Item 5 – Fees and Compensation
Private Funds
The Duhne Private Funds compensate Duhne for its investment management services through
an annual management fee with respect to each Investor, payable quarterly in advance.
Management fees charged with respect to each Investor can be negotiable and are typically
equal to a percentage of either the fair value of investments or the sum of the aggregated
unfunded subscriptions and the fair value of investments, including the fair value of any
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investments attributable to any leverage used for the purpose of, or related to, making
investments for the Duhne Private Fund.
Subject to the relevant Offering Materials, management fees may be offset by the Duhne Private
Fund Investors’ share of any directors’ fees, origination fees, monitoring fees, commitment fees,
transaction fees, closing fees and break-up fees received by Duhne or the Duhne Private Fund’s
general partner with respect to any investment made by the Duhne Private Fund.
Fees are deducted directly from the account of each Duhne Private Fund. Should an Duhne
Private Fund liquidate during a quarterly period, any prepaid, unearned fees will be refunded.
SMA Clients
SMA Client fee schedules can be negotiated and as such will vary based upon a wide variety of
factors including the type of client mandate, services provided, investment amount and other
factors as may be agreed with the particular Duhne SMA Client. Duhne typically receives an
annual management fee equal to 2% or 200 bps of the net asset value of the Account and are
generally payable quarterly in arrears. All fees are negotiable. Performance fees generally
equals 20% per annum of the net profits attributable to such accounts (with 5% hurdle rate and
high watermark). For SMA clients, we receive compensation as established in each client’s
written agreement with us. Depending on the structure of the Duhne SMA Client’s account,
management fees can be deducted directly from the account or invoiced to the client and may
be charged in advance or arrears, as agreed to with the Duhne SMA Client. Duhne SMA Clients
initiated or terminated during a calendar quarter will be charged a prorated fee for the period (if
fees are paid in arrears) or have any prepaid, unearned fees refunded (if fees are paid in
advance). In such instances, management fees are prorated for each capital contribution and
withdrawal made during the applicable calendar quarter. Accounts initiated or terminated during
a calendar quarter will be charged a prorated fee.
A client may pay more or less fees than similar clients depending on the particular circumstances
of the client, size, additional or differing levels of servicing or as otherwise agreed with specific
clients. Clients that negotiate fees, including a flat fee, may end up paying a higher fee than that
set forth above as a result of fluctuations in the client’s assets under management and account
performance.
Additional Fee Information
Private Funds
Each Duhne Private Fund typically pays, or reimburses the Adviser for, operating expenses and
organizational expenses related to such Private Fund. Expenses permitted to be charged to a
specific Duhne Private Fund are set out in the relevant Offering Materials.
Operating expenses for an Duhne Private Fund typically include those related to the operation
and liquidation of such Duhne Private Fund including but not limited to: deal related expenses
(such as due diligence on an investment and structuring and monitoring of an investment)
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including those deals that Duhne ultimately determines not appropriate for investment; third party
expenses associated with the purchase, holding or disposing of an asset; research and market
data (such as news and quotation equipment, software and services); expenses related to legal,
tax, auditors, accountants, administrators, custodians, consultants, compliance firms, third party
valuation firms, information technology providers and other outside advisors and professionals;
insurance; regulatory or tax compliance; brokerage, custodial and banking charges; forming and
holding a credit facility; hedging investments; meetings of such Duhne Private Fund’s advisory
board or limited partners; interest expense on borrowed money; taxes, duties and other
governmental charges; liquidation of such Duhne Private Fund; administrative expenses; costs
related to services provided to such Duhne Private Fund by legal, compliance, operations,
finance, tax and accounting service providers (“Service Providers”); reasonable travel expenses
(including transportation, lodging, meals and related expenses) incurred in respect of any of the
foregoing, indemnification expenses and such other expenses as may be set forth in the relevant
Offering Materials.
Organizational expenses for an Duhne Private Fund typically include those related to the offering
and sale of limited partnership interests to prospective Investors and the organization of such
Duhne Private Fund including any related legal payments, travel expenses, printing, capital
raising, accounting, regulatory compliance, Service Provider costs, administrative, filing or other
organizational expenses. Subject to the relevant Offering Materials, organizational expenses
with respect to an Duhne Private Fund in excess of a certain amount and any placement fees
will either be borne by Duhne or borne by the relevant Duhne Private Fund and offset against
the management fee. Refer to Item 14 – Client Referrals and Other Compensation for additional
information about placement arrangements and related fees.
It is critical that you refer to the relevant Private Fund Offering Materials for a complete
understanding of how Duhne is compensated for its investment management services. The
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