Item 5: Fees and Compensation
5.A. Adviser Compensation
The fees charged to the Fund are set forth in detail in the Governing Documents. A brief summary
of those fees is provided below.
Limited partners of the Fund pay a management fee to Factorial (the “Management Fee”) on a
quarterly basis, in advance on the first day of each calendar quarter, equal to an annual rate of 1.0%
of the sum of (a) the capital account balance of each limited partner as of the last business day of
the previous calendar quarter and (b) capital contributions with respect to any additional interest
subscribed for as of the first business day of such calendar quarter.
In addition, if at the end of any fiscal year, the capital account of a limited partner has increased in
an amount that exceeds 10% of the amount of such limited partner’s capital account as of the
beginning of such fiscal year, excluding additional capital contributions and measured as if no
withdrawals had been made for such fiscal year (the “Hurdle”), then such limited partner pays
Factorial a performance allocation equal to 15% of the excess over the Hurdle (the “Incentive
Allocation”).
Factorial has sole discretion to reduce, waive or calculate differently the Management Fee and
Incentive Allocation with respect to certain investors, including but not limited to members,
managers, partners, shareholders, directors, officers, affiliates or employees of Factorial, its
affiliates or the Fund, or such person’s family members and trusts or other entities established for
the benefit of such person or his or her family.
5.B. Direct Billing of Advisory Fees
Factorial is authorized under the Governing Documents of the Fund to charge and deduct advisory
fees directly from the Fund’s assets, at the times and in the amounts described in the Governing
Documents.
5.C. Other Non-Advisory Fees
In addition to the fees payable to Factorial, the Fund will pay all of its operating and other expenses,
including, without limitation, expenses related to the transfer of interests in the Fund (including
opinions of counsel issued for the benefit of the Fund), fees of any administrator, legal and
compliance expenses, costs of preparing required regulatory filings directly related to the Fund or
the offering of interests and/or specific portfolio investments (such as Form D, Schedules 13D and
13G and Hart Scott Rodino Act notices), costs and expenses of forming and operating any holding
company or alternative vehicle (including administrative costs), any expenses associated with
Foreign Account Tax Compliance Act or Automatic Exchange of Information registration and
compliance, including any intergovernmental agreements relating to automatic tax information
exchange, internal and external accounting, auditing, and tax preparation expenses of the Fund,
investment-related expenses (e.g., brokerage commissions and transaction costs, clearing and
settlement charges, custodial fees, interest expense (including, without limitation, interest on
margin accounts and other indebtedness), borrowing charges on securities sold short, consulting,
and any other professional fees or compensation relating to particular investments or contemplated
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investments, including costs related to transactions that are not completed (e.g., all costs and
expenses associated with negotiating and entering into contracts and arrangements in the ordinary
course of the Fund’s business), investment-related travel and lodging expenses, appraisal fees and
expenses, and research-related expenses (including data and pricing services and software),
expenses related to risk management provided by third parties, administrative fees and related
costs (including the fees of any third-party provider of middle office functions), and placement
agent fees and expenses), insurance costs incurred in connection with the Fund’s business
(including, without limitation, cost of correction insurance), extraordinary expenses, including any
litigation or regulatory investigation instituted against the Fund or its general partner in connection
with the affairs of the Fund (subject to certain restrictions under Section 275.211(h)(2)-1 of the
Advisers Act), and other similar expenses related to the Fund as determined by Factorial in its
capacity as the general partner of the Fund.
The section below titled “Item 12. Brokerage Practices” describes the factors that Factorial
considers in selecting or recommending broker/dealers for client transactions and determining the
reasonableness of their compensation (e.g. commissions).
5.D. Timing of Payments
Management Fee payments are generally due quarterly in advance and will be prorated should the
advisory relationship terminate prior to the end of a billing period. Please refer to the Governing
Documents of the Fund for more complete information on the timing and proration of advisory fee
payments.
5.E. No Compensation for Sale of Securities or Other Investment Products
Neither Factorial nor its supervised persons will receive any compensation with respect to the
purchase or sale of securities or other investment products by the Fund.