Item 5 – Fees and Compensation
Hiddenite Capital (or an affiliate) is entitled to receive management fees and performance-based
compensation with respect to the Fund. The fees and expenses applicable to the Fund Clients are
set forth in detail in their respective Offering Documents. However, a summary of Hiddenite
Capital’s basic fee schedule is set forth below.
The Fund Clients
Management Fee. With respect to the Fund, the Adviser is paid an asset-based investment
management fee in an amount up to 1.75% per annum (subject to certain reductions as further
described in the Fund’s Offering Documents). Management fees for investors in the Fund are
charged each quarter in advance as of the first day of the quarter. If an investor invests in a Fund
during a quarter or makes an additional subscription during a quarter, the management fee will be
charged as of the effective date of the subscription based on the subscription amount as of the
applicable date and will be prorated for the number of days remaining in the quarter. If an investor
withdraws during a calendar quarter, the Adviser will rebate a pro rata amount of the management
fee paid as of the beginning of such quarter.
The Adviser may waive or modify the Management Fee for investors that are members, principals,
employees or affiliates of the Adviser (or an affiliate thereof), and relatives of such persons and
advisers to the Adviser (or an affiliate thereof) and for certain large or strategic investors.
Incentive Allocation. Subject to certain terms, limitations and conditions set forth in the
applicable Offering Documents, at the end of each fiscal year, Hiddenite Capital GP LLC (an
affiliate of the Adviser) receives performance-based compensation from the Fund ranging from
12.5% to 20.0% of each investor’s share of net profits (including net unrealized gains on
investments), in each case, subject to a loss carryforward provision.
Hiddenite Capital GP LLC may waive or modify the Incentive Allocation for investors that are
members, principals, employees or affiliates of the Adviser (or an affiliate thereof), and relatives
of such persons and advisers to the Adviser (or an affiliate thereof) and for certain large or strategic
investors.
To the extent any employee, principal or partner of the Adviser is invested in a Fund, such person
or entity is not subject to the management fee or performance-based compensation in relation to
such investment.
Fees with respect to an investor in a Fund Client generally are not negotiable. However,
Hiddenite Capital may enter into side letters or other similar arrangements with certain investors
in the Fund Clients that waive, reduce or calculate differently the Management Fee and/or
performance-based compensation with respect to such investors. More detailed information about
the fees paid by investors in the Funds is included in each Fund’s governing documents.
With respect to a Fund, the management fee and the amount of any performance-based
compensation is calculated (subject to review and oversight by the Adviser) and deducted from
the Fund (which in the case of performance-based compensation is structured as a reallocation of
profits) by the Fund’s administrator.
Other Fees and Expenses. In addition to the Management Fee and the performance-based
compensation, each Fund Client generally is required to bear (and reimburse Hiddenite Capital
and its affiliates for) all costs and expenses relating to its activities. A summary of certain costs
and expenses that generally are required to be borne by the Fund Clients is set forth below.
Expenses. Expenses borne by the Fund Clients, include but are not limited to, fees paid to the
Adviser, Fund Client legal expenses, and other professional service fees and expenses, the
administrator’s fees and expenses (including, but not limited to, middle and back office services
and software necessary for trade capture and portfolio or order management), audit and tax
preparation (including third-party tax preparation) and accounting expenses (including third party
accounting services and accounting software); organizational expenses; execution, order and
portfolio management system fees and expenses; fees and expenses associated with risk
management services and any related software or systems; fees and expenses associated with
market data (including Bloomberg and similar subscription and data services); investment
expenses such as commissions; borrowing charges on securities sold short; research fees and
expenses (including software licensing and technology-related fees and expenses; fees and
expenses incurred in connection with the use of expert networks); interest on margin accounts and
other indebtedness; custodial fees; bank service fees; Fund-related insurance costs (including D&O
and E&O insurance for the Adviser and Hiddenite Capital GP LLC); expenses of regulatory
compliance (including compliance with AIFMD and AEOI and any other compliance regimes that
the Fund Clients may become subject to in the future), including expenses related to various filings
and reporting obligations that the Adviser is required to make as a result of managing the Fund’s
portfolio (including but not limited to Section 13, Section 16 and Form PF filings); a pro rata
portion of any directors’ or governance committee fees incurred at the Master Fund level; pricing
service fees; portfolio valuation expenses (including third-party valuation agents); and any other
expenses related to the purchase, sale, transmittal or preservation of Fund Client assets.
The Adviser may, in its sole discretion, pay any expenses that would otherwise be borne by the
Fund Client.
The Feeder Funds invest substantially all of its assets through a "master-feeder" fund structure in
the Master Fund. Each investment vehicle, including the Feeder Funds, that invest in the Master
Fund indirectly share in the administrative and other expenses of the Master Fund pro rata based
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