Fees and Compensation
A. Advisory Services and Fees
1. The Funds
Heights Point, either directly or indirectly through the Fund General Partner, receives management
fees and performance-based incentive allocations in connection with the management of the Funds.
The fees and/or allocations applicable to each Fund are set forth in detail in each Fund’s Offering
Documents. A brief summary of such fees and allocations is provided below.
Management Fee
Investors pay Heights Point a management fee that ranges between 1.25% and 1.5% per annum
(the “Management Fee”), based on each Investor’s class of interest in the Funds and the assets
under management of the Funds. The Management Fee is based upon the Investor’s capital account
balance as of the beginning of the fiscal quarter.
In its sole discretion, Heights Point has the right to waive, reduce, or calculate differently the
Management Fee with respect to any Investor, including any member, partner, affiliate or
employee of Heights Point or the Fund General Partner, any member of the immediate family of
any such person, and any trust or other entity established for the benefit of any such person that
invests directly or indirectly in the Funds (collectively, “Heights Point-Related Investors”).
Typically, no Management Fee will be paid by any Heights Point-Related Investor.
Incentive Allocation
At the end of each fiscal year, the Fund General Partner is entitled to receive an incentive allocation
based on investment performance of the Master Fund (the “Incentive Allocation”) generally in an
amount between 15% and 20% of realized and unrealized gains for the year subject to a “high
watermark.”
In its sole discretion, Heights Point has the right to waive, reduce, or calculate differently the
Incentive Allocation with respect to any Investor, including Heights Point-Related Investors.
Typically, no Incentive Allocation will be paid by any Heights Point-Related Investor.
2. Managed Account
The Managed Account pays Heights Point a management fee and a performance-based incentive
fee above an index hurdle, determined in accordance with the Managed Account’s investment
management agreement.
B. Payment of Fees
With respect to the Funds, the Management Fee and Incentive Allocation paid to Heights Point or
its affiliates are generally deducted from the assets of the Funds. Management Fees are generally
deducted from the Funds on a quarterly basis, and the Incentive Allocation is generally deducted
from the Funds on an annual basis. With respect to the Managed Account, Heights Point invoices
the accountholder for management fees and performance-based incentive fees in accordance with
the Managed Account’s investment management agreement.
C. Additional Expenses
In addition to the fees and allocations described above, each Client generally bears its own
expenses, including but not limited to expenses related to its operations and the investment of its
assets. Each Client shall near those expense as set forth in the applicable Offering Document, as
amended from time to time, including but not limited to some or all of the following: (i) expenses
related to the research, due diligence, financing, monitoring and disposition of actual and
prospective Client investments, whether or not such investment is consummated, including the
following: third-party investment sourcing fees; fees and expenses related to obtaining research
and market data (including any information technology hardware, software or other technology
incorporated into the cost of obtaining such research and market data, and including fees and
expenses related to obtaining, processing and analyzing research or market data that may be
considered “big data” or “alternative data”, including fees and expenses related to performing due
diligence on potential providers of any of such research or market data services); due diligence
expenses, including consulting and appraisal fees; travel expenses (including transportation,
lodging and meals); brokerage, prime brokerage and futures commission merchant fees,
commissions and expenses (including fees, commissions and expenses of any outsourced trading
desk); expenses relating to block trades; expenses relating to short sales; clearing and settlement
charges; custodial fees and expenses; bank service fees; interest expenses and fees related to
financings or refinancings; fees and expenses of proxy research and voting and class action-related
services; (ii) operational expenses, including the following: fees and expenses relating to
information technology hardware, software or other technology (including 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 and/or facilitate compliance with the rules of any self-regulatory organization or
applicable law (including reporting obligations), facilitate and manage the order execution of
investments or otherwise manage or monitor investments, such as Bloomberg terminals, portfolio
management systems, risk management systems and order management systems; fees and
expenses of third-party risk management products, models and services; fees and expenses of any
outsourced trading firms; (iii) fees and expenses of third-party professionals, including consultants,
valuation service providers, attorneys, accountants and third-party administrative fees and
expenses (including any “shadow” administrator), outsourced middle and back-office providers,
and including the costs of engaging or appointing a Money Laundering Reporting Officer, a
Deputy Money Laundering Reporting Officer and an Anti-Money Laundering Compliance
Officer; (iv) the costs of any litigation or investigation involving activities of the Clients; (v) taxes
and third-party audit and tax preparation expenses; (vi) insurance expenses, including premiums
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