ITEM 5: FEES AND COMPENSATION
DESCRIPTION OF COMPENSATION
In consideration of our advisory services, 272 receives a “Management Fee” and an “Incentive/Performance
Allocation” with respect to each Client account. While our fees are described in detail in the 272 Fund’s governing
and offering documents and in the investment management agreements, a brief summary of our advisory fees is set
forth below.
Management Fee
272 Fund Management Fee: The Master Fund will pay to the Investment Manager a fee for its services (the
“Management Fee”) for each fiscal quarter equal to a quarter of the result of the Management Fee Rate multiplied by
the balance of each Capital Account as of the beginning of such fiscal quarter (before taking into account the estimated
accrued Incentive Allocation, if any). The Master Fund will calculate and pay the Management Fee in advance but
will amortize the Management Fee monthly over the fiscal quarter for which such Management Fee is paid. The portion
of the Management Fee applicable to a Capital Account will be charged to its corresponding Master Fund Shares.
“Management Fee Rate” means 1.5% per annum. The Master Fund will pay the Management Fee within 10 days of
the first day of each fiscal quarter. The Investment Manager may, without the consent of the Limited Partners, cause
the Management Fee to be charged to and paid by the Partnership instead of the Master Fund.
Incentive Allocation: Generally, at the end of each Fiscal Year, the Master Fund will reallocate from the record of
each series of Master Fund Shares corresponding to a Capital Account to the record of the Class M Shares an amount
(the “Incentive Allocation”) equal to the result of the applicable Incentive Allocation Rate multiplied by the net
realized and unrealized appreciation in the net asset value of such series of Master Fund Shares (taking into account,
as applicable, gains and losses realized or deemed realized with respect to Special Investments allocated during such
Fiscal Year, and after reducing such amount by the amount of the Management Fee debited to such Limited Partner’s
Capital Account during such Fiscal Year), adjusted for (i) any redemption of Master Fund Shares in the series since
the last calculation of the Prior High NAV of such series of Master Fund Shares, and (ii) expenses of the Partnership
(other than Investor-Related Taxes) corresponding to such series of Master Fund Shares that are not reflected in the
net asset value of the Master Fund (the “Adjusted NAV”); provided, however, that an Incentive Allocation will be
made only with respect to the excess of the Adjusted NAV of a series of Master Fund Shares over its Prior High NAV.
The Incentive Allocation will also be made with respect to net realized and unrealized appreciation attributable to
amounts withdrawn, amounts distributed, and amounts transferred (provided that such Transfer results in a change in
the beneficial ownership of the Interest transferred) and in connection with the termination of the Partnership or the
Master Fund. The Class M Shares will not be subject to the Incentive Allocation.
“Incentive Allocation Rate” means 20%.
The “Prior High NAV” of each series of Master Fund Shares is the net asset value of that series immediately
following the date as of which the last Incentive Allocation allocable with respect to such series was determined (or if
no Incentive Allocation has yet been determined with respect to such series, the net asset value of such series
immediately following the initial issuance of such series), reduced by any Investor- Related Taxes accrued or paid
subsequent to either such date.
For purposes of determining allocations, including calculating the Incentive Allocation and the Prior High NAV, any
Investor-Related Taxes related to a Partner, or a direct or indirect beneficial owner of the Master Fund will be deemed
distributed to such Partner or direct or indirect beneficial owner of the Master Fund and will not be deemed to be
expenses that reduce net capital appreciation or increase the Prior High NAV.
“Investor-Related Tax” means any tax withheld from the Partnership or the Master Fund or paid over by the
Partnership or the Master Fund, in each case, directly or indirectly, with respect to or on behalf of a Partner or a direct
or indirect beneficial owner of the Master Fund, and interest, penalties and/or any additional amounts with respect
thereto, including (i) a tax that is determined based on the status, action or inaction (including the failure of a Partner
or a direct or indirect beneficial owner of the Master Fund to provide information to eliminate or reduce withholding
or other taxes) of a Partner or a direct or indirect beneficial owner of the Master Fund, or (ii) an “imputed
underpayment” within the meaning of Section 6225 of the Internal Revenue Code of 1986, as amended (the “Internal
Revenue Code”), and any other similar tax, attributable to a Partner or a direct or indirect beneficial owner of the
Master Fund, as determined by the General Partner in its sole discretion.
If Master Fund Shares of a particular series are redeemed other than at the end of a Fiscal Year as of which an Incentive
Allocation is made with respect to such series, the Prior High NAV of such series will be reduced in the same
proportion as the reduction in the net asset value of that series caused by such redemption.
The Incentive Allocation will be determined separately with respect to each series of Master Fund Shares
corresponding to a Capital Account established for a Limited Partner. Accordingly, it is possible that an Incentive
Allocation may be made with respect to one series of Master Fund Shares even though another series of Master Fund
Shares corresponding to a Capital Account of the same Limited Partner has not appreciated or has depreciated in value
during the same period.
...