Item 5: Fees and Compensation
A. Fee Schedule
Portfolio Management Fees
For its services to the Partnership, BICM is entitled to a management fee (the “Management Fee”) at an
annual rate of 1.00% of each limited partner’s capital account balance. The Partnership’s general partner,
Breach Inlet Genpar, LP, is entitled to a performance-based profit allocation (the “Performance Allocation”)
at the end of each calendar year (and/or at certain other times) equal, generally, to (i) 5% per annum of the
amount by which, generally, the Partnership’s net profits allocated to the limited partner’s Founders Class
capital account for the current calendar year exceeds the balance in such limited partner’s loss carry
forward account for such Founders Class capital account and (ii) 10% per annum of the amount by which,
generally, the Partnership’s net profits allocated to the limited partner’s Anchor Class capital account for
the current calendar year exceeds the balance in such limited partner’s loss carry forward account for such
Anchor Class capital account and (iii) 20% per annum of the amount by which, generally, the Partnership’s
net profits allocated to the limited partner’s Class C and/or Class D capital account for the current calendar
year exceeds the balance in such limited partner’s loss carry forward account for such Class C or Class D
capital account (explained further within the Partnership’s private placement memorandum). Net profit
includes unrealized appreciation or depreciation of both marketable and non-marketable investments.
BICM has received capital from an initial strategic investor (the “Initial Strategic Investor”). The Initial
Strategic Investor has invested in the Partnership and was subject to an extended lock-up period and, in
return, the Initial Strategic Investor is entitled to receive a portion of the Management Fee and any
Performance Allocation.
The Partnership’s general partner and its affiliates have made contributions to the Partnership’s investment
program through an investment in the Partnership. Such affiliated investors will not bear any Management
Fee or Performance Allocation but will share pro rata in all other applicable expenses of the Partnership.
B. Payment of Fees
Payment of Portfolio Management Fees
Asset-based portfolio management fees are withdrawn directly from the limited partner’s capital accounts
in an amount equal to one fourth of 1.00% of the account balance, which amount is calculated and paid in
advance on the first business day of each calendar quarter based on the account balance as of such day.
Performance-based fees are withdrawn directly from the limited partner’s capital accounts at the end of
each calendar year generally equal to 5.00% with respect to Founder Class interests; 10.00% with respect to
Anchor Class interests; and 20.00% with respect to Class C and Class D interests, of the increase in value
above the high water mark.
C. Client Responsibility for Third Party Fees
The Partnership bears the expenses of its organization and offering, as further described in the
Partnership’s Limited Partnership Agreement (including legal and accounting fees, printing costs, travel,
“blue sky” filing fees and expenses and out-of-pocket expenses). The Partnership bears all (i) costs and
expenses related to its investment program, including expenses related to proxies, underwriting and
private placements, data feed hardware and software, research, trade publications, brokerage
commissions, interest on debit balances or borrowings, custody fees and any withholding or transfer taxes
imposed on the Partnership; and (ii) all out-of-pocket costs of the administration of the Partnership,
including accounting, audit and legal expenses, costs of any litigation or investigation involving the
Partnership’s activities and costs associated with reporting and providing information to existing and
prospective limited partners; provided, however, that the amount of fund Expenses (including, for this
purpose, the amount of amortized organizational expenses, but not including the Management Fee, the
trading expenses, borrowing expenses or direct costs associated with the Partnership’s portfolio) shall not
exceed 0.50% of annual average net asset value of the Partnership (applied to each capital account of a
limited partner on a pro rata basis for the portion of such year the capital account was in existence). The
Partnership does not have its own separate employees or office, and it does not reimburse the general
partner or BICM for salaries, office rent and other general overhead costs of the general partner or BICM.
D. Prepayment of Fees
Asset-based portfolio management fees are collected in advance. Generally, for asset-based fees paid in
advance, the fee refunded is determined on a pro rata basis for the amount of time such withdrawal amount
was invested during the calendar quarter.
E. Outside Compensation for the Sale of Securities to Clients
Neither BICM nor its supervised persons accept any compensation for the sale of securities or other
investment products, including asset-based sales charges or service fees from the sale of mutual funds.