Item 5 - Fees and Compensation
Cutter Capital Management generally charges both asset-based “management fees” and performance-
based “performance fees” to its Clients. The amount of these fees and reimbursements is subject to
negotiation between Cutter Capital Management and its Clients and is set out in the applicable documents
governing the respective Client relationship. The performance fees charged by Cutter Capital
Management are discussed in more detail in Item 6 – Performance Based Fees and Side-by-Side
Management.
Client Accounts
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With respect to its management of Client Accounts, Cutter Capital Management generally charges a
monthly asset-based management fee calculated at an annual percentage rate dependent upon the value
of the assets in such Client Account. However, the types and amounts of fees payable by a Client may be
negotiated based on a variety of factors, including, but not limited to, the size, composition and
complexity of the Client’s account, length and nature of the Firm’s relationship with the Client or other
factors deemed relevant by Cutter Capital Management.
Management fees with respect to Client Accounts are generally payable in arrears and are invoiced to the
applicable Client on a monthly basis, unless otherwise agreed with a particular Client. Management fees
payable with respect to an investment in a Cutter Capital Management Fund are payable quarterly in
advance.
Generally, performance-based compensation payable to Cutter Capital Management with respect to a
Client Account is equal to a percentage of the net increase in value (if any) of the assets in the Client
Account (including both realized and unrealized gains and losses) over the applicable measurement
period, after recovery of any losses in the Client Account in prior measurement periods, and subject to
variation based on additional performance-related criteria in certain cases. However, the performance-
based compensation (if any) to be paid by a particular Client is subject to negotiation, based on various
factors.
Performance-based fees generally are accrued monthly and are invoiced to the applicable Client on an
annual basis, unless otherwise agreed with a particular Client.
Cutter Capital Management Funds
The Funds are structured such that the Adviser receives compensation commensurate with the respective
classes of interest in which an investor is invested. Separate classes of interests in certain Funds have
been established that provide for different or additional terms including without limitation reduced or
waived advisory fees. Certain classes of interests are only offered to large or strategic investors or
investors that are members, principals, employees or affiliates of the Adviser.
In consideration for investment management services provided to the Funds, the Adviser receives a
management fee calculated at an annual rate dependent upon the class(es) of interest in which each
investor is invested. The management fee is calculated and payable quarterly in advance based on the
value of the investor’s capital account(s) as of the first day of each calendar quarter or on the date of a
contribution if other than the beginning of a quarter. The Adviser in its sole discretion reserves the right
to waive, modify or calculate differently the management fee for certain investors or classes of interest,
including for investors that are members, principals, employees or affiliates of the Adviser or for certain
large or strategic investors.
In addition, the affiliated general partner receives annual performance-based incentive allocation
reallocated from the capital accounts of each investor to the general partner in an amount unique to each
specific class of interest in a Fund. The incentive allocation is calculated based upon an individual
investor’s realized and unrealized return over a particular period of time compared to a “high-water mark”
as set forth in the relevant offering documents. When calculating the incentive allocation, the
management fee and all items of income, loss and expense incurred by the Fund will be taken into
account. The Adviser in its sole discretion reserves the right to waive, modify or calculate differently the
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incentive allocation for certain investors or classes of interests, including for investors that are members,
principals, employees or affiliates of the Adviser or for certain large or strategic investors.
Investors in a Fund are generally limited in their ability to terminate their participation in the Fund. In
addition to other redemption and transfer restrictions that are described in each Fund's offering
documents, the Funds impose a soft “lock-up” period such that investors who wish to withdraw capital
that has not been invested for a specified period of time will be subject to the application of an early
withdrawal penalty to such investors’ capital account balances (the “Early Withdrawal Amounts”). The
applicable lock-up period varies depending on the class of interests in which an investor has subscribed.
Early Withdrawal Amounts will be retained by the master fund and allocated to the accounts of the
continuing investors in the Fund. The Adviser may, in its sole discretion, reduce or waive the Early
Withdrawal Amount with respect to any investor, including those who are affiliated with Cutter Capital
Management.
Neither the Adviser nor any of its affiliates or related persons receive commission or transaction-based
compensation related to the sale of interests in the Funds.
Other Fees and Expenses
Cutter Capital Management’s Clients will incur other expenses in connection with the Firm’s advisory
services. Cutter Capital Management’s fees do not include transaction fees, brokerage commissions,
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