Fees and Compensation
GSM receives management fees in connection with the investment management services it
provides to each of the Funds and may also receive performance fees. Such management
fees, performance fees or other compensation generally are negotiable and established at
the beginning of the advisory relationship with each Fund. Specific details of payment terms
and compensation, including its method of calculation, are set out in the offering materials,
indentures, disclosure documents, Management Agreements and the constituent
documents of each Fund. Such compensation may be negotiated with strategic partnerships,
managed accounts and certain other investors in certain limited circumstances.
Management fees may be subject to waiver or rebate. Such management fees are generally
structured with a portion of such fee payable as a senior management fee and a portion
payable as a subordinated management fee. Management fees are typically payable
quarterly in arrears, deducted from each Funds’ account and dependent in part on certain
cash distribution constraints set forth in the governing documents for each Fund.
Collateral management fees for Fund clients are payable only to the extent that funds are
available in accordance with the priority of payments described in the Funds’ indentures.
GSM may also receive an incentive fee as set forth in the Funds’ indentures. Incentive fees
are also only payable to the extent that funds are available for such purpose and certain
performance hurdles are met on each payment date in accordance with the priority of
payments described in the CLOs’ indentures.
All performance-based compensation payable to GSM will be consistent with the
requirements of Section 205 of the Advisers Act, and as applicable, Rule 205-3 thereunder.
Performance-based compensation payable to GSM is typically payable quarterly, or more
frequently, in arrears, deducted from each CLO’s account and dependent in part on certain
cash distribution constraints set forth in the constituent documents for each CLO.
GSM may also receive management fees payable under CLO Warehouse documents as
negotiated by GSM on a deal-by-deal basis.
In accordance with the terms of GSM’s Management Agreement with each of the Funds and
applicable indentures, the Funds generally reimburse GSM for certain out-of-pocket
expenses related to the services provided by GSM and third parties to the CLOs.
Each Fund typically pays or otherwise bears all fees, costs, expenses and other liabilities
incurred in connection with the formation and organization of such Fund (collectively, the
“Organizational Expenses”). Fees, costs and expenses will differ in each Fund.
Each Fund, subject to its governing documents, typically pays or otherwise bears all of the
direct and indirect fees, costs, expenses and other liabilities or obligations resulting from or
arising in connection with its operations (collectively, the “Operating Expenses”). These
Operating Expenses include taxes, brokerage commissions, clearing and settlement fees and
other typical transaction expenses related to closing and execution. The Operating Expenses
of a particular Fund are set forth in its governing documents and related offering documents.
All fees, costs and expenses incurred by GSM employees for travel, accommodations, meals,
events, entertainment and other similar fees, costs and expenses are subject to applicable
travel and expense reimbursement policies and procedures.
GSM and its affiliates from time to time incur fees, costs and expenses on behalf of more than
one Fund or multiple Funds. To the extent such fees, costs and expenses are incurred for the
account or benefit of more than one Fund, each Fund typically bears an allocable portion of
any such fees, costs and expenses in proportion to the size of its investment in the activity
or entity to which the expense relates (subject to the terms of each Fund’s applicable
governing documents) or in such other manner as GSM considers fair and equitable under
the circumstances. GSM endeavors to allocate such fees, costs and expenses on a fair and
equitable basis over time.
Apollo Management Holdings, L.P., Apollo Capital Management, L.P. and their affiliates
(collectively the “AGM Group”) and Redding Ridge Asset Management LLC (“RRAM” and
together with the AGM Group, the “Service Providers”) provide certain services to GSM.
Such services may include, but are not limited to: (i) certain administrative and back-office
services including making available certain non-credit facilities, systems, and other
infrastructure assistance; and, (ii) the provision of certain non-discretionary services
related to structuring and other strategic guidance and advice with respect to the Funds and
CLO Warehouses; and (iii) providing middle, back-office and other administrative services,
including, but not limited to, supporting legal, tax, compliance and risk functions. In
consideration for providing such services, certain members of the Service Providers are
entitled to service fees pursuant to service agreements with GSM and are entitled to be
reimbursed for certain costs and expenses pursuant to such service agreements.
Funds and CLO Warehouses are required to pay fees, costs or expenses prior to their closing
dates. In addition, no employee of GSM or its affiliates receives compensation in connection
with the sale of interests in CLOs or CLO Warehouses.
Additional information relating to GSM’s brokerage practices is outlined in Item 12 –