5. Fees and Compensation
A. General Compensation
As explained more fully in each Fund’s offering documents, Blue Ridge receives an asset-based
fee/allocation of 1.5% annualized for management and administrative services provided to the
Flagship Funds and an asset-based fee of 1.0% or 1.5% annualized (depending on the class of
interests subscribed) for management and administrative services provided to the Long Fund.
Additionally, affiliates of Blue Ridge who are the Flagship Funds’ general partners (Blue Ridge
Capital Holding LLC and Blue Ridge Capital Offshore Holdings LLC) receive annually a 20%
incentive allocation of the Flagship Funds’ capital appreciation during each year subject to a
high-water mark. An affiliate of Blue Ridge who is the Long Fund’s general partner (Blue Ridge
Capital Long GP, LLC) receives annually a 17.5% or 20% incentive allocation (depending on the
class of interest subscribed) of the Long Fund’s capital appreciation exceeding the performance
of the MSCI World Index, subject to a high-water mark. The calculation of the asset-based
fee/allocation and incentive allocation is based upon both realized and unrealized gains. Blue
Ridge may in its sole discretion elect to waive or reduce the asset-based fee/allocation and
incentive allocation with respect to the capital account of any investor, including investors who
are affiliated with Blue Ridge, or who have agreed to limit their withdrawals for extended
periods of time by entering into lock-up-agreements.
Also as explained more fully in the Flagship Funds’ offering documents, Blue Ridge may
acquire for the Flagship Funds financial instruments and assets which Blue Ridge believes either
lack a readily assessable market value or should be held until the resolution of a special event or
circumstance. Such financial instruments and assets may be designated as “special investments,”
which are also commonly referred to as “side pocket” investments. As a general matter, the
calculation of the asset-based fee/allocation includes the value of any special investments, which
for this purpose are valued at their fair market value (as determined by Blue Ridge). The
calculation of the incentive allocation, however, does not include special investments until a
realization event (e.g., the investment is sold) or a deemed realization event (e.g., a private
holding becomes public).
Blue Ridge does not receive any compensation or incentive allocation for its management of the
two employee-only funds.
B. Assessment of Compensation
As explained more fully in each Fund’s offering documents, the asset-based fee/allocation and
incentive allocation (if earned) are deducted directly from each fee-paying investor’s capital
account.
For the Flagship Funds, a portion of the asset-based fee/allocation is paid to Blue Ridge on the
first day of each fiscal quarter based on each Flagship Fund’s total assets including assets
designated as special investments. A pro rata amount of this asset-based fee/allocation is
charged on any capital contributions made by new or existing investors on any date that does not
fall on the first day of a fiscal quarter, based on the actual number of days remaining in the
partial fiscal quarter. Such fee is paid upon contribution of the additional funds to each
respective Flagship Fund. In the case of a withdrawal by an investor other than as of the last day
of a fiscal quarter, a pro rata portion of the fee is repaid by Blue Ridge to the withdrawing
investor.
The remaining portion of the asset-based fee/allocation is generally received by Blue Ridge at
the end of each quarter (depending on the performance of the Flagship Funds). If an investor
contributes capital or withdraws capital, in whole or in part, other than at the end of the quarter,
the amount of the remaining asset-based fee/allocation is calculated as of the date of the
contribution or the withdrawal and will be assessed to the investor accordingly.
For the Long Fund, the full asset-based fee is paid to Blue Ridge on the first day of each fiscal
quarter based on the Fund’s total assets. As with the Flagship Funds, a pro rata portion of the
asset-based fee is charged on any capital contributions made by new or existing investors on any
date that does not fall on the first day of a fiscal quarter, based on the actual number of days
remaining in such partial fiscal quarter. Such fee is paid upon the contribution of the additional
funds to the Long Fund. In the case of a withdrawal by an investor other than as of the last day
of a fiscal quarter, a pro rata portion of the fee is repaid by Blue Ridge to the withdrawing
investor.
The incentive allocation for the Flagship Funds and the Long Fund (if earned) is assessed and
deducted annually. If an investor withdraws capital, in whole or in part, other than at the end of
a fiscal year, an incentive allocation (if earned) will be calculated as of the date of the withdrawal
and will be assessed to the investor.
Also as explained more fully in the Flagship Funds’ offering documents, investors who have
participated in a special investment generally will not be able to withdraw from their capital
accounts any amounts allocated to the special investment until the realization or deemed
realization of the special investment. An incentive allocation (if earned) will be assessed upon
the realization or deemed realization of the special investment.
C. Expenses
In addition to the asset-based fee/allocation and incentive allocation, the Funds bear their own
expenses as described more fully in each Fund’s offering documents. These expenses include,
for example, custodian fees, brokerage fees and other transaction costs; research services and
other third-party research-related expenses; sub-advisory fees (if any); accounting expenses;
regulatory expenses; the cost of third-party software and systems relating to trading, risk
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