Item 5: Fees and Compensation
The Hedge Funds:
Pursuant to the offering documents and advisory agreements, the Hedge Funds are generally
charged a fee consisting of: (i) a management fee based upon the net asset value of the Hedge
Funds on a quarterly basis, and (ii) a performance allocation which is calculated based upon a
percentage of the net capital appreciation of the Hedge Funds at the end of each fiscal year.
Management
Firefly’s current management fee schedule for the Hedge Funds is generally as follows:
The Domestic Fund 2%
The Offshore Fund 2%
The Master Fund 2%
Firefly will receive a management fee, payable quarterly in advance, equal to 0.5%
(approximately 2% annually) of each Investor's share of the Hedge Funds’ net asset value
(“Management Fee”). Firefly, in its sole discretion, may waive, reduce or rebate the
Management Fee with respect to one or more Investors for any period of time, or agree to
apply a different Management Fee for an Investor (all such arrangements in the form of a rebate
or otherwise as determined by the General Partner).
All fees described in this Item 5 are deducted from the Investors’ accounts by instructing the
Hedge Funds’ custodian. The Hedge Funds shall pay for their organizational and initial offering
expenses as well as for their operating expenses, including but not limited to: (i) all operating
expenses of the Hedge Funds, tax preparation fees, governmental fees and taxes, director fees
and expenses, administrator and registrar and transfer agent fees, communications with
Investors, and ongoing legal, accounting (including, without limitation, portfolio accounting
software), auditing, bookkeeping, consulting and other professional fees and expenses; (ii) all
research (e.g., due diligence on issuers, data services), trading and investment related costs
and expenses (e.g., outsourced trading fees and expenses, brokerage commissions, margin
interest, expenses related to short sales, custodial fees, clearing and settlement charges); and
(iii) all fees and other expenses incurred in connection with the investigation, prosecution or
defense of any claims, assertion of rights or pursuit of remedies, by or against the Hedge Funds
(including, without limitation, professional and other advisory and consulting expenses and
travel expenses, and whether not pursuant to bankruptcy or other legal proceedings, or
participation in informal committees of creditors or other security holders of an issuer). The
Hedge Funds also incur brokerage and other transaction costs. For further details on the
Firm’s brokerage practices refer to Item 12 of this brochure.
Firefly and its employees do not accept compensation, including sales charges or service fees,
from any person for the sale of securities or other investment products.
Early Withdrawal or Redemption
Investments in the Domestic Fund and the Offshore Fund are subject to lock-up periods and
early withdrawal or redemption fees, as disclosed in the offering documents. The following is
a summary of the early withdrawal or redemption fees applicable by series or type of interest
of each respective Hedge Fund.
Firefly Value Partners, LP Form ADV Part 2A
Domestic Fund:
Series A Interests: An Investor holding Series A Interests that elects to make a withdrawal
from a capital account (or a portion of a capital account) attributable to such Series A Interests
(i) after the expiration of the applicable lock-up period, but within 12 months of the end of
such lock-up period, shall be subject to an early withdrawal fee equal to 4% of the amount
withdrawn, and (ii) after the expiration of the 12 month period after the end of the applicable
lock-up period, but within 24 months after the end of such lock-up period, shall be subject to
an early withdrawal fee equal to 2% of the amount withdrawn.
Series B Interests: An Investor holding Series B Interests that elects to make a withdrawal
from a capital account (or portion of a capital account) attributable to such Series B Interests
(i) after the expiration of the applicable lock-up period, but within 12 months of the end of
such lock-up period, shall be subject to an early withdrawal fee equal to 4% of the amount
withdrawn, (ii) after the expiration of the 12 month period after the applicable lock-up period,
but within 24 months after the end of such lock-up period, shall be subject to an early
withdrawal fee equal to 2% of the amount withdrawn, and (iii) after the expiration of the 24
month period after the end of the applicable lock-up period, but within 36 months after the
end of such lock-up period, shall be subject to an early withdrawal fee equal to 1% of the
amount withdrawn.
Series C Interests: An Investor holding Series C Interests that elects to make a withdrawal
from a capital account (or portion of a capital account) attributable to such Series C Interests
(i) after the expiration of the applicable lock-up period, but within 12 months of the end of
such lock-up period, shall be subject to an early withdrawal fee equal to 6% of the amount
withdrawn, and (ii) after the expiration of the 12 month period after the end of the applicable
lock-up period, but within 24 months after the end of such lock-up period, shall be subject to
an early withdrawal fee equal to 4% of the amount withdrawn.
Series D Interests: An Investor holding Series D Interests that elects to make a withdrawal
from a capital account (or portion of a capital account) attributable to such Series D Interests
(i) after the expiration of the applicable lock-up period, but within 12 months of the end of
such lock-up period, shall be subject to an early withdrawal fee equal to 6% of the amount
withdrawn, (ii) after the expiration of the 12 months period after the applicable lock-up period,
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