Fees and Compensation
A. Advisory Services and Fees
1. The Funds
Davern, either directly or indirectly through the Fund General Partner, receives management and
performance-based incentive allocations in connection with the investment advisory services
Davern provides to the Funds. The fees and/or allocations applicable to each Fund are set forth in
detail in the Offering Documents.
A brief summary of such fees and allocations for the Funds is provided below.
Management Fee
The Firm is paid a management fee (the “Management Fee”) of between 1.50% and 1.75% per
annum based upon the net assets of Fund Investors’ capital account balance, subject to certain
reductions as fully set forth in the Offering Documents. The Management Fee is payable at the
beginning of each calendar quarter once the net asset value of the prior quarter is determined. The
Management Fee will be prorated (and rebated, if applicable) accordingly for any intra-quarter
capital contributions, withdrawals or distributions.
Davern may, in its sole discretion, waive, reduce, rebate or calculate differently all or part of its
Management Fee in respect of any Fund Investor, without the consent of or notice to any other
Fund Investor.
Typically, no Management Fee will be paid by any of Davern’s partners, affiliates (including the
Fund General Partner), employees, and family members (collectively, “Related Investors”).
Incentive Allocation
At the end of each fiscal year, the Fund General Partner is entitled to receive a performance
allocation based on the investment performance of the Funds (the “Incentive Allocation”) generally
in an amount between 15% and 20% of realized and unrealized gains for the year subject to a
traditional “high watermark” and subject to certain reductions as fully set forth in the Offering
Documents.
The Fund General Partner may, in its sole discretion, waive, reduce or calculate differently all or
part of its Incentive Allocation in respect of any Fund Investor, without the consent of or notice to
any other Fund Investor, any Related Investor
In addition, Davern and the Funds occasionally enter into side letter arrangements with certain
Fund Investors which provide for more favorable terms than those described above including,
without limitation, the fees charged, minimum subscription amounts, redemption rights and other
rights.
2. Managed Account
The Managed Account pays Davern a management fee and incentive fee based on the value and
performance of the assets in such account, as determined in accordance with the Managed
Account’s IMA.
B. Payment of Fees
With respect to the Funds, Management Fees are paid quarterly in advance. Incentive Allocations
are paid annually in arrears. With respect to the Funds, the Management Fee and Incentive
Allocation are generally deducted from each Investor’s capital balance account by the Funds’
administrator. The Managed Account pays management fees quarterly in arrears and incentive
fees annually in arrears.
C. Additional Expenses
In addition to the fees and allocations described above, each Client generally bears all of their own
expenses, including but not limited to expenses related to its operations and the investment of its
assets. Each Client shall bear those expenses as set forth in the applicable Offering Document, as
amended from time to time, including, but not limited to, some or all of the following:
(i) all fees, costs and expenses attributable to evaluating, structuring, organizing, acquiring,
holding, maintaining, monitoring, managing, operating, valuing (including appraisal costs and
expenses incurred in connection with third party valuations), holding and disposing of Client
investments and proposed but unconsummated investments, including, without limitation, travel
and lodging expenses, legal, accounting, auditing, due diligence, appraisal, investment banking,
consulting (including consultant and retainer fees paid to consultants performing investment
initiatives and similar consultants), investment research (including research-related travel and due
diligence expenses related to research-vendor selection, and the costs of research-related
publications and periodicals), expert and other fees and expenses, financing commitment fees,
broker and finder’s fees, market information systems and computer hardware and software
expenses, the costs of trading, research and/or data screens (including Bloomberg market data for
all Davern investment personnel and any connectivity hardware incorporated into the cost of
obtaining such data), as well as risk management and data services and systems (including the
costs of utilizing and/or supporting risk-reporting technology required by consultants retained by
or on behalf of institutional investors), externally incurred costs of establishing computer and
systems connections with the Clients’ brokers and other counterparties, the costs of installation,
implementation and maintenance of order management, portfolio management and execution
management systems and software (including internally developed systems or software), fees of
pricing services and financial modeling services, filing fees, registration fees, transfer fees,
extraordinary expenses, printing costs, brokerage commissions, spreads, mark-ups, execution,
clearing and settlement costs, short dividends, interest and other financing expenses or other
transactional charges, insurance expenses, custody and depository expenses, the costs and fees
attributable to any third-party proxy voting service or consultants, expenses associated with
participating in class actions and securing other claims and fees and expenses incurred in
connection with any investments in other investment funds;
(ii) all fees, costs and expenses associated with the administration and operations of the Clients,
including, without limitation, legal, regulatory, compliance, administrative, reporting, accounting
...