Item 5 - Fees and Compensation
A. Below is a discussion of how the Adviser is compensated in connection with providing advisory
services to its Clients. The Adviser may enter into different fee arrangements on a client-by-client
basis. It is critical that all Clients, and investors in the Funds, refer to the applicable Client’s
governing documents for a complete understanding of how the Adviser and its affiliates are
compensated for advisory services. The information contained herein is a summary only and is
qualified in its entirety by each applicable Client’s Governing Documents.
Management Fees for the Adviser. The Adviser generally receives management fees (the
“Management Fees”) from the Funds between 1.25% to 2.0% per annum of net asset value
depending on the class of partnership interests. The Management Fee is payable by a Fund to the
Adviser or its designee quarterly and in advance, as described in each Fund’s respective governing
documents, and pro-rated for partial periods. For any Sub-Advisory Client, the Adviser is not
entitled to receive any management fees or compensation.
Incentive Allocation for the Adviser. Additionally, the general partner of the Fund, or other affiliate
of the Adviser, (the “General Partner”) may be eligible to receive an incentive or performance
allocation from a Fund based on a percentage of net capital appreciation (both realized and
unrealized) during each yearly measurement period (the “Incentive Allocation”), subject to a high
water mark. The Adviser expects the Incentive Allocation to be between 15% and 22.5% of net
capital appreciation of the Fund.
The compensation described above is the Adviser’s typical compensation rates. However,
Management Fee and Incentive Allocation rates may be negotiable. The Adviser has the right to
enter into agreements with one or more Fund investors to waive or modify certain terms of the
offering of a Fund’s interests, or certain rights and obligations of Fund investors, including
compensation, otherwise applicable to such interest(s), in each case without notice to the Funds’
other investors.
Management Fees for SilverArc Private Capital. The Relying Adviser generally receives a
Management Fee up to 2% of capital commitments during the investment period. However, the
Management Fee may be reduced for certain investors in particular circumstances, as set forth in
the Governing Documents for each respective Fund. This Management Fee is payable quarterly in
advance by limited partners in the Funds. The Management Fee will cover all ordinary
administrative and overhead expenses including salaries, rent and office equipment. The precise
amount of, and the manner and calculation of, the Management Fees for each respective Fund is
governed and disclosed in the Governing Documents.
Carried Interest Fees for SilverArc Private Capital. In terms of performance-based fees, 20% to
30% of the Relying Adviser’s Funds’ net investment proceeds are allocated as “carried interest.”
However, the carried interest may be reduced for certain investors in particular circumstances, as
set forth in the Governing Documents for each respective Fund. Carried interest will be subject to
certain adjustments and reserves as stated in more detail in each of the Relying Adviser’s respective
Fund Governing Documents. All carried interest are distributed to the General Partner, SilverArc
Private Capital I, LP.
In addition, certain limited partners that may qualify as an Early Close Investor (as defined below),
are eligible for (i) a 10% reduction of the Carried Interest with respect to such Early Close Investor
and (ii) a 10% reduction of the Management Fee payable by such Early Close Investor.
An “Early Close Investor” is any limited partner that makes a capital commitment to such Fund
that is accepted by the general partner on or before November 30th, 2024, subject to the extension
or early termination of such period in the sole discretion of the general partner (such period, the
“Early Close Date”); provided, that, a limited partner shall only be treated as an Early Close
Investor with respect to a capital commitment accepted by the general partner on or before the Early
Close Date and any subsequent capital commitment by such limited partner shall not be entitled to
such benefits.
B. The Management Fee and the Incentive Allocation for the Adviser are proportionally adjusted for
capital contributions or directly deducted from the capital account balances of fee-paying investors
in the Funds.
SilverArc Private Capital directly deducts all applicable fees from the respective Funds’ assets. The
management fees are typically funded with capital contributions drawn for such purpose, but are
also permitted to be funded with, or withheld from, proceeds from investments. Carried interest
distributions generally will be distributed from time to time upon the disposition of investments by
a respective Fund and are distributed in accordance with the terms of the Offering Documents.
C. Each Fund bears its own legal and other organizational expenses incurred in the formation of the
Fund (the “Organizational Expenses”) up to an aggregate amount agreed upon in the Fund’s
Governing Documents. In the General Partner’s sole discretion, certain Organizational Expenses
may be amortized over a period of up to 60 months from the date the Fund commences its
investment activities. The operating and administrative expenses that are borne by each Fund or
SMA client are outlined in the applicable LPA or SMA agreement.
SilverArc Private Capital will mainly be responsible for all expenses incurred by or on behalf of
SilverArc Private Capital (including, without limitation, organizational costs of SilverArc Private
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