Item 5 Fees and Compensation
The fees and expenses associated with an investment in the Funds vary by Fund and are described
in detail in each Fund’s offering documents. In the future the Adviser may, in its discretion,
manage other private investment funds or other Clients with higher or lower fees, different fee
structures, and different expense payment arrangements, than the Funds. The fees charged for
managing separately managed accounts are negotiable and will be described in each client’s
investment advisory agreement.
Management Fee
The Adviser and/or its related persons who provide advisory services to the Funds receive
management fees based on a certain percentage of the applicable Fund’s net assets. The standard
management fee for each Fund is calculated and paid as described in the Fund’s offering
documents. Management fees are negotiable, and individual management fee arrangements vary
depending on a variety of factors (including the assets under management of the applicable
investor).
Incentive Allocation
Investors in the Funds generally are subject to an incentive allocation. See Item 6 below for
information with respect to incentive allocations.
Fees Charged to Employees
Due to the Adviser’s special relationship with its employees, the Adviser generally charges
reduced or no fees or incentive allocations for providing investment management services to them
(including as investors in the Funds).
Redemptions and Termination
Investors in the Funds have the right to withdraw or redeem their interest in the Funds in
accordance with the applicable terms set forth in the respective Fund’s offering documents and
other Fund documentation.
Generally, the Adviser’s investment services are terminable by either the Adviser or the applicable
Fund. The terms of such termination, including provisions with respect to notice and fees earned
or refunded, are described in the respective Fund’s offering documents or the applicable advisory
agreement.
Other Fees and Expenses
The Adviser’s and related persons’ fees are exclusive of brokerage commissions, transaction fees,
and other related costs and expenses, which are incurred by the respective Fund.
Each Fund is responsible for all direct expenses related to its respective operations and activities,
including all expenses associated with its investment portfolio. Funds incur certain charges
imposed by custodians, counsel, independent accountants, auditors, administrators, brokers and
other professionals and consultants (including the fees of independent directors), the expenses of
the advisory committee of the Funds (the “Advisory Committee”), the Fund’s annual meeting and
Board meetings, the fees of directors of the Funds (or, if applicable, the general partner of a Fund)
who are unaffiliated with the Adviser, and any taxes, fees or other governmental charges levied
against the Fund, expenses incurred in connection with the incurrence of indebtedness, custodial
fees, bank service fees, professional liability insurance premiums (including directors and officers
insurance) and any extraordinary expenses of the Fund, including but not limited to litigation and
indemnification expenses (subject to limitations set forth in the Funds’ organizational documents),
and other expenses as set forth in the Funds’ organizational documents. The Funds also will pay
the out-of-pocket costs associated with making and realizing investments, including but not limited
to research services (including Bloomberg subscription expenses), information services (including
fund accounting systems), trading and order management, travel, communications, investment-
related fees and expenses such as bookkeeping and investment banking expenses, brokerage
commissions, filing and registration fees, SEC, Hart-Scott-Rodino Act and other reporting and
filing expenses and the costs incurred by the general partners of the Funds, the Adviser, the Funds
and their affiliates in connection with specific shareholder initiatives (such as the costs of calling
shareholder meetings, proxy solicitation fees and costs, and professional consulting fees), any and
all expenses incurred in connection with the preparation and delivery of the Funds’ financial
statements, reports, tax returns, and K-1’s (or other similar schedules), expenses relating to the
valuation of the Funds’ assets, and other expenses incurred in connection with the evaluation,
acquisition, monitoring, or disposition of investments whether or not the investments are
consummated. The Funds also reimburse the general partners of the Funds or the Adviser for audit,
tax and other filing and registration expenses. If a Fund invests through a master fund, the Fund
will bear its pro rata share of the expenses of such master fund.
Each Fund pays its expenses directly or reimburses the Adviser or its affiliates, as instructed, for
expenses paid on its behalf. The direct expenses incurred by each Fund vary depending on the
nature of the operations and activities of such entity and are described in detail in each Fund’s
governing documents.
The Adviser pays compensation costs of its employees, rent and other overhead expenses of the
Adviser.
The Funds incur brokerage and other transaction related costs. Item 12 describes the factors that
the Adviser considers in selecting broker-dealers to execute Funds’ transactions and determining
the reasonableness of their compensation (e.g., commissions).
Valuation
Each Fund’s net asset value, as of any date of determination, is the value of its assets minus its
liabilities as determined by the Adviser in accordance with the Fund’s governing documents and
generally accepted accounting principles, and is not reduced by any incentive allocation accrued
but not yet distributed. The Adviser is responsible for determining the fair market value of each
Fund’s investments. In doing so, the Adviser has considerable discretion in valuing certain
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