ITEM 5 – FEES AND COMPENSATION
Item 5.A Describe how you are compensated for your advisory services. Provide your fee
schedule. Disclose whether the fees are negotiable.
Tontine generally charges Advisory Clients an asset based investment
management fee based on the value of the Advisory Client’s assets under
management. In addition, Advisory Clients also pay Tontine a performance-based
fee or incentive allocation. These performance-based fees/allocations are
compensation to Tontine that is based on a share of capital gains on, or capital
appreciation of, the assets of an Advisory Client.
Tontine also manages the Legacy Fund for which no management fee or
performance-based compensation is charged to or allocated from such Fund.
Fund Fees
The Fees applicable to each Fund are set forth in detail in each Fund’s offering
documents. A brief summary is below.
Management Fees
Management fees are generally calculated and paid quarterly in advance. The
management fee is generally based on the net asset value of each Fund investor’s
interest in the Fund, as of the first day of such quarter or as of the last day of the
previous fiscal quarter, depending on the Fund. The quarterly management fee is
generally equal to 0.25% (1% on an annual basis) of a Fund’s net asset value
(subject in all cases to the specific management fee provisions of the applicable
Fund governing documents).
The management fee will be prorated for any capital contribution or
withdrawal/redemption by a Fund investor that is effective other than as of the
first day of a quarter. For Funds where the management fee is paid in advance, in
the event of a withdrawal/redemption by an investor other than as of the last day
of a quarter, a pro rata portion of the management fee (based on the actual number
of days remaining in such fiscal quarter) will be repaid by the relevant Tontine
entity to the Fund and distributed to the Fund and then to the withdrawing Fund
investor.
For purposes of calculating management fees, Special Investments held by a
particular Fund generally (though with certain exceptions) are valued by Tontine
at fair value (which will generally be cost if the investment is designated as a
Special Investment at the time of acquisition).
Incentive Allocations
Tontine, with regard to the offshore Funds, and the General Partners (as defined in
Item 10.C, below), with regard to the domestic Funds, generally charge
performance-based compensation and/or fees to Fund accounts that range from
15-20% of the net capital appreciation (including realized and unrealized gains
and losses) allocated to each Fund investor as of the end of the Fund’s fiscal year,
subject to a high water mark or loss carryforward mechanism, which generally
provides that to the extent a Fund incurs net losses as of the end of any year, the
Fund investors will not be charged an incentive allocation on net profits earned in
subsequent years unless 100% of the net losses carried forward from prior years
have been recouped (subject in all cases to the specific performance-based
allocation provisions of the applicable Fund’s governing documents).
For purposes of determining the performance-based compensation, the
performance-based compensation will take into account, with respect to Special
Investments, only gains and losses realized or deemed realized.
In the event that a Fund is terminated or an investor withdraws/redeems other than
at the end of a fiscal year, then for purposes of determining the Incentive
Allocation allocable at such time to the Fund’s General Partner, net capital
appreciation will be determined as if such dates were the end of the fiscal year,
subject to certain adjustments. In the sole discretion of the Fund’s general partner
or investment manager, the performance compensation may be waived, reduced or
calculated differently with respect to certain investors.
Certain Funds or Fund investors may pay a higher or lower management fee or
performance-based compensation than other Funds or Fund investors for the same
management services, depending, for example, on investment strategy, number of
related investment accounts or total Fund investor assets under management with
Tontine. Tontine may reduce, waive or calculate differently the management fees
or performance-based compensation for Fund investors that are members,
employees or affiliates of Tontine and relatives of such persons and certain large
or strategic investors.
It is critical that Fund investors refer to their respective Fund’s private
placement memorandum and operating agreements for a complete
understanding of fees and allocations they may incur. The information
contained herein is a summary only and is qualified in its entirety by such
documents.
Account Fees
The Fees applicable to each Account are set forth in detail in each Account's
investment management agreement. A brief summary is below.
Fee arrangements with the Accounts are individually negotiated and established
pursuant to each Account’s investment management agreement. Generally, the
investment management agreements are terminable upon receipt by either party
...