Item 5. Fees and Compensation
Mosaic primarily seeks high net worth and institutional clients for its Vehicles. Certain
Vehicles may require investors satisfy certain suitability tests such being an “accredited
investors”, a “qualified client” or a “qualified purchasers”, each as defined under federal
securities laws. 2 Vehicles may include management fees, performance fees, or a
combination of both management fees and performance fees.
Vehicle Costs and Expenses
Generally, each Vehicle pays for all costs and expenses associated with forming and
operating the Vehicle. Subject to each Vehicle’s Governing Documents, such costs and
expenses paid by the Vehicles may include the following:
• General Costs and Expenses. All costs and expenses incurred in connection with
its organization and operation (or will reimburse Mosaic and its affiliates for having
actually incurred any such expenses), including, without limitation: (i) all expenses
incurred during the closing of a transaction, including, but not limited to, travel,
attorneys, accountants, appraisers and other consultants; (ii) any expenses
associated with the evaluation and making of potential investments (including
travel and any due diligence costs or expenses of any third parties) and all fees for
attorneys, accountants, consultants and other professionals or experts (including the
fees and expenses for counsel to Mosaic) arising in connection with the Vehicle’s
business; (iii) all fees, costs and expenses related to the making, holding,
development, management, monitoring, administering, servicing, foreclosing and
enforcing or otherwise exercising remedies related to, and sale or other disposition
of investments (including any legal, audit, appraisal, structural review, custodial,
environmental review, insurance, consulting, brokerage, underwriting and
indemnification costs and expenses); (iv) all costs relating in any way to any
offerings of units, including, without limitation, costs relating to preparing offering
documents, travel, complying with the laws of applicable jurisdictions and payment
of filing fees; (v) all fees related to accounting, portfolio management and risk
management systems and all quotation and valuation costs and expenses, including
without limitation, the fees and out-of-pocket expenses of any Valuation Agent;
(vi) all costs, fees and expenses relating to investor relations, communications,
bookkeeping, accounting and the preparation and mailing of financial, tax and
performance information to investors in the Vehicles and any U.S. federal, state
and local taxes, filing and registration fees of the Vehicles; (vii) all insurance costs
and fees and expenses associated with licensing and insuring the activities of the
Vehicles and indemnifying the Firm or its affiliates; (viii) all litigation and
indemnification expenses; (ix) all costs and expenses related to any financing,
hedging, ratings, securitization or capitalization; (x) all expenses related to making
The terms “Accredited Investors”; “Qualified Client”, “Qualified Purchaser”; and” shall have the meaning set forth,
respectively, in the Securities Act of 1933, Investment Advisers Act of 1940 and Investment Company Act of 1940 and the
rules promulgated thereof, each as amended from time to time.
7|Page
temporary investments and any interest expenses; (xi) all expenses associated with
software licensing fees necessary to conduct the Vehicles related activities; and
(xiii) any extraordinary expenses.
• Amortization of Organizational Costs; Cost Sharing. For accounting purposes, the
organization expenses incurred by the Vehicles may be amortized over a period of
60 months or such other time period as Mosaic determines to be fair and equitable
in its sole discretion. Mosaic may enter into certain cost-sharing or cost-
reimbursement relationships with certain Vehicles in order to normalize returns
among Vehicles that incur different expenses ratios despite investing in all or many
of the same underlying investments, or for any reason whatsoever.
• Sourcing and Diligence Expenses. These expenses relate more generally to
investment sourcing and diligence for a particular investment strategy and include
fees, costs and expenses of identifying, investigating (including conducting
diligence with respect to), evaluating, structuring and negotiating potential
investments for such strategy. The largest category of sourcing and diligence
expenses are those expenses incurred with respect to the pursuit of particular
investments that are never actually consummated (“Broken Deal”). Examples of
such Broken Deal expenses include fees and expenses of any legal, financial,
accounting, consulting or other advisors or lenders, real estate brokers,
environmental consultants, investment banks and other financing sources in
connection with arranging financing for transactions that are not consummated; any
travel and accommodation expenses and any deposits or down payments that are
forfeited in connection with, or amounts paid as a penalty for, unconsummated
transactions.
• Other Sourcing and Diligence Expenses. Includes certain organizational expenses;
...