Item 5: Fees and Compensation
DESCRIPTION OF COMPENSATION AND FEE SCHEDULE
In consideration of our advisory services, we generally receive management fees and one of our affiliates generally
is entitled to receive performance allocations with respect to the Funds. The fees and expenses applicable to the
Funds are set forth in detail in the applicable governing and offering documents. A brief summary of such fees and
expenses is set forth below:
Management Fee. We generally receive a management fee, payable quarterly in advance, equal to a percentage of
the net asset value of each separate account of an investor as of the beginning of such calendar quarter. The
management fee percentage generally is (i) 1.0% per annum with respect to each investor initially admitted to a
Fund prior to February 1, 2014 and (ii) 1.5% per annum with respect to each investor initially admitted to a Fund on
or after February 1, 2014. Our affiliates generally are not subject to any management fee.
Performance Allocation. Subject to certain terms and limitations, one of our affiliates generally is entitled to receive
an annual performance allocation equal to twenty percent (20%) of the aggregate net profits (subject to certain
adjustments) allocated to an investor for the applicable period. In regards to a Class D investor, subject to certain
terms and limitations, one of our affiliates generally is entitled to receive a performance allocation equal to twenty
percent (20%) of the excess of the actual return amount allocated to an investor over a hurdle amount of four percent
(4%) for such investor for the applicable period. Our affiliates generally are not subject to any performance
allocations. The performance allocation is calculated and determined separately with respect to each capital
contribution made by an investor.
A “cumulative net loss” account (also known as a “high water mark”) is maintained by the Intermediate Fund with
respect to each separate account of an investor (a “Cumulative Net Loss Account”). At the end of each fiscal period,
each Cumulative Net Loss Account is (a) debited with the sum of the cumulative amount of net losses, if any,
allocated to the relevant separate account since the immediately preceding date as of which a calculation of the
performance allocation was made (or if no calculation has yet been made with respect to such separate account,
since the date such separate account was initially established) and the cumulative amount of management fees
charged with respect to the separate account and (b) credited (but not below zero) with the cumulative net profits, if
any, allocated to such separate account since the immediately preceding date as of which a calculation of a
performance allocation was made (or the date such separate account was initially established). No performance
allocation is allocated with respect to a separate account of an investor until the debit balance in the corresponding
Cumulative Net Loss Account has been reduced to zero. In regards to a Class D investor, no performance allocation
is allocated with respect to a separate account of an investor until the debit balance in the corresponding Cumulative
Net Loss Account has been reduced to zero and the actual return amount exceeds the hurdle amount.
A portion of the management fee and performance allocation generally is paid or allocated, as applicable, to certain
strategic investors, which reduces the amounts that would otherwise be paid or allocated to us or our affiliate.
Each investor generally is required to certify that it is, among other things, an “accredited investor” (as such term is
defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended) and a “qualified purchaser”
(as such term is defined in Section 2(a)(51)(A) of the Investment Company Act of 1940, as amended).
Our advisory fees with respect to each investor generally are not negotiable. However, subject to certain conditions
and limitations, the management fee and/or performance allocation with respect to any investor may be waived or
reduced by us or our affiliate.
DEDUCTION OF ADVISORY FEES
With respect to each applicable investor, management fees are payable quarterly, in advance, as of the first day of
each calendar quarter and deducted directly from the separate account of each investor. The management fee is
prorated with respect to any capital contribution effective other than as of the first day of a calendar quarter. In the
event of a withdrawal by an investor other than as of the last day of a calendar quarter, a pro rata portion of the
management fee, based upon the actual number of days remaining in such calendar quarter, generally is repaid by us
to the Intermediate Fund for credit to the separate account of such investor.
Performance allocations are calculated and allocated as of the end of each fiscal year and at such other times as set
forth in the partnership agreement of the Intermediate Fund. Performance allocations are re-allocated from each
separate account of an investor to the separate accounts of our affiliate and strategic investors.
OTHER FEES AND EXPENSES
In addition to management fees and performance allocations, the Funds generally bear (and reimburse us and our
affiliates for) all costs and expenses relating to their activities, including but not limited to (a) with respect to each
Feeder Fund, its proportionate share of expenses related to the Intermediate Fund and the Master Fund that are
determined to be properly and ratably allocable to that Feeder Fund, (b) all expenses incurred in connection with the
offering, including, but not limited to, documentation of performance and the admission of investors or the acceptance
of subscriptions, (c) all operating expenses such as tax preparation fees (including, without limitation, any such fees
related to the preparation of tax returns and Schedule K-1s), governmental fees and taxes (or any other governmental
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