Item 5 - Fees and Compensation
A. Below is a discussion of how the Adviser is compensated in connection with providing advisory
services to its Clients. The Adviser may enter into different fee arrangements on a Client by
Client basis.
Fund
The Funds consist of two classes, a Founders Class and Class A. The Founders Class has been
closed to additional investments.
Management Fees. For its services to the Fund, the Adviser is entitled to a management fee
(the “Management Fee”) at an annual rate of (i) one and a half percent (1.50%) for the Founders
Class or (ii) two percent (2.00%) for Class A of the capital account balances of members
admitted to the Funds. The Management Fee is calculated each calendar quarter and paid each
calendar quarter in advance. Capital contributions accepted after the commencement of a
calendar quarter will be subject to a pro-rated Management Fee.
Performance Allocation. The Adviser is entitled to a performance-based profit allocation at
the end of each calendar year equal to (i) fifteen percent (15%) for the Founders Class or (ii)
twenty percent (20%) for Class A of the amount, determined as of the end of each calendar
year with respect to each Member, by which such Member’s positive performance change for
the year, if any, exceeds any positive balance in such Member’s loss carryforward account as
of the close of the calendar year after all adjustments thereto effective as of such date. (the
“Performance Allocation”).
Organizational Expenses. The Fund bears the expenses of the organization of the Partnership
and the offering of membership interests (including legal and accounting fees, printing costs,
travel, all regulatory filing fees and expenses and out-of-pocket expenses). The organizational
expenses borne by the Fund are described in more detail in the Funds’ Offering Documents.
Direct Expenses of the Fund. The Fund is responsible for all direct expenses related to its
operations and activities, including all of its expenses associated with its investment portfolio,
including brokerage commissions and other transaction costs. The Fund bears the full cost of
expenses related to proxies, underwriting and private placements, brokerage commissions,
interest on debit balances or borrowings, custody fees and any withholding or transfer taxes
imposed on the Fund. The Fund also bears all out-of-pocket costs of the administration of the
Fund, including accounting, audit, compliance (including all regulatory filing fees and
expenses), legal and other professional expenses, research-related travel and expenses, costs of
any litigation or investigation involving the Funds’ activities, and costs associated with
reporting and providing information to existing and prospective members. However, the
Adviser may, in its sole discretion, choose to absorb any such expenses incurred on behalf of a
Fund.
Withdrawals. Members of the Funds are allowed to make withdrawal requests, subject to
certain restrictions. Each member is subject to a three percent (3.0%) withdrawal fee on its
capital account if a withdrawal is requested within one year (the “lock-up period”) of the
member’s initial investment in the Funds. During the lock-up period, each member of the
Funds is permitted to make complete or partial withdrawals of such member’s interest in the
Funds on the last business day of each calendar quarter, provided that such member has given
irrevocable written notice to the Adviser or its designee at the Adviser’s principal office at least
forty-five (45) days prior to the proposed withdrawal date indicating the amount to be
withdrawn from such Member’s capital account in such notice.
Separate Accounts
Management Fees. The fees and expenses associated with the Accounts will be negotiated with
each Account and are described in detail in the each Account’s Offering Documents.
Generally, the Adviser will be entitled to a management fee of two percent (2.0%) of an
Account’s assets.
Performance Fees. Separate Accounts may be charged a performance fee of twenty percent
(20%) per annum. The performance fee will be calculated based on net profits. The
Management Fee and performance fee will generally be paid from the Account upon invoice
to the custodian.
Miscellaneous
The Adviser may agree with certain investors to a variation of the terms set forth in a Client’s
Offering Documents, including different Management Fees, Performance
Allocations/performance fees, or withdrawal/redemption rights.
B. Management Fees and Performance Allocations from the Fund are deducted directly from the
capital accounts of the Funds’ investors and Management Fees and performance fees are paid
from the Accounts upon invoice to the custodian, each as indicated in Item 5.A. above.
C. In addition to the fees described above, Clients may bear and/or share other costs or expenses
associated with investments or accounts including but not limited to: (i) custodial charges,
brokerage fees, commissions and related costs; (ii) interest expenses; (iii) taxes, duties and
other governmental charges; (iv) costs associated with foreign exchange transactions; (v) other
portfolio expenses; and (vi) costs, expenses and fees associated with products or services that
may be necessary or incidental to such investments or accounts. With respect to such services
(which may include, but are not limited to, custodial, securities lending, brokerage, futures,
banking, consulting or third-party advisory or legal services) each Client may be required to
establish business relationships with relevant service providers or other counterparties based
on the Client’s own credit standing. Unless specifically stated in each Client’s Offering
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