Item 5 - Fees and Compensation
A. Pursuant to the Agreement of Limited Partnership, Limited Partners’ capital accounts are
subject to being assessed a management fee (the “Management Fee”) payable in advance on
the first day of each calendar quarter. The Management Fee for Type A Interests is an
amount equal to 0.25% (1% per annum) of the “Net Asset Value” (defined as the value of all
assets of the Partnership less all liabilities of the Partnership as of the close of business on the
relevant valuation date) of each Type A Interest capital account (prior to deduction for the
Management Fee being calculated and any Profit Allocation (as defined in Item 6 hereof) not
yet made but after deduction for all other Partnership expenses). The Management Fee for
Type B Interests is an amount equal to 0.1875% (0.75% per annum) of the Net Asset Value
of each Type B Interest capital account (prior to deduction for the Management Fee being
calculated and any Profit Allocation (as defined in Item 6 hereof) not yet made but after
deduction for all other Partnership expenses). All Management Fees are pro-rated in respect
of intra-quarter capital contributions and withdrawals.
The Adviser is authorized to waive part or all of the Management Fee in respect of certain
Limited Partners (including any principal and his family members) and not others and expects
to do so in certain cases.
Management fees paid by Clients are negotiable and will depend upon the type and size of
the account and the specific investment strategy employed.
B. The Management Fees for the Adviser’s Clients are deducted and paid directly from the
fund’s assets.
Management Fees are payable in advance on the first day of each calendar quarter.
C. With respect to the Adviser’s private fund Client, the Partnership bears all of its own direct
investment expenses, including interest, brokerage and other transactional charges,
commitment fees, insurance, the due diligence expenses, and costs (including travel)
associated with the review of the prospective Portfolio Funds and all other investment
opportunities for the Partnership as well as the expenses of the ongoing monitoring of
Portfolio Fund investments. In addition, the Partnership bears its direct accounting, audit,
legal, administration (including the fees of the Administrator, as defined below), printing and
filing fees and expenses and other operating expenses. The Partnership does not bear any of
the Adviser’s overhead expenses, except as otherwise described herein.
The Partnership’s administrative and operating expenses are in addition to (i) the
Management Fees and Profit Allocation (if any) paid or made by the Partnership to the
Adviser (see below), and (ii) the compensation paid to the Portfolio Managers in respect of
the Partnership’s investments and the Partnership’s share of any Portfolio Funds’ expenses
(including the fees and expenses of the underlying funds of any “funds of funds” in which the
Partnership invests). Certain of the strategies which the Portfolio Funds implement incur
higher transaction costs than most conventional investment methods. The compensation
earned by the Portfolio Managers may involve both fixed fees based on the value of the
respective Portfolio Funds’ assets (including the Partnership’s investment) (generally from
1% to 2% per annum) and allocations based on the profits generated by such Portfolio Fund
(generally 0% to 30% of such profits, calculated quarterly or annually).
The Partnership may borrow from time to time, although doing so will generally be limited to
paying expenses and providing liquidity for investments and withdrawals. The Partnership
will incur interest and other costs in doing so (as well as generate “unrelated business taxable
income” for tax-exempt investors). The Adviser will limit the Partnership’s borrowing to no
more than 20% of its estimated Net Asset Value at the time that any such borrowing is made.
If the Partnership uses selling or placement agents to market the limited partnership interests
in the Partnership (“Interests”), Limited Partners introduced by such selling or placement
agents may be subject to placement and/or referral fees (both initial and ongoing) to persons
who introduce such Limited Partners. All affected investors will be informed of any such fees
applicable to their subscriptions prior to their subscribing for an Interest. The Adviser may
also compensate persons who introduce investors out of its own resources, including by
sharing a portion of its Management Fees and/or the Profit Allocation with such selling or
placement agents.
In addition, the Adviser may use “soft” or commission dollars to pay for various products or
services, for the benefit of the Adviser or the fund. Section 28(e) of the Securities Exchange
Act of 1934, as amended (“Section 28(e)”) provides a “safe harbor” to investment managers
who direct their trading to particular brokers, in effect exchanging a portion of the
commission revenue generated by their accounts for investment research and related services.
Various Portfolio Managers and the Adviser may not conform to the safe harbor of Section
28(e). The Adviser is specifically authorized to direct, and consent to Portfolio Managers
directing, brokerage to firms which furnish or pay for quotation and/or electronic office
equipment, recordkeeping and clerical services, office space, data, research and travel and
entertainment expenses or similar expenses utilized or incurred by the Adviser or such
Portfolio Managers, whether or not the terms on which the foregoing are provided conform to
the restrictions of Section 28(e).
Currently, the Adviser does not maintain any trading accounts and does not use “soft” dollars.
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