Item 5: Fees and Compensation
The fees and expenses applicable to a Fund are set forth in detail in the Fund’s Offering
Documents. A general summary of the fees and expenses applicable to the Funds is provided
below.
Asset-Based Compensation
A Fund will pay the Adviser an asset-based investment management fee each quarter in advance
ranging from 1.0% to 1.5% per annum based on the net asset value of each Fund Investor’s
capital account (the “Management Fee”). In the sole discretion of the Adviser, the Management
Fee may be waived, reduced rebated, discounted or, with the consent of the applicable Fund
Investor(s), calculated differently with respect to any Fund Investor.
Performance-Based Compensation
The general partner of a Fund (the “General Partner”), which is an affiliate of the Adviser, is
entitled to receive annual performance-based compensation (the “Incentive Allocation”) from
the Fund at a rate ranging from 10% to 17%. The Incentive Allocation is based on the aggregate
net capital appreciation allocated to each Fund Investor’s capital account. The Incentive
Allocation is subject to a loss recovery provision and, with respect to some Fund Investors, a
noncumulative hurdle amount. In the sole discretion of the General Partner, the Incentive
Allocation may be waived, reduced or, with the consent of the applicable Fund Investor(s),
calculated differently with respect to certain Fund Investors.
Expenses
A Fund will bear, or reimburse the Adviser and/or the General Partner for advancing, the Fund’s
reasonable and documented out-of-pocket expenses, including, without limitation, the
following: (i) expenses related to the research, execution and monitoring of actual and
prospective investments (whether or not consummated) and the consummation of investments,
including, without limitation, the following: third-party investment sourcing fees; consulting
fees; expert fees; fees and expenses of and related to obtaining research, analytics and market
data (including, without limitation, third-party data sources and any information technology
hardware, software and data subscriptions (such as Bloomberg and FactSet) or other technology
incorporated into the cost of obtaining such research and market data); due diligence expenses
including, without limitation, consulting and appraisal fees; investment-and research-related
travel expenses (including first and business class fares); any outsourced trading provider fees;
brokerage and prime brokerage fees, commissions and expenses (including the costs of
negotiating, documenting and/or amending agreements with prime brokers, ISDAs and other
agreements with trading and financing counterparties); expenses relating to borrowing
securities to be sold short; clearing and settlement charges; custodial fees and expenses; bank
service fees; interest expenses and other borrowing costs; fees and expenses of proxy research
and voting services; broken deal expenses; fees and expenses of third-party professionals,
including, without limitation, consultants, investment bankers, attorneys, accountants and
service providers who, in each case, provide services to the Fund or provide services to the
Adviser, the General Partner or the Managing Member (on matters that would not have arisen
but for their respective advisory relationships with the Fund); and expenses relating to
engagement with a company irrespective of the outcome of such engagement, such as
shareholder and management communication, soliciting proxies, hiring proxy advisory
consultants, hosting shareholder forums, hiring public relations consultants and proposing or
nominating directors or executives, including sourcing, recruiting, standby and indemnification
and other expenses, regardless of whether the nomination is successful; (ii) organizational fees
and expenses and fees and expenses incurred in connection with the offering and sale of Fund
interests, including, without limitation, the following: the preparation and amendment of the
Offering Documents and the Fund’s subscription agreement; fees and expenses of the Adviser
incurred in connection with “world sky” matters and private placement regimes, including the
European Alternative Investment Fund Managers Directive, and Form D and blue sky and
similar fees and expenses; and expenses incurred in connection with negotiating, documenting
and complying with provisions of any side letter agreement with investors; (iii) operational
expenses, including, without limitation, the following: fees and expenses relating to information
technology hardware, software or other technology (including, without limitation, costs of
software licensing, implementation, data management and recovery services and custom
development) used to research investments, evaluate and manage risk, facilitate valuations,
facilitate accounting functions, facilitate compliance with the rules of any self-regulatory
organization or applicable law (including, without limitation, reporting obligations) in
connection with the activities of the Fund, and facilitate and manage the order execution of
securities or otherwise manage the Fund (such as portfolio management systems and order
management systems); fees and expenses of third-party risk management products, models and
services; third-party administrative fees and expenses, including fees and expenses of the
Administrator (as defined below) and any middle and/or back office service provider; fees and
expenses of third-party professionals, including, without limitation, consultants, valuation
service providers, attorneys, accountants and tax preparers; third-party audit and tax preparation
expenses; insurance expenses, including, without limitation, premiums for cybersecurity
insurance and liability insurance (including directors and officers liability insurance and errors
and omission insurance) covering the Fund, the General Partner, the Adviser and the current
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