Investment Management
The Investment Manager and its General Partner
Tetragon Financial Management LP (the "Investment Manager") has been appointed the investment manager of TFG and the Master Fund pursuant to an investment management agreement dated 26 April 2007 (the "Investment Management Agreement"). The management and control of the Investment Manager is vested in its general partner, Tetragon Financial Management GP LLC (the "General Partner"), which is responsible for all actions of the Investment Manager. The General Partner is directly or indirectly controlled by Reade Griffith, Alexander Jackson and Paddy Dear. The General Partner and the Investment Manager are affiliated with Polygon Global Partners LLP (together with its other affiliated management companies, other than the Investment Manager and the General Partner, "Polygon") which is controlled by Reade Griffith and Paddy Dear. As the General Partner is responsible for all actions of the Investment Manager, any references to the Investment Manager on this website or in any of our disclosure shall be deemed to include a reference to the General Partner to the extent applicable. Mr. Griffith acts as the authorized representative of the General Partner and the Investment Manager.
In February 2012, the Investment Manager filed the relevant materials with the U.S. Securities and Exchange Commission to become registered as an investment adviser under the U.S. Investment Advisers Act of 1940.
The investment committee of the Investment Manager (the "Investment Committee") currently consists of Jeffrey Herlyn, Michael Rosenberg, David Wishnow, Reade Griffith and Paddy Dear and is responsible for the investment management of the portfolio and the business. The Investment Committee currently sets forth the investment strategy and approves each significant investment by the Master Fund.
The risk committee of the Investment Manager (the "Risk Committee") has the same composition as the Investment Committee. The Risk Committee is currently responsible for the risk management of the portfolio and the business and performs active and regular oversight and risk monitoring.
Summary of Key Terms of the Investment Management Agreement
The Investment Manager has full discretion, in accordance with the terms of the Investment Management Agreement, to invest the assets of TFG and the Master Fund in a manner consistent with the investment objective of TFG. The Investment Manager is authorized to delegate its functions under the Investment Management Agreement.
The Investment Management Agreement shall continue in full force and effect unless terminated (i) by the Investment Manager at any time upon 60 days’ notice or (ii) immediately upon TFG or the Master Fund giving notice to the Investment Manager or the Investment Manager giving notice to TFG or the Master Fund in relation to such entity in the event of (a) the party in respect of which notice has been given becoming insolvent or going into liquidation (other than a voluntary liquidation for the purpose of reconstruction or amalgamation upon terms previously approved in writing by the other party) or a receiver being appointed over all or a substantial part or of its assets or it becoming the subject of any petition for the appointment of an administrator, trustee or similar officer, (b) a party committing a material breach of the Investment Management Agreement which causes a material adverse effect to the non-breaching party and (if such breach shall be capable of remedy) not making good such breach within 30 days of service upon the party in breach of notice requiring the remedy of such breach or (c) fraud or wilful misconduct in the performance of a party’s duties under the Investment Management Agreement.
The Investment Management Agreement provides that none of the Investment Manager, its affiliates or their respective members, managers, partners, shareholders, directors, officers and employees (including their respective executors, heirs, assigns, successors or other legal representatives) (each, an "Investment Manager Indemnified Party") will be liable to the Master Fund, TFG or any investor in the Master Fund or TFG for any liabilities, obligations, losses (including, without limitation, losses arising out of delay, mis-delivery or error in the transmission of any letter, cable, telephonic communication, telephone, facsimile transmission or other electronic transmission in a readable form), damages, actions, proceedings, suits, costs, expenses (including, without limitation, legal expenses), claims and demands suffered in connection with the performance by the Investment Manager of its obligations under the Investment Management Agreement or otherwise in connection with the business and operations of TFG or the Master Fund, in the absence of fraud or wilful misconduct on the part of an Investment Manager Indemnified Party, and TFG and the Master Fund have each agreed to indemnify each Investment Manager Indemnified Party against any such liabilities, obligations, losses, damages, actions, proceedings, suits, costs, expenses, claims and demands, except as may be due to the fraud or wilful misconduct of the Investment Manager Indemnified Party.
The Investment Manager may act as investment manager or advisor to any other person, so long as its services to TFG or the Master Fund are not materially impaired thereby, and need not disclose to TFG or the Master Fund anything that comes to its attention in the course of its business in any other capacity than as Investment Manager. The Investment Manager is not liable to account for any profit earned or benefit derived from advice given by the Investment Manager to other persons. The Investment Manager will not be liable to TFG or the Master Fund for any loss suffered in connection with the Investment Manager’s decision to offer investments to any other person, or failure to offer investments to TFG or the Master Fund. The Investment Manager is authorized to enter into transactions on behalf of TFG and the Master Fund with persons who are affiliates of the Investment Manager; provided that in connection with any such transaction that exceeds $5 million of aggregate investment, the Investment Manager obtains either (i) the approval of a majority of the members of the Board Directors of TFG and the Master Fund that do not have a material interest in such transaction (whether as part of a Board of Directors resolution or otherwise) or (ii) an opinion from a recognized investment bank, auditing firm or other appropriate professional firm substantively to the effect that the financial terms of the transaction are fair to TFG and the Master Fund from a financial point of view.
Fees and Expenses
All fees and expenses of TFG and the Master Fund, except for the incentive fees for the Investment Manager (as described below), will be paid by the Master Fund, including management fees relating to the administration of TFG.
The Investment Manager is entitled to receive management fees equal to one and one-half percent (1.5%) per annum of the net asset value ("NAV") of TFG, calculated on a Share-by-Share basis and payable monthly in advance prior to the deduction of any accrued incentive fees. No separate management fees are payable with respect to the NAV of the Master Fund.
Management fees are payable to the Investment Manager at the beginning of each calendar month in advance.
TFG will also pay to the Investment Manager an incentive fee for each Calculation Period (as defined below) equal to 25% of the increase in the NAV of TFG during the Calculation Period (before deduction of any dividend paid or the amount of any redemptions or repurchases of Shares (or other relevant capital adjustments) during such Calculation Period) above (i) the Reference NAV (as defined below) plus (ii) the Hurdle (as defined below) for the Calculation Period. If the Hurdle is not met in any Calculation Period (and no incentive fee is paid), the shortfall will not carry forward to any subsequent Calculation Period.
A "Calculation Period" is a period of three months ending on March 31, June 30, September 30 and December 31 of each year, or as otherwise determined by the Directors.
The "Reference NAV" is the greater of (i) NAV at the end of the Calculation Period immediately preceding the current Calculation Period and (ii) the NAV as of the end of the Calculation Period immediately preceding the Calculation Period referred to in clause (i). For the purposes of determining Reference NAV at the end of a Calculation Period, NAV shall be adjusted by the amount of accrued dividends and amounts of any redemptions or repurchases of Shares (or other relevant capital adjustments) and incentive fees to be paid with respect to that Calculation Period.
The "Hurdle" for any Calculation Period will equal (i) the Reference NAV multiplied by (ii) the Hurdle Rate (defined below).
The "Hurdle Rate" for any Calculation Period equals 3-month U.S. Dollar LIBOR determined as of 11:00 a.m. London time on the first London business day of the then current Calculation Period plus the hurdle spread of 2.647858%, in each case multiplied by (x) the actual number of days in the Calculation Period divided by (y) 365.
The incentive fee in respect of each Calculation Period is calculated by reference to the increase in NAV of the Shares before deduction of any accrued incentive fee. The incentive fee is normally payable in arrears within 14 calendar days of the end of the Calculation Period. If the Investment Management Agreement is terminated other than at the end of a Calculation Period, the date of termination will be deemed to be the end of the Calculation Period. The Investment Manager does not charge separate fees based on the NAV of the Master Fund.
Under the provisions of a deferred fee agreement between TFG and the Investment Manager, the Investment Manager may defer payment of all, or a portion of, the incentive fee. Under this agreement, up to 100% of the amount which the Investment Manager elects to defer in any year may be invested in the same manner as TFG’s other assets. The amount of the fees which the Investment Manager elects to defer in any year may be deferred for a period of up to 10 years and 90 days. Deferred amounts will be paid in cash.
Investment Manager Options
In recognition of the work performed by the Investment Manager in successfully arranging the global offering and the associated raising of new capital for TFG, TFG granted to the Investment Manager options (the "Investment Management Options") to purchase 12,545,330 of TFG’s Non-Voting Shares at an exercise price per share equal to the IPO offer price (U.S. $10.00). The Investment Management Options are fully vested and immediately exercisable since the date of admission to the NYSE Euronext in Amsterdam and will remain exercisable until the 10th anniversary of that date.
The Services Agreement
The Investment Manager has entered into a services agreement with Polygon Global Partners LLP and Polygon Global Partners LP (together, the "Services Providers") dated 30 April 2012 (the "Services Agreement") following the termination of the existing services agreement by their affiliated entities Polygon Investment Partners LLP and Polygon Investment Partners LP. Under the Services Agreement, the Services Providers provide operational, financial control, trading, marketing and investor relations, legal, compliance, administrative, payroll and employee benefits and other services to the Investment Manager (the "Services") in exchange for fees invoiced on a monthly basis.
The Services Agreement provides, among other things, that none of the Services Providers, their affiliates or their respective directors, partners, members, managers, shareholders, officers and employees (including their respective executors, heirs, assigns, successors or other legal representatives) (each, a "Services Providers Indemnified Party") will be liable to the Investment Manager for any liabilities, obligations, losses (including, without limitation, losses arising out of delay, mis-delivery or error in the transmission of any letter, cable, telephonic communication, telephone, facsimile transmission or other electronic transmission in a readable form), damages, actions, proceedings, suits, costs, expenses (including, without limitation, legal expenses), claims and demands suffered in connection with the provision of Services under the Services Agreement in the absence of fraud or wilful misconduct on the part of a Services Providers Indemnified Party. The Investment Manager agrees to indemnify and keep indemnified each Services Providers Indemnified Party against any liabilities, obligations, losses (including without limitation losses arising out of delay, mis-delivery or error in the transmission of any letter, cable, telephonic communication, telephone, facsimile transmission or other electronic transmission in a readable form), damages, actions, proceedings, suits, costs, expenses (including without limitation legal expenses), claims and demands suffered, incurred or sustained in connection with the provision of Services under the Services Agreement, other than liabilities arising out of such Services Providers Indemnified Party's fraud or wilful misconduct.
Under the Services Agreement, the Services Providers are free to render similar services to others so long as their Services under the Services Agreement are not thereby impaired. Neither of the Services Providers are deemed to be affected with notice of or to be under any duty to disclose to the Investment Manager anything which may come to the notice of either Services Provider or any director, officer, servant, employee or agent thereof in the course of or in connection with its rendering such services to any other person or in any manner whatsoever otherwise than in the course of carrying out its duties under the Services Agreement.
Furthermore, please be advised that as of 30 April 2012, Polygon Global Partners LLP and Polygon Global Partners LP act as the “Service Providers” to each of LCM Asset Management LLC and GreenOak Real Estate — the respective previous services agreement with their affiliated entities Polygon Investment Partners LLP and Polygon Investment Partners LP having been terminated on such date.
The information contained in this webpage supersedes any previous disclosure by TFG or the Master Fund with respect to such information.