Item 5. Fees and Compensation
The Master Fund pays the Adviser a quarterly management fee in arrears in an amount ranging from 1.0% to
2.0% per annum (i.e., 0.25% to 0.5% per quarter) based on the value of the Funds as of the last day of each
month. The Adviser pays a portion of the management fee to BSAM upon the sale or deemed sale of certain
illiquid investments of the Master Fund ("Special Investments") made prior to October 1, 2008. A
management fee is charged to the Account each month in arrears based on the net asset value of the
Account on the last day of the month. The management fee will be prorated for any period that is less than a
full quarter or full month, as the case may be.
The Adviser receives the management fee from the Master Fund each quarter by instructing the Master
Fund's administrator to deduct the management fee from the Master Fund's account. The Account client
calculates and pays the management fee to the Adviser.
Healthcare Value Capital General Partner, LLC, an affiliate of the Adviser (the “General Partner”), serves as
the general partner of the U.S. Feeder Fund. The General Partner receives an annual performance-based
incentive allocation, which is compensation that is based on a share of capital appreciation of the assets of
the Funds, at the Master Fund level. The Adviser (or an affiliate) also receives an annual performance-
based incentive fee based on a share of capital appreciation of the assets of the Account. The incentive
allocation and incentive fee range from 15% to 20% and are subject to a loss carryforward provision.
In the discretion of the General Partner (or, in the case of the Offshore Feeder, the Board of Directors with
the approval of the Adviser or an affiliate, as the case may be), the management fee and incentive allocation
may be waived, reduced or calculated differently with respect to certain investors in the Funds, including
members, partners, affiliates or employees of the General Partner and the Adviser, members of the
immediate families of such persons and trusts or other entities for their benefit. Management fees and
incentive fees with respect to clients with separately managed accounts may be negotiable.
The Funds and the Account may bear certain other expenses including fees and expenses of the
administrator, investment expenses (e.g., expenses that the Adviser reasonably determines to be related to
the investment of assets, such as brokerage commissions and other trading execution related costs and fees
charged by a broker and its affiliates, the costs and expenses of products and services relating to research
concerning the investments or potential investments, expenses relating to short sales, clearing and
settlement charges, custodial fees, bank service fees, interest expenses and expenses related to the
purchase and sale of Special Investments of the Funds); fees and expenses of the board of directors;
insurance expenses (including the cost of an errors and omissions insurance policy); legal expenses;
accounting expenses; auditing and tax preparation expenses; costs of accounting and portfolio management
software packages; pricing and valuation service provider fees; costs of printing and mailing reports and
notices; taxes; corporate licensing; regulatory expenses (including filing fees); organizational expenses;
expenses incurred in connection with the offering and sale of shares and interests and other similar
expenses related to the Funds; and extraordinary expenses. Fund and Account assets may be invested in
money market mutual funds, ETFs or other registered investment companies. In these cases, the Fund
and/or Account will bear its pro rata share of the investment management fee and other fees of the fund,
which are in addition to the management fee paid to the Adviser. Each Feeder Fund also bears its pro rata
share of the expenses of the Master Fund.