Item 5: Fees and Compensation
A. Advisory Services and Fees
Private Investment Funds
Management Fee and Incentive Allocation
The Advisor will receive a management fee from each of the Funds, at the rate of 1.2% per
annum of the net asset value of the respective Fund, for the investment advisory and
administrative services it provides to such Fund (the “Management Fee”). This fee will be
calculated quarterly on the basis of 0.30% (1.2% per annum) of each Funds’ net asset value at the
opening of business on the first business day of each calendar quarter (after giving effect to
capital contributions and withdrawals) and is payable in advance. Any Management Fee payable
for any period of less than one full quarter shall be pro-rated.
The General Partner receives an incentive or performance allocation generally equal to 20% of
the net profit (the “Incentive Allocation”), if any, charged to each investor in a Client, subject to
a loss carry forward provision. In addition, we may negotiate lesser or different allocation
schedules for Clients (or underlying investors) based on a variety of factors, including the nature
of investments. We structure any incentive or performance allocation arrangement in accordance
with Section 205(a)(1) of the Investment Advisers Act of 1940 (the “Advisers Act”) and the rules
and regulations promulgated thereunder, including the exemption set forth in Rule 205-3
permitting performance allocation arrangements with “qualified clients.”
The Advisor and the General Partner have the right, in each of their discretion, to charge
differing Management Fees or Incentive Allocations to different investors or to rebate, waive or
reduce all or any part or re-allocate any portion of the Management Fee chargeable or the
Incentive Allocation to any investor.
To the extent that the Management Fee is charged or allocated or the Incentive Allocation is
made at the Master Fund level, no additional Management Fee will be paid nor will any Incentive
Allocation be made at the Fund level.
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In connection with the initial capitalization of the Funds, the Advisor entered into an agreement
with a substantial institutional investor (the “Initial Investor”), pursuant to which the Initial
Investor agreed to provide a significant seed capital to certain of the Funds in exchange for
certain rights, including, without limitation, the right to receive an allocation of the Partners’ and
the Master Fund’s net profits, which, in effect, reduces the amount of the Incentive Allocation
and Management Fees that would otherwise be received by the General Partner and Advisor
from such Funds. This results in a portion of the Management Fee being taken as an allocation
of profits rather than a fee, but does not increase the economic rate payable by investors or the
Funds.
Additional Fund Disclosure
Prospective investors in each of the Funds are advised to review the applicable PPM (including,
without limitation, the “Risk Factors” section), as applicable, for additional disclosure regarding
the fees and expenses, rights of withdrawal and other matters pertaining to the Funds.
Managed Accounts
Management Fee and Incentive Allocation
Fees payable to the Advisor for services provided or Incentive Allocation charged on a managed
account basis will be determined, in the Advisor's and the General Partner’s discretion, on a
client-by-client basis. Such fees or allocations may, but are not required to be, substantially
similar to those payable to the Advisor or the General Partner by the Funds (as described above).
B. Method for Payment of Fees
The IMAs, offering documents and other Fund documents govern the terms of compensation and
the manner in which we charge fees to each Client. We directly deduct our fees from the Funds.
Managed Accounts may elect to be billed directly for fees or may authorize us to directly deduct
fees from their account.
Clients may pre-pay fees in advance. If a Client (or underlying investor) pre-pays a fee and then
terminates its advisory contract before the end of the billing period, the Client may obtain a
refund by contacting the Advisor or the refund will automatically be credited to the Client (or
underlying investor) as specified in the relevant IMA or Fund document. The amount of the
refund will be prorated for the partial period.
C. Additional Expenses and Third Party Fees
Our fees are exclusive of other charges, fees, and expenses which are paid for by Clients.
Private Investment Funds. In addition to the Management Fee and Incentive Allocations, each
Fund bears all of its own ordinary and extraordinary expenses (and in the case of each of the
Offshore Fund and Qualified Partners, its proportionate share of the ordinary and extraordinary
expenses of the Master Fund) including, but not limited to: the fees of the Fund’s administrator
or any sub-administrator or of any other third parties retained by the Fund; accounting, auditing
and bookkeeping fees and expenses, including tax return preparation costs, relating to the Fund’s
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independent accountants; legal and compliance fees and expenses, including, but not limited to,
fees and expenses incurred in connection any offering of Interests, regulatory registrations,
qualifications and licensings, Fund contracts and investments and any defense of the Fund in any
inquiry, action or proceeding, and costs of compliance and advice regarding all applicable laws
and regulations; and insurance and bonding costs, including without limitation a portion of
premiums on the directors and officers / errors and omissions liability insurance maintained by
the Advisor, all trading expenses and transaction costs, including brokerage commissions and
expenses relating to short sales, clearing and settlement charges, interest on loans and debit
balances, margin interest, broker service fees and other clearing and custodial expenses; and such
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