ITEM 5. FEES AND COMPENSATION
The management fees and performance-based compensation, if any, payable by each Client
or its affiliate is set forth in detail in each Client’s Governing Documents. Generally, the
Adviser receives a management fee from each Client that is equal to a percentage of the
assets of such Client that are managed by the Adviser. With respect to certain Managed
Accounts, the Adviser receives reimbursement of an agreed upon amount of the Adviser’s
operating expenses in lieu of a management fee, as provided in such Managed Accounts’
Governing Documents. In addition, the Adviser may be entitled to a performance-based
fee or allocation from Clients, as described in Item 6.
The Adviser presently offers investors two classes of Shares. Class A is a limited capacity
“Founders” share class with a lockup and Class B is the standard share class. For its
advisory services to the Funds, the Adviser generally receives a management fee equal to
1% (Class A Shares) or 1.5% (Class B Shares) per annum of each Investor’s capital
account balance. In addition, the General Partner generally is entitled to a 15% (Class A
Shares) or 20% (Class B Shares) performance-based fee, in the form of incentive
allocations, based on the profits allocated to each Fund’s sub-accounts and subject to a
“high water mark”, as described in the Funds’ Governing Documents.
The fees and payments listed above are negotiated and agreed upon in advance. Typically,
the management fees are deducted from a Client’s account (or the account of its beneficial
owners) at the beginning of each calendar month and the performance-based fee or
allocation is deducted or debited, as applicable, from a Client’s account (or the account of
its beneficial owners) at the end of each fiscal quarter or fiscal year. If an Investor was to
be permitted to withdraw capital on a date other than the end of a calendar month, the
Investor would not receive any refund of any management fee as to the remaining portion
of that calendar month.
The Adviser may offer other classes with different fee structures. The Adviser also may
waive, reduce or rebate the management fee and/or performance-based fees as to particular
Investor, including without limitation, Investors who are members of the Adviser’s
personnel.
Each Client is responsible for its organizational expenses (typically, up to a certain cap, as
specified in the Client’s Governing Documents).
Each Fund is also responsible for its operating expenses, which may include, but are not
limited to the following: (a) brokerage and futures commissions and other transaction
related compensation and charges arising out of transactions involving Fund assets,
including costs and expenses associated with using a service provider unaffiliated with the
General Partner to provide an outsourced trading desk function; interest on margin and
other borrowings, interest and other borrowing charges on investments sold short, and
custodial fees; (c) auditing, accounting, administration, compliance, bookkeeping,
appraising, tax preparation fees and expenses, D&O/E&O, cybersecurity and other
insurance expenses, legal and other professional fees, costs and expenses (including fees
and costs paid to the General Partner and its affiliate(s)’ counsel for services relating to the
Fund’s legal affairs, and including fees and costs in connection with lawsuits, arbitrations
and other controversies and related costs and liabilities); (d) organization and offering costs
made by or on behalf of the Fund (including those advanced by the General Partner or its
affiliate); (e) costs and expenses incurred in connection with the offer and sale of Fund
interests, including printing, copying, travel and travel-related costs and expenses
associated with the preparation of the Fund’s offering materials and the offer and sale of
Fund interests; provided that the Fund will not be charged or bear any placement or
solicitation fees in connection with the offer and sale of Fund interests; (f) fees and
expenses of third-party appraisers, experts, consultants, and other professionals in
connection with, as well as other costs and expenses (including travel and travel related
expenses) directly related to, investment research and due diligence; (g) regulatory,
licensing and governmental registration, filing and other fees, transfer, withholding, stamp,
and other taxes and duties imposed on the Fund or Investors; (h) costs and expenses of
Fund reporting, and costs and expenses of Fund governance activities (including obtaining
Investor Consents); (i) the Fund’s allocable share of the costs and expenses related to the
operation and/or administration of any collective investment vehicle (including a “master
fund” or similar entity) in which the Fund holds an ownership interest; and (j) other
reasonable Fund costs and expenses related to the Fund’s governance, management and
operation and/or the purchase, sale or transmittal of investments and other Fund assets, as
the Adviser or General Partner determines.
Each Managed Account bears all expenses relating to transactions for such Managed
Account, including, without limitation, (a) third-party commissions; (b) third-party dealing
and other transaction or execution costs; (c) transfer charges; (d) registration charges; (e)
administrative expenses, including, without limitation, costs of any administrator; and (f)
taxes.