Item 5. Fees and Compensation
Asset-Based and Performance-Based Compensation. The fee schedules for the Clients are described in
detail in each Client’s offering memorandum.
As a general matter, the Clients pay the Adviser an asset-based investment management fee each quarter
in advance ranging from 1.00% to 1.75% per annum based on the value of the net assets of the respective
Client on the first day of each quarter (the “Management Fee”). The Adviser has waived the Management
Fee for investors that are members, principals and employees of the Adviser, relatives of such persons, and
may do so for certain large or strategic investors.
As a general matter, 140 Summer Partners Fund GP LLC (the “General Partner”), an affiliate of the Adviser,
is entitled to receive annual performance-based compensation ranging from 10% to 20% (the “Incentive
Allocation”) from the Clients, which is compensation that is based on a share of net capital appreciation of the
assets of a Client. The Incentive Allocation is subject to a loss carryforward provision. The General Partner
has waived the Incentive Allocation for investors that are members, principals and employees of the Adviser,
relatives of such persons, and may do so for certain large or strategic investors.
Expenses. In addition to bearing the Management Fee and Incentive Allocation, if any, the Clients are also
subject to other expenses related to its investments and operations, such as all investment-related costs and
expenses (i.e., expenses that, in the Adviser’s sole discretion, are related to the investment of a Client’s
assets, whether or not such investments are consummated), including commissions and other trade execution
related charges, interest on margin accounts and other indebtedness, expenses relating to short sales,
clearing and settlement charges, option premiums and custodial and service fees, research-related expenses,
expenses relating to consultants, attorneys, brokers or other professionals or advisors who provide research,
advice or due diligence services with regard to investments; (iii) fees and expenses related to portfolio
exposure and performance management systems, risk management services and software related to trade
reconciliation, treasury, margin, financial and counterparty management, risk monitoring, performance
reporting, valuation quotation services (e.g., Bloomberg terminals, historical and live financial data and other
similar services and data feeds) and trade order management systems (including systems that facilitate trade
compliance, commission management, stock locates and transaction cost analysis, and third party service
providers used for implementation, custom reporting, updates, consultations, support, maintenance,
monitoring and data extracts); (iv) a Client’s legal, accounting, tax preparation and other tax-related expenses
(including preparation and mailing costs of financial statements, tax returns and reports to Shareholders),
auditing, consulting and other professional expenses; (v) third-party administration costs, fees and expenses
(including any costs, fees and expenses related to investor communications, relations, reporting or other
investor materials, tax preparation and related reporting, performance information, data extraction and other
types of reporting and any audit or accounting services provided by a third-party administrator); (vi) all fees
and charges of custodians, clearing agencies and banks; (vii) compliance and reporting expenses and
expenses attributable to regulatory filings that are made with respect to a Client or assets of a Client (including
Section 13, Section 16, Form D, Form PF, FATCA/CRS, anti-money laundering compliance, AIFMD, state
security filings (such as blue sky filings), general regulatory compliance and non-U.S. position reporting filings,
if applicable, and non-U.S. filings, if any); (viii) a Client’s pro rata share of Client-related insurance costs
(including a Client’s pro rata portion of director’s and officer’s insurance, errors and omissions insurance,
fidelity insurance and other similar policies covering the General Partner, the Adviser and any independent
review committee (“Review Committee”)); (ix) independent Review Committee members’ fees and expenses,
if any; (x) any taxes (including but not limited to any withholding taxes, transfer taxes, stamp duties and other
governmental or self-regulatory agency-related charges or duties); (xi) all costs and expenses incurred in
attempting to protect and enhance the value of a Client investment (including any fees and expenses
associated with any pending or threatened litigation, audit, investigation, administrative or other proceeding,
as well as any settlement costs); (xii) fees and expenses related to any activist-related activities; (xiii) any fees
and expenses related to a Client’s liquidation, if applicable; (xv) fees paid to proxy and securities class action
advisory firms; (xvi) expenses relating to the offer and sale of a Clients interests or shares and redemptions
and transfers thereof; (xvii) directors’ fees and expenses; (xviii) fees and expenses related to the cost of
maintaining registered offices in the Cayman Islands; and (xix) other reasonable expenses related to the
purchase, sale, preservation or transmittal of a Client's assets.
The allocation of expenses by the Adviser between it and a Client and among Clients represents a conflict
of interest for the Adviser. The Adviser has adopted an expense allocation policy that is designed to
address this conflict. The Adviser allocates expenses to each Client in accordance with the Client’s
governing documents. The Adviser will seek to allocate any shared expenses for products and services
benefitting multiple Clients or both the Adviser and a Client, and not covered in the Client’s governing
documents, in a fair and reasonable manner.