Item 5 - Fees and Compensation
Investment Management
The Adviser bases its fees on a percentage of assets under management, hourly charges, fixed fees, and performance
fees. Although the Advisory Service Agreement is an ongoing agreement and constant adjustments are required, the
length of service to the client is at the client’s discretion. The client or the investment manager may terminate an
Agreement by written notice to the other party. At termination, fees will be billed on a pro rata basis for the portion of
the quarter completed. The portfolio value at the completion of the prior full billing quarter is used as the basis for the
fee computation, adjusted for the number of days during the billing quarter prior to termination.
SBCM Managed Account Program: SBCM charges an annual fee for investment management services for the Managed
Account Program calculated as a percentage of assets in the account. The maximum fee is 1.1% per annum and is
subject to negotiation.
Financial Planning: Clients are charged an hourly or a flat fee for financial planning services. The hourly fee is between
$100 and $500 an hour depending on the experience of the person assigned to the review. Flat fees are negotiated with
the client. Fees are based on the range and complexity of the services being provided. If a client implements all or a
portion of a plan through SBCM planning fees may be waived at the Adviser’s sole discretion. Implementation of the
plan through SBCM is optional, and the client is advised that similar products or services are available elsewhere. Fees
are subject to change without prior notification at the discretion of SBCM.
Private Equity Funds: For Private Equity Funds I and II, the fee is equal to 1% of all asset of each member’s capital
account in the fund(s), including realized and unrealized gains and losses of securities held in the fund to be determined
upon an annual valuation of the funds’ overall assets. However, members who maintain individual investment accounts
managed by the manager throughout the lifetime of the fund will not be charged the management fee by the fund
provided that, such members' capital accounts shall be considered “assets under advisory” and shall remain subject to
the terms of the Client Service Agreement previously entered into with the manager.
For the SB Capital Management Private Equity Fund III, LLC, the manager reserves the right to receive an annual
management fee no more than 1.0% of all assets of each member's capital account in the fund, including realized and
unrealized gains and losses of securities held in the fund, to be determined upon an annual valuation of the fund's
overall assets. However, members who maintain individual investment accounts managed by the manager throughout
the lifetime of the fund will not be charged the management fee by the fund provided that, such members' capital
SB Capital Management, Inc. Brochure | Page 9
accounts shall be considered “assets under advisory” and shall remain subject to the terms of the Client Service
Agreement previously entered into with the manager.
For SBCM Private Equity Fund IV, LLC, the manager will receive (a) an annual management fee equal to one percent (1%)
of all capital commitments of each member in the Fund from inception through the fifth calendar year following the final
closing, paid or accrued quarterly based on the commitments as of the closing of the prior quarter; and (b) thereafter,
80% of the previous year’s compensation, paid or accrued quarterly. However, members who have individual
investment accounts managed by SBCM throughout the lifetime of Fund IV will not pay the management fee provided
that, such members' capital accounts will remain subject to the terms of the Client Service Agreement previously
entered into with SBCM. The management fee will begin being charged immediately upon the termination of the
member’s Client Service Agreement.
Hedge Fund: An annual management fee of 1.00% may be charged to investors who do not have at least $2 million USD
under management with SB Capital Management, Inc. All investors with less than $2 million USD under management
with SB Capital who were invested in the Fund before June 30, 2009 will also be exempt from the management fee.
However, these members' capital accounts will remain subject to the terms of the Client Service Agreement previously
entered into with SBCM. The management fee will begin being charged immediately upon the termination of the
member’s Client Service Agreement.
Clients who invest in the fund after July 1, 2009 are subject to performance fees. The Manager may receive a
“Performance Allocation” as to each Limited Partner equal to five percent (5%) of the net profits allocated to that
Member, but only to the extent those net profits exceed net losses previously allocated to the Limited Partner that have
not been recovered.
In the event that the client’s situation is substantially different than disclosed at the initial meeting, a revised fee will be
provided for mutual agreement. The client must approve the change of scope in advance of the additional work being
performed when a fee increase is necessary.