negotiation, execution, and delivery of the
Fund’s governing and offering documents, including any related legal and accounting fees and
expenses, travel expenses, and filing fees.
Other fees and expenses borne by the Fund typically include, without limitation, (i) costs and
expenses of the Fund relating to the annual audit of the Fund and the preparation of federal and
state tax returns of the Fund; (ii) taxes payable by the Fund to federal, state, local and other
governmental agencies; (iii) costs incurred in connection with the development, investigation and
monitoring of portfolio company investments; (iv) expenses incurred in the holding, purchase,
sale or exchange of investments (whether or not actually consummated), including without
limitation, accounting fees, brokerage fees, transfer fees, legal fees, consulting fees, real property
or personal property taxes on investments, including documentary, recording, stamp and transfer
taxes, broken deal expenses and costs related to the registration or qualification for sale of
investments; (v) business development costs and expenses; (vi) bookkeeping and similar services
(including, without limitation, accounting fees, preparation of annual and interim financial
statements of the Fund, portfolio financing reports, and capital certificate); (vii) legal, insurance
and bonding expenses (including insurance), auditing expenses, and the amounts of any
judgments or settlements paid in connection with any legal actions, proceedings or investigations
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