Item 5. Fees and Compensation:
(A) Generally: Separate Account fees may be individually negotiated. Circumstances
considered when negotiating fees may include, without limitation, customary market
rates, specialized guidelines, and other performance fee and/or incentive allocation
arrangements with the Client.
Management fees for separately managed or pooled investment accounts are calculated
based on a periodic percentage of the value of the assets under management (the
“Management Fee”), and generally between 1.0% to 2.0% per annum.
In addition, the Firm may collect incentive fees/allocations based on the performance of
investments. Please refer to Item 6, below, for a more detailed description of incentive
fees/allocations, and related conflicts of interest.
Payment of Fees: With respect to the Separate Accounts, Management Fees are billed
periodically, generally quarterly in arrears, as specified in the relevant investment
management agreement or applicable pooled vehicle transaction document.
The Master Funds will pay to the general partner a Management Fee payable quarterly
in advance.
The Firm also receives a performance based fee or incentive fee/allocation (the
“Performance Fee”) which is tied to the capital appreciation within the Client account
as evaluated at the end of each calendar year. The Performance Fee will be payable
annually, in arrears.
Deducting of Fees: Blau Capital will indirectly deduct Management Fees and
Performance Fees from the Funds pursuant to authorization through the Administrator.
With respect to the Separate Account clients, the Separate Account owner may authorize
fees to be paid to the Firm for Management Fees and Performance Fees by signing off
within the terms of the Investment Management Agreement. Blau Capital does not have
the authority to directly withdraw money from the Separate Account for Management
Fees and/or Performance Fees.
(B) Additional Fees and Expenses: Blau Capital is responsible for and pays or causes to be
paid overhead expenses including: office space and utilities; furniture and fixtures;
stationary; salaries; administrative services; and secretarial, clerical and other personnel;
travel expense; entertainment expenses; employee insurance and payroll taxes. All other
expenses are paid by the Fund and include, subject to an “expense cap,” as more fully
outline each relevant Fund’s offering documents, the following: Fund’s relevant
expenses and its pro rata share of the Master Funds’ expenses, including, without
limitation, the Management Fee; the Master Funds’ investments expenses (such as
brokerage commissions, expenses relating to short sales, clearing and settlement charges,
custodial fees, bank services fees and interest expenses); professional fees (including,
without limitation, expenses of consultants, investment bankers, attorneys, accountants
and other experts) relating to the Master Funds’ investments; fees and expenses of the
Governance Committee; fees and expenses relating to software tools, programs or other
technology utilized in managing the Fund and the Master Funds (including, without
limitation, third-party software licensing, implementation, data management and
recovery services and custom development costs); research and market data (including,
without limitation, any computer hardware and connectivity hardware (e.g., telephone
and fiber optic lines) incorporated into the cost of obtaining such research and market
data); administrative expenses (including fees and expenses of the Administrator); legal
expenses; external accounting and valuation expenses (including, without limitation, the
cost of accounting software packages); audit and tax return preparation and filing
expenses; costs related to errors and omissions insurance for the general partner and the
Firm; fees and expenses of any governance board appointed by the Fund and/or the
Master Funds; costs of printing and mailing reports and notices; entity level taxes;
corporate licensing; regulatory expenses of the Fund, the general partner and the Firm
(including, without limitation, consulting fees, legal fees and filing fees); organizational
expenses; expenses incurred in connection with the offering and sale of the interests
(including travel expenses) and other similar expenses related to the Fund;
indemnification expenses; and extraordinary expenses.
(C) Fees Paid in Advance: The Firm does not permit the Separate Account clients to pay
any fees in advance. However, the Funds pay in advance in accordance with the relevant
Investment Management Agreement.
(D) Additional Compensation of Supervised Persons: No supervised person accepts
compensation for the sale of securities or other investment products.