FEES AND COMPENSATION
A. Advisory Fees and Compensation
The fees applicable to each Fund are set forth in detail in each Fund’s offering documents. The fees
applicable to each Managed Account are set forth in detail in each Managed Account’s investment
management agreement. A brief summary of such fees is provided below.
1. Distressed Credit Fund
(a) Management Fee
Generally, the Distressed Credit Fund pays the Investment Adviser a fee for investment management
services (the “Management Fee”) for each fiscal quarter equal to between 1.25-1.75% (on an annualized
basis) of the quarter-beginning balance in each such investor’s capital account (without taking into
account any accrued Incentive Allocation (as defined below). The Management Fee is calculated and paid
in advance but is amortized monthly by the Distressed Credit Fund over the quarter for which such
Management Fee is paid.
The Management Fee will be prorated for any capital contribution or withdrawal by an investor that is
effective other than as of the first day of a quarter. In the event of a withdrawal by an investor other than
as of the last day of a quarter, the Investment Adviser will pay to the Distressed Credit Fund an amount
equal to the pro rata portion of the Management Fee, based on the actual number of days remaining in
such quarter, and the Distressed Credit Fund will distribute such amount to the withdrawing investor. In
the sole discretion of the Distressed Credit Fund General Partner, the Management Fee may be waived,
reduced or calculated differently with respect to certain investors.
(b) Incentive Allocation
Generally, at the end of each fiscal year of the Distressed Credit Fund, the Distressed Credit Fund General
Partner is entitled to an incentive allocation (the “Incentive Allocation”) in an amount equal to between
15-20% of the net capital appreciation, allocated to each limited partner’s capital account, subject to a
cumulative hurdle, vesting restrictions and a loss recovery mechanism.
In the event that the Distressed Credit Fund is terminated or an investor withdraws other than at the end
of a fiscal year, then for purposes of determining the Incentive Allocation allocable at such time to the
Distressed Credit Fund General Partner, net capital appreciation will be determined as if such dates were
the end of the fiscal year, subject to certain adjustments. In the sole discretion of the Distressed Credit
Fund General Partner, the Incentive Allocation may be waived, reduced or calculated differently with
respect to certain investors.
2. Canvas P Credit Fund
(a) Management Fee
Generally, the Canvas P Credit Fund pays the Investment Adviser a Management Fee in arrears as of the
end of each month equal to 0.8% (on an annualized basis) of the balance of each capital account of a
limited partner (without taking into account any accrued incentive allocation). In the sole discretion of
the Investment Adviser, the Management Fee may be waived, reduced or calculated differently with
respect to certain investors.
(b) Incentive Allocation
Generally, at the end of each fiscal year, the Canvas P Credit Fund reallocates from each capital account
of each limited partner to the capital account of the Liquid Credit General Partner an amount equal to
between 0-15% of the net capital appreciation allocated to such capital account of such limited partner,
subject to a loss carryforward mechanism.
In the event that the Canvas P Credit Fund is terminated or an investor withdraws other than at the end
of a fiscal year, then for purposes of determining the Incentive Allocation allocable at such time to the
Liquid Credit General Partner, net capital appreciation will be determined as if such dates were the end
of the fiscal year, subject to certain adjustments. In the sole discretion of the Liquid Credit General Partner,
the Incentive Allocation may be waived, reduced or calculated differently with respect to certain investors.
3. Distressed Credit Fund II
(a) Management Fee
Generally, the Distressed Credit Fund II pays the Investment Adviser a fee for investment management
services (the “Management Fee”) in arrears as of the end of each month equal to 1/12 (one-twelfth) of
the applicable Management Fee Rate (equal to between 1.25-1.75% on an annualized basis) multiplied by
the month-end balance of each Capital Account of a Limited Partner (without taking into account any
accrued Incentive Allocation), which Management Fee shall be payable to the Investment Manager and
the General Partner in such ratio as may be agreed between the General Partner and the Investment
Manager from time to time.
The Management Fee will be prorated for any capital contribution or withdrawal by an investor that is
effective other than as of the first day of a month. In the event of a withdrawal by an investor other than
as of the last day of a month, the Investment Adviser will pay to the Distressed Credit Fund II an amount
equal to the pro rata portion of the Management Fee, based on the actual number of days remaining in
such month, and the Distressed Credit Fund II will distribute such amount to the withdrawing investor. In
the sole discretion of the Distressed Credit Fund General Partner II, the Management Fee may be waived,
reduced or calculated differently with respect to certain investors.
(b) Incentive Allocation
Generally, at the end of each fiscal year of the Distressed Credit Fund II, the Distressed Credit Fund General
Partner II is entitled to an incentive allocation (the “Incentive Allocation”) in an amount equal to between
15-20% of the net capital appreciation, allocated to each limited partner’s capital account, subject to a
cumulative hurdle, vesting restrictions and a loss recovery mechanism.
In the event that the Distressed Credit Fund II is terminated or an investor withdraws other than at the
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