ITEM 5. FEES AND COMPENSATION
Axon provides discretionary investment advisory services to domestic and offshore private investment
vehicles. For its services, Axon (or an affiliate) is entitled to management fees and performance-based
allocations or fees (“performance-based compensation”).
Management fees may vary with each investor in a Fund and are more fully explained in the respective
Offering Documents. The base annual management fee is generally up to 2% of assets under management.
Axon is paid management fees quarterly in advance according to the terms of the relevant agreement with
each Fund. Adviser generally deducts management fees from Fund accounts at the beginning of each fiscal
quarter. As investors generally may redeem on a quarterly basis, no refund of such fees typically will be
required.
Axon (or an affiliate) may receive performance-based compensation in addition to management fees. Axon
(or an affiliate) generally receives annual performance-based compensation in an amount up to twenty
percent (20%) of the excess of net capital appreciation (unrealized and realized) measured against the prior
period’s net asset value of an investor’s shares or limited partnership interest, as defined and calculated in
each Fund’s Offering Documents. Adviser generally deducts performance-based compensation as of the
end of each calendar year or as of the time of any redemption or withdrawal.
Other Compensation
Axon has earned, and may in the future earn, certain advisory, restructuring, financing, and other similar
fees provided in connection with a private investment made by the funds.
Variation of Terms
Axon, an affiliate or the board of directors of a respective Fund, as the case may be, may waive or reduce
management fees or performance-based compensation with respect to a Fund or any of the investors in a
Fund at its discretion.
Redemptions and Withdrawals
Investors in the Funds may redeem or withdraw their interests, in whole or in part, on a quarterly basis with
30 days prior written notice, in accordance with the redemption or withdrawal terms of the relevant Fund’s
Offering Documents.
Given the quarterly nature of redemptions and withdrawals, there generally will not be any unearned fees
paid in advance which will need to be refunded. To the extent a redeeming or withdrawing investor is owed
any unearned fees paid in advance, the investor will be refunded an amount prorated from the date of
termination to the end of the relevant period in which the termination date falls.
Other Fees and Expenses
The Funds will incur other costs including, but not limited to, investment-related expenses (e.g., brokerage
commissions, clearing and settlement charges, custodial fees, interest expenses, expenses relating to
outsourced trading relationships, consultants, attorneys, brokers or other professionals or advisors who
provide research, advice, due diligence or proxy voting services with regard to investments, appraisal fees
and expenses, and investment banking expenses), market data and research expenses (except to the extent
that all or a portion of such costs are paid through the use of “soft dollars”), legal and regulatory expenses
(including, without limitation, filing fees), internal and external accounting expenses (including, without
limitation, valuation expenses), audit expenses, tax preparation and other tax-related expenses,
organizational and offering expenses, premiums for liability insurance covering Axon and its members,
partners, officers, employees and affiliates, administration fees and related costs (including, without
limitation, costs of reporting to investors or shareholders) extraordinary and nonrecurring expenses and
other similar expenses related to the Funds as the Adviser determines in its sole discretion. For the
avoidance of doubt, the categories of expenses provided herein shall include any associated or ancillary
costs, including, without limitation, any computer hardware or software used or developed to obtain
research, market data or accounting services.
A portion of research-related expenses may be paid for using “soft dollars.” The use of commission or
“soft dollars” for research and research-related services will come within the safe harbor for the use of soft
dollars provided under Section 28(e) of the U.S. Securities Exchange Act of 1934, as amended (the
“Exchange Act”). Expenses generally will be shared by all of investors in or the shareholders of the Fund
pro rata; provided, however, that a Fund may specially allocate expenses related to specific investments to
relevant investors.
Please see Item 12 below for further discussion of the factors that Adviser considers in selecting or
recommending broker-dealers for client transactions and determining the reasonableness of their
compensation (e.g., commissions).
Additional Compensation and Conflicts of Interest
Neither Axon nor its personnel receive a brokerage commission or any other compensation for the sale of
securities or other investment products.