Item 5. Fees and Compensation
A. Advisory Fees and Compensation.
Asset-Based Compensation
The Adviser charges each client an investment “Management Fee” of up to 1.5% per annum based on the
value of each client’s assets under management. The Fund Investors indirectly pay the Management Fee
through their investment in the Fund.
Management Fees are charged either quarterly or monthly in advance based on the total market value of
the assets in the client account (including net unrealized appreciation or depreciation of investments and
cash, cash equivalents and accrued interest) on the first day of the quarter or month, as applicable. If a
new client account is established during a quarter or month, as applicable, or a client makes an additional
investment in its account during a quarter or month, as applicable, the Management Fee will be charged
as of the effective date of the applicable investment management agreement or the date of the additional
investment based on the value of the assets as of the applicable date and will be prorated for the number
of days remaining in the quarter or month, as applicable.
Management Fees are generally not negotiable; however, the Adviser, in its sole discretion, may waive or
modify the fees for certain investors in pooled investment vehicles who are members, employees or
affiliates of the Adviser or a related person of the Adviser, relatives of such persons and for certain large or
strategic investors.
Performance-Based Compensation
The Adviser (or its related person) will also be paid or allocated, as applicable, a performance-based fee
or allocation (a “Performance Fee”), which is compensation that is based on a share of capital gains on or
capital appreciation of the assets of a client. This compensation may be paid or allocated, as applicable,
to the Adviser or to a related person of the Adviser and may equal up to 20% of net profits, subject to a
loss carryforward.
The Performance Fee paid or allocated to the Adviser (or its related person) is generally not negotiable;
however, the Adviser, in its sole discretion, may waive or modify such compensation for certain investors
in the pooled investment vehicles who are members, employees or affiliates of the Adviser or a related
person of the Adviser, relatives of such persons and for certain large or strategic investors.
Contribution Firm
With respect to the Contribution Firms, the Adviser receives a flat annual fee and a discretionary bonus
as determined by the Contribution Firm based on a variety of factors.
B. Payment of Fees.
The Adviser deducts the Management Fee from Investor’s accounts by debiting the Investor’s fee payable
against the Investor’s capital account(s). For certain Founders Class Interests, the Management Fee will
be subject to a management fee reduction (or management fee increase, as the case may be), based on
the net assets of the Partnership on the final day of the preceding quarter. The Adviser deducts Investor
accounts for Management Fees monthly or quarterly, as applicable.
C. Other Fees and Expenses.
The Funds pay the following expenses: (i) the Management Fee; (ii) Partnership legal and compliance
expenses, fees and expenses related to various filings (or portions thereof) made in connection with
managing the Partnership’s portfolio (including, but not limited to, Section 13 filings, Section 16 filings
and similar expenses (if applicable)); (iii) administrator, audit (including custody audit, if applicable), tax
and Partnership-related accounting expenses (including third party accounting services); (iv) shareholder
proxy voting services; (v) Organizational Expenses (as defined in the relevant investment management
agreement); (vi) investment and trading expenses such as commissions, research fees and expenses; (vii)
data and data services, including real time pricing and market information, order management systems,
portfolio management systems, and risk management systems; (viii) interest on margin accounts and
other indebtedness, borrowing charges on securities sold short; custodial fees; bank service fees; (ix)
Partnership-related insurance costs; (x) any applicable Advisory Board or review committee members fees
and expenses; (xi) the costs of any litigation and indemnification relating to the affairs of the Partnership;
all fees and other expenses incurred in connection with the investigation, prosecution or defense of any
claims by or against the Partnership; and (xiii) any other expenses related to the purchase, sale or
transmittal of Partnership assets. To the extent that an expense relates only to the Adviser, or any
identifiable Fund, generally it will be allocated to and solely borne by such vehicles. In addition, certain
expenses are negotiated and billed as a collective fee for the Funds. Examples include, but are not limited
to, administrator, audit and legal expenses. Unless otherwise determined by the General Partner,
expenses generally will be shared among all Investor capital accounts in accordance with the respective
balances thereof.
D. Prepayment of Fees.
Clients are required to pay the Management Fee in advance. The Management Fee is prorated for any
capital contribution by an Investor that is effective other than as of the first day of any calendar quarter.
In the event of a withdrawal by an Investor other than as of the last day of a calendar quarter, a pro rata
portion of the Management Fee, based upon the actual number of days remaining in such quarter, will be
repaid by the Adviser to the Partnership for credit to the applicable capital account(s).
E. Additional Compensation and Conflicts of Interest.
Neither the Adviser nor any of its supervised persons accepts compensation for the sale of securities or
other investment products.