Item 5 – Fees and Compensation
Fees generally are paid to each Fund’s respective General Partner as set forth in each Fund’s
Governing Documents. Capitalized terms used in this section that are not otherwise defined herein
will have the meanings assigned to such terms in the applicable Governing Documents.
TLF Fees:
With respect to TLF, the General Partner charges a Management Fee that consists of two
components – a “Base Management Fee” and an “Incentive Fee”:
Base Management Fee: The Base Management Fee is calculated monthly and paid quarterly in
arrears. For each month it is an amount equal to (i) 0.0833% multiplied by (ii) total assets under
management on the last day of the previous month and the fee for any partial month is
appropriately prorated as determined by the General Partner. Each limited partner’s share of this
fee shall be apportioned pro rata based on his or her Capital Account in TLF.
Incentive Fee: The Incentive Fee is calculated on a monthly basis and is payable quarterly in
arrears, as outlined below.
(i) Monthly Pre-Incentive Fee Distributable Income Amounts will be compared to a hurdle amount
of 0.667% (8.0% annually) times the total of all investors’ previous month’s ending Unreturned
Capital Amount.
(ii) 30% of Pre-Incentive Fee Distributable Income Amounts, if any, that exceeds the hurdle
amount in any quarter, is payable to the General Partner.
(iii) If Pre-Incentive Fee Distributable Income Amounts do not exceed the hurdle amount in any
Fiscal Quarter, a hurdle shortfall is created that will carry forward to subsequent quarters. No
Incentive Fee is payable to the General Partner in any quarter in which a hurdle shortfall exists.
Derby RR QOF Fees:
With respect to Derby RR QOF, (i) a quarterly “Asset Management Fee” is paid to each of Derby
RR GP and the relevant OZ Manager equal to 0.125% (which is equivalent to 1% per year in the
aggregate for Derby RR GP and the relevant OZ Manager) of the total estimated cost of the
underlying real estate project, and (ii) an incentive allocation of 30% subject to a 6% preferred
return, all of which are further described in the Governing Documents.
Kress QOF Fees:
With respect to Kress QOF, (i) commencing on the 18th month after the initial closing of Kress
QOF, a quarterly “Asset Management Fee” is paid to each of Kress GP and the relevant OZ
Managers equal to 0.125% (which is equivalent to 1% per year in the aggregate for Kress GP and
the relevant OZ Managers ) of the total estimated costs of the underlying real estate project; and
(ii) an incentive allocation of 30% subject to a 7% preferred return, all of which are further
described in the Governing Documents.
Other Information
The Adviser and/or the General Partners are permitted to exempt certain investors in the Funds
from payment of all or a portion of Management Fees and/or incentive fees, including the General
Partners, their affiliates and any other person designated by the Adviser such as “friends and
family” of the Adviser or its personnel, or other investors meeting certain qualification
requirements based on investment size or other strategic or relationship factors. The Governing
Documents set forth the full list of terms under which management fees will be reduced, offset or
otherwise be limited, and consequently investors should expect to bear the full specified
management fee rate in the Governing Documents until they are reduced in the circumstances (if
any) and on the date(s) specified therein.
Principals or other current or former employees of the Adviser generally receive salaries and other
compensation derived from, and in certain cases including a portion of the Management Fee,
incentive fees, administrative fees, or other compensation received by the Adviser or its affiliates
in accordance with the Governing Documents.
Fund Expenses
Each General Partner is responsible for all expenses relating to its own operations, including
ordinary administrative and overhead costs and expenses, including salaries, benefits, rent and
utilities.
In addition to management fees, incentive fees and/or allocations, development fees and
organizational expenses incurred for a Fund (as such expenses are limited by the applicable Fund’s
Agreement of Limited Partnership), each Fund is generally responsible for fees, costs, expenses,
liabilities and obligations incurred by its General Partner, the Adviser or any affiliate thereof on
behalf of the Fund (or its subsidiaries or intermediate entities), including, without limitation: the
costs and expenses related to such Fund’s operations, including, without limitation, expenses
incurred in connection with the evaluation, audit and verification, structuring, organization,
negotiation, financing, refinancing, acquisition, bidding on, consummation, owning, managing,
monitoring, operation, holding, hedging, restructuring, trading, taking public or private, selling,
valuing, winding up, liquidation or other disposition, as applicable, of the Fund’s actual and
potential investments, (including follow-on investments) including: legal, financing, commitment,
transaction or other fees and expenses payable to attorneys, accountants, tax professionals,
investment bankers, lenders and, third-party diligence software and service providers, consultants
and similar professionals in connection therewith and any fees and expenses related to transactions
that may have been offered to co-investors, whether or not any contemplated transaction or project
is consummated and whether or not such activities are successful; reverse breakup, topping,
termination and other similar fees; auditing expenses; accounting, tax, tax preparation (including
in connection with the preparation and audit of the Fund’s financial statements, tax returns, tax
estimates and Schedule K-1s (or other investor tax reporting forms)) and legal fees, costs and
expenses, including those provided by an affiliate or a person affiliated with an employee of the
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