Item 5 – Fees and Compensation
5.A. Adviser Compensation
The Adviser’s fees are generally described below and detailed in each in the Fund’s governing
documents. Fees for service may be negotiated with each client on an individual basis prior to the
engagement of the Adviser.
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Fees for the CLO Funds
For purposes of the calculation of base management fees with respect to CLO clients, gross
assets are being calculated utilizing par value of Bank Loans and other related debt securities as
well as the value of cash and cash equivalents which the Adviser believes is standard practice
with respect to CLOs. Often the calculation of the base management fee for the CLOs will be
based on the market value rather than par value. and will include a subordinated fee component
of the base management fee. For the CLO clients, fees are typically calculated and paid by an
independent trustee or a third-party independent custodian.
The difference between the senior fee and subordinated management fee components of base
management fees with respect to CLO clients relates to amount and certainty of collection and
are typically of differing amounts. The collection of such senior management fees by the Adviser
is fairly certain because senior management fees are typically paid by the Funds prior to most
interest expense, if any, is paid to the Fund’s debtholders. Subordinated management fees
associated with CLO clients are paid after most interest expense to the CLO’s debtholders is paid
and the CLO’s coverage tests have been met. The collection of such subordinated management
fees may be less certain under certain adverse credit conditions which may cause a failure in
connection with the CLO’s coverage test. However, in such instances, subordinated management
fees will typically be deferred and may be paid at a later date assuming there are sufficient funds
and the CLO’s coverage tests have been met at a later date.
Fees for the Private Equity Funds
The private equity Funds pay an annual management fee to the Adviser quarterly both in advance
and in arrears that will vary based on a particular Fund's governing documents. Generally, the
management fee ranges from 0.9% to 2% of assets under management which is fair-valued by
the Adviser since there is no readily available market price for the private company investments.
FAM LLP, in its sole discretion, permits investors who are employees or otherwise related to
personnel to invest in a Fund without being subject to the standard management fee or the carried
interest (performance fee).
Performance Fees
The Funds, under certain circumstances, pay a performance fee to the Adviser in addition to the
base management fee. Performance fees are further discussed in Item 6 of this Brochure
General Fee Disclosures
In the event that additional assets are placed under management during the calendar quarter, the
Adviser’s compensation with regard to base management fees will be calculated and payable on
a pro rata basis.
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Each Fund’s respective fund’s governing documents will generally permit the Adviser to waive,
rebate or defer all or part of the management fee and/or performance fee with respect to
investments made by certain Investors without waiving, rebating, or deferring the fees charged to
other Investors.
Fees may change over time and as discussed below, different fee schedules may apply to
different types of clients or advisory arrangements. The amount, timing, and type of fees charged
(i.e., base management fee and performance fee), and the manner in which fees are calculated,
are set forth in each Fund’s governing documents There may be differences in fees paid by certain
Investors based on a variety of factors. The Adviser reserves the right to waive or reduce the fees
charged to a particular Investor in its sole and absolute discretion.
5.B. Direct Billing of Advisory Fees
The annual management fee will be deducted quarterly from each Fund’s assets.
5.C. Other Non-Advisory Fees
FAM LLP’s advisory fee is exclusive of brokerage commissions, transaction fees and other related
costs which shall be incurred by the Funds. The Funds will incur certain charges imposed by
third-party custodians, brokers, third-party investment and other third parties including legal and
accounting fees pertaining to services rendered to the Funds as well as wire fees, taxes and
other transaction-related fees. There may be times when excess cash is swept into instrument
such as a money market fund which will also charge a service fee.
Certain expenses can be attributed to a specific Fund(i.e., a legal expense in connection with a
change in a Fund’s governing documents or broken deal expenses) while other services are
shared by one or more clients (i.e., loan pricing services). Such shared services and the expenses
incurred are typically allocated to the Funds if the Fund derives a benefit for the service. If it is
determined that the Fund received the service, the cost of the service is allocated on a pro-rata
basis determined by Fund size.
5.D. Advance Payment of Fees
Adviser bills for its services quarterly, both in arrears and in advance, depending on the fund.
Billing terms are outlined in each Fund’s governing documents.
5.E. Compensation for Sale of Securities or Other Investment Products
The Adviser and its personnel do not accept compensation for the sale of securities or other
investment products. Certain affiliates of the Adviser may receive compensation related to a
Fund's investments. These fees are disclosed in each Fund’s governing documents and in Item
10 of this Brochure.
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Item 6 – Performance-Based and Side-By-Side Management
CLO Fund Performance Fees: The Adviser’s performance fees with respect to CLO clients are
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