Item 5. Fees and Compensation
Compensation received by us includes management fees, which are based on a percentage
of assets under management, and performance-based compensation. The management fees are
paid to us in advance at the beginning of each quarter (or up to three months in advance). The
performance based compensation is paid to us in the form of fees or allocated in the form of a
performance allocation to one of our affiliates, Clovis Capital Group, LLC or Clovis Capital
Long, LLC (the "General Partners"), as applicable. All such fees or allocations are deducted
directly from the accounts of investors in the respective Funds. Although all management fees
and performance-based compensation are waived for Clovis Related Party investors, they do pay
their pro rata share of the applicable Fund’s expenses as disclosed in each Fund’s respective
governing documents.
In addition, as described below, any fees that are paid as a penalty for an early redemption
are deducted from any redemption proceeds at the time of the redemption. The fees and expenses
applicable to each Fund are set forth in detail in each of the Fund's governing documents. A brief
summary of fees and expenses is provided below. Clovis Related Parties do not pay redemption
fees.
Management Fees (Based on Assets)
We receive from the Funds a quarterly management fee equal to ¼ of 0.75%, ¼ of 1.25%,
or ¼ of 1.5% of the value of each investor's investment. The management fee is paid in advance,
as of the first day of each calendar quarter. Management fees with respect to contributions made
on a day other than the first day of a calendar quarter are pro-rated. Management fees with
respect to redemptions made on a day other than the last day of a calendar quarter are generally
not pro-rated. We (in consultation with the General Partners), in our discretion (subject to
oversight by a board of directors for offshore funds (the "Offshore Directors")), may waive all or a
portion of such fees.
Performance Fees/Allocations (Performance Based)
Long/Short Domestic Partnerships
The General Partner is allocated, at the fiscal year-end and/or upon redemption, a profit
allocation between 15% and 20% on any appreciation of an investor's investment during such
fiscal year. If interests incur a loss in any fiscal year, or any prior fiscal year, there will be no
allocation owed on such interests until such loss has been recouped. Subject to the approval of the
General Partner, investors committing to a three year lock-up in a Domestic Partnership allocate a
reduced profit allocation of 17.5% (as opposed to 20%) of the committed amount. The General
Partner may, in its sole discretion, waive all or a portion of the profit allocation.
Offshore Fund
We receive an incentive fee between 15% and 20% of any appreciation on an investor's
investment from the Offshore Fund, payable at the end of its fiscal year and/or upon redemption,
on any increases in an investor's investment during such fiscal year. If a share series incurs a loss
in any fiscal year, or any prior fiscal year, there will be no incentive fee owed on such shares until
such loss has been recouped. Subject to the approval of the Offshore Directors, investors
committing to a three year lock-up in the Offshore Fund pay a reduced incentive fee of 17.5% (as
opposed to 20%) of the committed amount. Subject to the supervision of the Board of Directors,
we may waive all or a portion of such fees.
CCL Master Fund and CCL Domestic Feeder
The General Partner is allocated, at the fiscal year-end and/or upon redemption, a
performance allocation by some limited partners equal to 20% of any outperformance in excess
of a hurdle rate, subject to an underperformance carryforward amount (each, as defined and
further described in the governing documents). The General Partner may, in its sole discretion,
waive all or a portion of the performance allocation.
Plan Asset Investors
A Fund may be a plan asset fund as a result of holding in excess of 25% plan assets within
any one class of equity interests. Should this be the case, those investments by a plan asset
investor subject to the U.S. Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the U.S. Internal Revenue Code of 1986, as amended (the "Code"),
will defer the incentive fee or the performance allocation until such time that such investor has
been invested for a 12 month period; except, if such investor were to withdraw from the Offshore
Fund or a Domestic Partnership prior to its 12 month anniversary, the incentive fee would be due
or performance allocation allocable upon redemption. While the Offshore Fund and Clovis
Capital Partners Institutional, L.P. were each at one time plan asset funds, no Funds are currently
a plan asset fund and the current intention is for none of the Funds to be a plan asset fund in the
future.
Redemption Fees
The Funds generally allow for quarterly redemptions. For standard reporting investors,
such redemptions must be requested in writing with no less than 30 days’ notice. Subject to the
paragraphs below, redemptions in the first year of an investor's initial purchase of shares or
interests are subject to a 2%, 3%, or 5% redemption fee payable to the applicable Fund and no
redemption fees are charged thereafter.
As described above, subject to the approval of the Board of Directors of the Offshore Fund
and the General Partner of the Domestic Partnerships, as applicable, investors may elect to make a
three-year commitment in a Fund. Such investments are subject to a one year lock-up. In
addition, a 3% redemption fee is paid to us if the investor redeems all or a portion of its
committed interest in the second year, and a 2% redemption fee is payable to us if the investor
redeems all or a portion of its committed interest in the third year. In the event of such early
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