Item 5: Fees and Compensation
The fees applicable to each Fund and the Fund of One are set forth in detail in their respective
governing documents. A brief summary of such fees is provided below.
Management Fee and Performance Allocation
Each of the Feeder Funds is had offered two series of limited partner interests in the Onshore Fund
(the “Interests”) and shares of the Offshore Fund (the “Shares”): Founders Series Interests
(“Founders Series Interests”) and Standard Investor Series Interests (“Standard Investor Series
Interests”) with respect to the Onshore Fund and Founders Series Shares (“Founders Series Shares”)
and Standard Investor Series Shares (“Standard Investor Series Shares”) with respect to the Offshore
Fund. Other than with respect to Management Fees (as defined below) and Performance Allocations
(as defined below), Founders Series Interests, Standard Investor Series Interests, Founders Series
Shares and Standard Investor Series Shares have identical rights and obligations. However, Founders
Series Interests and Founders Series Shares will only be available for an initial fundraising period
determined by the Fund General Partner or the board of directors of the Offshore Fund (the “Board”),
respectively. Currently, none of these Funds are open to new capital commitments.
Each of the Feeder Funds may create and offer various additional classes or series of Interests or
Shares, as applicable, with different terms and conditions than those described herein, including,
without limitation, management fees, performance allocations and withdrawal or redemption rights
(each, a “Series”). New Series may be established by either Feeder Fund without notice to or approval
of the Limited Partners or the Shareholders, as applicable.
For our services to the Master Fund, we are entitled to annual management fees, calculated and paid
each calendar quarter in advance and equal to a percentage of the balance of each Limited Partner’s and
Shareholder’s capital sub-account in the Master Fund (the “Management Fees”). Capital contributions
accepted after the commencement of a calendar quarter are subject to a prorated Management Fee
reflecting the time remaining during the quarter. The Management Fee is calculated and charged at
the Master Fund level and borne by the Limited Partners and the Shareholders as a deduction to
their capital sub-accounts in the Master Fund. No separate management fee will be charged at the
Feeder Fund level. Prospective investors should review the offering documents of the relevant Feeder
Fund for more information on the Management Fees. If a Limited Partner or Shareholder withdraws
during a calendar quarter (which is generally not permitted), we will refund a pro rata portion of the
Management Fee applicable to the withdrawn capital for that quarter, based on the actual number
of days remaining in the calendar quarter divided by the total number of days in the calendar quarter.
For our services to the Fund of One, we are entitled to an annual management fee equal to a fixed
amount payable in quarterly increments in advance and debited from the capital account of its single
limited partner. If the Fund of One is dissolved during a calendar quarter, we will refund, or use to
offset other amounts owed by the investor, a pro rata portion of the management fee based on the
actual number of days remaining in the calendar quarter divided by the total number of days in the
calendar quarter.
Cove Key Management LP Form ADV Part 2A
The Fund General Partner also receives a performance allocation from the Fund of One and the Funds,
which, with respect to the Funds, is taken at the Master Fund level and charged to each Limited
Partner’s and Shareholder’s capital sub-account in the Master Fund, and with respect to the Fund of
One and the Funds, is based on the annual net realized and unrealized profits of the Fund of One’s
capital account or such Limited Partner’s or Shareholder’s capital sub-account, respectively, subject
to a “high water mark” limitation, each as more fully described in the Fund of One’s and each Fund’s
offering documents. If a Limited Partner or Shareholder withdraws capital, the performance
allocation applicable to the withdrawn interest is calculated and paid as of the date of the withdrawal
and any associated high water deficit is ratably reduced.
In Cove Key's sole discretion, the Management Fee and performance allocation may be waived,
reduced or calculated differently with respect to certain Investors. In addition, Single Investor Clients
negotiate their management fees and method of payment, if applicable. The General Partner, Mr.
Kiani and Mr. Coviello (and other investors affiliated with the General Partner and the Investment
Manager) will not bear Management Fees or any performance allocation.
The Strategic Investor will share in the Management Fee and the Performance Allocation (as defined
below) and any other fees or performance-based incentive payments made to the Investment
Manager, the General Partner or any of their affiliates by any other collective investment vehicle or
managed account affiliated with the Strategic Investor (including the Fund of One).
Other Types of Fees or Expenses
Organizational Expenses
Each Feeder Fund bears the expenses of the organization of such Feeder Fund and the initial
offering of the Interests or the Shares, as applicable (including legal and accounting fees, printing
costs, expenses associated with reporting and providing information to prospective Partners or
Shareholders (as applicable), travel, “blue sky”, Form D and other filing fees, out-of-pocket expenses
and the costs of compliance with any applicable federal and state laws). Each Feeder Fund also
bears its pro rata portion of any of the foregoing costs or expenses directly related to the
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