ITEM 5 – Fees and Compensation
Investors in the Fund will generally be subject to (i) a monthly management fee, payable in
advance equal to 1/12th of 1.75% (1.75% per annum) of such investor’s capital account balance
as of the beginning of each month; and (ii) an annual performance allocation equal to 20% of each
investor’s ratable share of the Fund’s profits for each year that such profits meet or exceed a 2.5%
hurdle, but only to the extent that such profits exceed such investor’s “high water mark.”
Management fees vary across SMAs based upon the specific strategy. For example, a single name
co-investment SMA will typically have a 0% management fee and a performance allocation equal
to 10% of total net realized profits.
The Funds shall pay for all ordinary operating and other expenses, including, but not limited to:
- investment-related expenses (such as brokerage commissions, clearing and settlement
charges, custodial fees, interest expenses, expenses relating to consultants, brokers or other
professionals or advisors who provide research, advice or due diligence services with
regard to investments, appraisal fees and expenses and investment banking expenses);
- research costs and expenses (including fees for news, quotation and similar information
and pricing services);
- legal expenses (including, without limitation, the costs of on-going legal advice and
services, blue sky filings and all costs and expenses related to or incurred in connection
with Dark Horse’s compliance obligations under applicable federal and state securities and
related regulations arising out of its relationship to the Funds as well as extraordinary legal
expenses);
- accounting fees and audit expenses;
- administrative fees;
- tax preparation expenses and any applicable tax liabilities (including transfer taxes and
withholding taxes);
- other governmental charges or fees payable by the Funds;
- director and officer and/or errors and omissions liability insurance premiums or fiduciary
liability insurance premiums for directors, officers and personnel of Dark Horse;
- costs of printing and mailing reports and notices;
- and other similar expenses related to the Funds, as Dark Horse determines in its sole
discretion.
Dark Horse may elect to pay any of the foregoing expenses with its own resources for any period,
in the sole discretion of Dark Horse, as applicable.
Dark Horse may, in its sole discretion, enter into arrangements with limited partners and clients
under which the management fee or performance allocation is reduced, waived, or calculated
differently with respect to such limited partners and clients, including, without limitation, limited
partners and clients that are members, affiliates or employees of Dark Horse, members of the
immediate families of such persons and trusts or other entities for their benefit, or limited partners
and clients that make a substantial investment or otherwise are determined by Dark Horse in its
sole discretion to represent a strategic relationship. Dark Horse may also offer increased or
different information rights, withdrawal rights, or other rights through one or more letter
agreements, the terms of which will not generally be disclosed to the limited partners and clients.
The Adviser may enter into arrangements with placement agents to solicit investors in the Funds,
and such arrangements may provide for the compensation of such placement agents for their
services at the Adviser’s expense. Currently, these fees range from 20% to 33% of net fees received
by Dark Horse from the capital placed by such placement agent.