ITEM 5 – FEES AND COMPENSATION
A. Advisory Fees and Compensation
Management Fees
ClearSignal is generally compensated for its advisory services through asset-based management
fees.
With respect to the Fund, ClearSignal receives a management fee equal to 1% per annum of the
value of the assets under management in the Fund (i.e., the value of each Limited Partner’s
capital account). The management fee is payable monthly in arrears as of the last business day
of each calendar month, equal to 0.083% (approximately 1.0% per annum) of the balance of each
capital account of each limited partner. The management fee will be appropriately prorated in
the case of capital contributions made on a day other than the first day of a calendar month or
withdrawals made on a day other than the last business day of a calendar month.
The management fee will be debited directly from each capital account of each Limited Partner
as of the last business day of each calendar month and generally paid to the General Partner or
ClearSignal, as the case may be, within ten (10) days after the end of such calendar month.
Incentive Allocation
As more particularly described in the Fund Agreement, the General Partner will be entitled to an
annual incentive allocation equal to 20% of the increase in the net asset value, if any,
experienced on the net assets represented by each Limited Partner’s capital account (the
“Incentive Allocation”). The net increase in the net asset value includes both realized and
unrealized appreciation. The Incentive Allocation will be determined with respect to any fiscal
year as of the close of business on the last day of such fiscal year (each, an “Incentive Allocation
Date”). In addition, upon a full or partial withdrawal by a Limited Partner, there will be a special
determination and allocation of the Incentive Allocation with respect to the withdrawn amount,
and the date of such withdrawal will be an Incentive Allocation Date. Upon final allocation of
the Incentive Allocation, the General Partner may withdraw such amount at any time, without
notice to or consent from any Limited Partner.
The General Partner shall only receive an Incentive Allocation with respect to any Limited
Partner’s capital account if the Fund has recouped all prior losses with respect to such Limited
Partner’s capital account (the “Loss Carryforward Amount”), and exceeded the High Water
Mark (defined below), except that (i) the Loss Carryforward Amount and High Water Mark, in
the General Partner’s discretion, may be reduced pro rata by the amount of any distributions,
withdrawals or redemptions as to such Limited Partner’s capital account, and (ii) the High Water
Mark shall be increased to reflect the amount of any additional capital contributions to such
Limited Partner’s capital account since the High Water Date (as defined below). For avoidance
of doubt, with respect to the Loss Carryforward Amount, additional capital contributions to a
Limited Partner’s capital account shall not reduce prior losses to be recouped. Once an Incentive
Allocation has been made to the General Partner as to any Limited Partner’s capital account, it
shall be retained by the General Partner notwithstanding subsequent losses as to such Limited
Partner’s capital account. The term “High Water Date” means, as to any capital account, the
date on which the capital account balance is the greatest of (i) the highest closing capital account
balance on the last day of any Incentive Allocation Period, or (ii) if no Incentive Allocation had
ever been made to the General Partner with respect to such capital account, the date on which the
capital account was established. The term “High Water Mark” means the balance of a capital
account on the High Water Date. The term “Incentive Allocation Period” means the period
beginning on the first day following the last Incentive Allocation Date (or creation of the capital
account) and ending either on the last day of each calendar year or upon any redemption,
withdrawal or distribution.
Any new fund launched by ClearSignal may have materially different terms than those
summarized above.
B. Payment of Fees
The Management Fee with respect to the Fund will be debited directly from each Limited
Partner’s capital account as of the date of the Limited Partner’s capital contribution and as of the
start of the first day of each calendar month and paid to ClearSignal. Performance based
compensation described in Item 6 below, if the General Partner is entitled to receive it under the
terms of the Fund Agreement, will be debited directly from each Limited Partner’s capital
account and allocated to the General Partner on the last day of each calendar year or upon any
redemption, withdrawal, or distribution (as more specifically described in the Fund Agreement).
C. Other Client Fees and Expenses
The Fund will bear all expenses of the Fund except for organizational and overhead expenses, as
further described below and in the Fund Agreement. General Fund expenses include, but are not
limited to, the management fee; the incentive allocation; all costs and expenses related to the
Fund’s liquidation; transaction and trading-related expenses (e.g., commissions and brokerage
charges, other prime brokerage fees, clearing and settlement charges, interest expenses, financing
expenses, data services, investment bankers, appraisers, bank service fees and related
transactional expenses); order management systems, as well as other analytical systems;
compensation payable to research consultants engaged to evaluate or appraise particular
investments; all research-related expenses with respect to potential and actual investments,
including fees, costs and expenses related to research software and equipment; all travel-related
expenses (including first-class or business-class travel) incurred in connection with Partnership
investment (but not marketing activity); appraisals for any difficult to value investments; news
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