Item 5: Fees and Compensation
Divisadero’s compensation is negotiable and varies. The fees applicable to each of the Funds are set forth in detail in
the corresponding Fund’s Offering Documents or sub-management agreement. Divisadero is an SEC-registered
adviser that delivers this brochure to prospective investors in the Divisadero Funds and to the Sub-Managed Funds
that are qualified purchasers as defined in section 2(a)(51)(A) of the Investment Company Act of 1940, as amended.
Therefore, information on how Divisadero is compensated for its advisory services and its fee schedule with respect
to the Funds are not included here.
Divisadero complies with Rule 205-3 under the Investment Advisers Act of 1940, as amended, to the extent required
by applicable law. Divisadero believes that its fees are competitive with fees charged by other investment advisers
for comparable services. Comparable services may be available, however, from other sources for lower fees.
A management fee is deducted from the Divisadero Funds in advance, on a quarterly basis based on aggregate assets
on the first day of the quarter and a performance allocation is allocated to the General Partner annually in arrears and
on a withdrawal with respect to the amount withdrawn. The Offshore Fund investors pay fees and allocations
indirectly, through their investments in the Onshore/Master Fund. Each Sub-Managed Fund pays certain incentive
compensation, as set forth in the applicable sub-management agreement; Divisadero does not deduct its incentive
compensation from the Sub-Managed Funds. One Sub-Managed Fund pays an allocation and distribution of cash to
the General Partner, annually in arrears and on termination of the sub-management agreement. The other pays certain
incentive allocations, one that is paid to Divisadero quarterly in advance, which is pro-rated for partial periods or in
the event of a redemption on a day other than the last day of a quarter, and another, under certain specified conditions,
to the General Partner by way of participation in an allocation and distribution of cash. The performance allocations
and incentive allocations may create an incentive for Divisadero to make more risky and speculative investments than
it would otherwise make.
Divisadero provides certain Fund and investors special fee and allocation arrangements that it does not provide to
other Funds and investors. Divisadero may waive all or any portion of the management fees or performance
allocations/incentive compensation with respect to any Fund or investor and has done so for employees and former
employees.
Relationships with the Funds are terminable on specified prior written notice, subject to certain limitations described
in each Fund’s Offering Documents or applicable sub-manager agreement. In all cases, expenses through the date of
termination are charged to the applicable Fund, as provided for in the Offering Documents or sub-management
agreement. An investor who withdraws from a Divisadero Fund on a date other than the last day of a quarter does not
receive a refund of the management fee previously paid.
Each of the Funds bear all costs and expenses of its organization and ongoing operation, as described in the Offering
Documents, including trading costs and expenses (such as brokerage commissions, expense related to short sales,
clearing and settlement charges, outsourced trading services, and costs or expenses of portfolio and trading related
software or equipment), ongoing legal, accounting and bookkeeping fees and expenses, research-related fees and
expenses, and the fees and expenses charged by any fund administrator for its accounting, bookkeeping and other
services. The applicable Fund will reimburse each of the General Partner and the Firm for any of such expenses paid
by it. If the General Partner or an affiliate incur any expenses or costs on behalf of the Divisadero Funds, such
expenses or costs generally will be allocated among the Divisadero Funds in proportion to the net asset value of the
Fund, the size of the investment made by each in the activity or entity to which the expense relates, or in such other
manner determined by the General Partner or Adviser to be fair and reasonable. With respect to certain expenses that
relate to multiple clients, including the Divisadero Funds and the Sub-Managed Funds, each Fund generally will share
proportionately in such expenses based on their respective account balances (except as otherwise determined by the
General Partner or Adviser in its discretion).
Each of the General Partner and the Adviser bear all of its operating, general, administrative and overhead costs and
expenses, including salaries of all of their employees and rent and other overhead costs, and shall not otherwise charge
any Fund for any thereof, except that these costs and expenses, together with all or any portion of the applicable Fund’s
expenses, may be paid by securities brokerage firms and futures commission merchants to which the General Partner
or the Adviser directs the securities trades of that Fund and any other accounts managed by the General Partner or the
Adviser.
A portion of the commissions generated on the Funds’ brokerage transactions may generate “soft dollar” credits that
the General Partner and the Adviser are authorized to use to pay brokers and other providers for research and other
research related services and products used by the General Partner and the Adviser. See Item 12: Brokerage Practices.