Item 5—Fees and Compensation
Asset-Based Fees and Performance-Based Compensation
The relevant POM describes the fees and compensation that we charge a Fund. Our fees and
compensation from the Funds usually consist of an asset-based management fee and
performance-based compensation. Asset-based fees are calculated based on the net asset
value of a Fund, prior to the accrual of the management fee and any performance-based
compensation, on the last day of each calendar quarter and are payable in arrears. In general,
the Investment Manager debits the management fee directly from the assets of a Fund on a
quarterly basis, and performance-based compensation is allocated following the close of the
fiscal year of the Fund on December 31. Bowery Opportunity Fund, L.P. pays any performance-
based compensation to its General Partner, rather than the Investment Manager. The
Investment Manager receives any performance-based compensation paid by Bowery
Opportunity Fund, Ltd.
Performance-based compensation is based on a share of capital gains on, or on the capital
appreciation of, the assets of each Fund. Whether we will be entitled to performance-based
compensation with respect to a Fund in any particular year will be determined as of December
31 of that year, except with respect to investors who withdraw from the Fund as of a date other
than December 31. Performance-based compensation is typically subject to a high-water mark.
In other words, if an investor in a Fund were to suffer an aggregate loss of capital during a fiscal
year, no performance-based compensation would be due with respect to that year until the
loss of capital was first recovered.
At our discretion, we may waive all or a portion of any asset-based fee or performance-based
compensation. For example, a waiver or reduction may apply for our employees and members
of their immediate families.
The Funds prohibit withdrawals of investor capital during the first twelve months after the
issuance of the relevant interest to the investor. Once the lock-up period has elapsed, full or
partial withdrawals of investor capital in the Funds are permitted annually on written notice of
at least ninety but no more than 104 days. The Funds may charge a withdrawal reduction fee
when an investor is permitted to withdraw all or a portion of his investment on a date other
than a standard withdrawal date.
In general, a Fund may pay an investor withdrawal proceeds in kind, including in the form of
nonvoting, non-redeemable equity interests in a special-purpose vehicle that will share in
future profits and losses derived from assets that are difficult to value or illiquid, or both, held
by the Fund on the redemption date. In general, such a special-purpose vehicle will make
periodic distributions of proceeds, net of expenses, as underlying positions are realized and will
not participate in new investment opportunities. The Investment Manager or an affiliate of the
Investment Manager will manage the special-purpose vehicle and will typically charge a
management fee and, in the case of Bowery Opportunity Fund, Ltd., an administrative fee to
defray the costs and expenses of its management activities.
Additional information about withdrawals of investor capital from a Fund and other important
topics is included in the relevant POM. Investors and prospective investors in a Fund should
carefully read all of the governing documents of the Fund to understand the specific terms and
conditions applicable to an investment, which may differ materially from the general
description contained in this brochure.
We generally have the discretion to agree with a Fund investor to waive or modify the
application of any provision of the investment terms applicable to the investor in a side letter or
in another manner, generally without obtaining the consent of the other investors in the Fund.
The terms of a side letter may include, among other things, lock-up waivers, asset-based fee
rebates, and other types of more favorable fees or liquidity terms. In addition, we may grant
additional transparency or another form of additional disclosure with respect to the
performance or operation of a Fund to an investor without obtaining the consent of, or
granting similar rights to, other investors in the Fund. Some investors in a Fund may negotiate
a most-favored-nation provision that permits them to elect to receive the benefit of any
modifications or waivers of terms that another investor in the Fund negotiates in the future.
We may be obligated to disclose to other investors in a Fund who have most-favored-nation
status that particular terms are being offered to other investors in the Fund through side letters
and, in some cases, to offer those terms to other investors in the Fund who have most-favored-
nation status.
Unlike investors in the Funds, investors who own all or part of an Account may have negotiated
the right to receive more specific information about the trading and other activities relating to
the Account. These investors also may have greater flexibility in the frequency with which they
may add capital to the Account, or may withdraw or redeem capital from the Account, and
these changes in capital may require less notice to Bowery than a Fund investor would be
required to give. The investors who own all or part of an Account may be able to terminate the
Account at any time or from time to time. These enhanced information and liquidity rights may
create advantages for Account investors that Fund investors generally do not enjoy.
Some of our clients are now or in the future may be in the process of winding down their
affairs. The investments held by these clients will be liquidated based on their specific terms
and provisions. For example, many debt holdings will eventually mature. The Investment
Manager may sell some investments prior to maturity if and when attractive opportunities
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