Fees and Compensation
A. Fee Schedule
HPC generally receives advisory fees and performance fees (or allocations) in connection with the investment
management services it provides to the Clients.
1. Management Fee
Generally speaking, each Fund pays HPC a quarterly investment management fee (the “Management Fee”)
in advance in an amount equal to 0.375% (1.50% per annum) of the applicable net assets of the Fund, as of
the first day of each calendar quarter. A pro rata portion of the Management Fee will be paid out of any initial
or additional subscriptions received by the applicable Fund on any date that does not fall on the first day of a
quarter, based on the number of months remaining in such partial quarter.
2. Performance-based Fees
HPC or the GPs, as applicable, are entitled to receive a performance profit allocation (the “Performance
Allocation”) in an amount equal to 17% of the net profit allocated to each investor during each calendar
year, subject to a loss carry-forward provision, also known as a “high water mark,” as detailed in the
applicable Governing Documents provided to investors.
The Performance Allocation will only be charged to Fund investors who are “qualified clients” as defined in
Rule 205-3 of the Investment Advisers Act of 1940, as amended (“Advisers Act”).
Fund investments that are deemed “Hard-To-Value” investments or assets, as determined by HPC or the
GPs in its reasonable judgement, will not be subject to the Management Fee or Performance Allocation until
such investments are sold, exchanged, or are otherwise realized such that a value can be reasonably
determined.
HPC, the GPs or an affiliate may waive or reduce the Management Fee and/or Performance Allocation for
any Fund investor, and has waived such fees for HPC and affiliates that are invested in the Funds.
The fees payable with respect to each SMA are individually negotiated between HPC and the respective SMA
Client. Such fees are set forth in the Governing Documents for each such SMA. Performance-based fees will
only be charged to SMA Clients that are “qualified clients” or “qualified purchasers,” as defined in Section
2(a)(51) of the Investment Company Act.
Compensation from Securities Ranking Programs
In return for HPC’s participation in securities ranking programs, the Firm receives compensation from the
third-party asset managers of such programs consisting of an annual base fee as well as the opportunity for a
discretionary bonus based on the performance or quality of HPC’s inputs.
B. Payment of Fees/Billing Methods
For the Funds, HPC deducts fees and expenses from Fund investors’ accounts to facilitate billing. The
Management Fee is calculated and charged in advance, on the first day of each calendar quarter, and the
Performance Allocation, if any, is calculated and charged at the end of each calendar year. For the SMAs,
HPC bills the SMA Clients for fees and expenses incurred. The billing schedule and structure of such fees is
individually negotiated between HPC and each such SMA Client, and are set forth in the applicable
Governing Documents.
C. Other Fees and Expenses
Each Fund will bear its own ordinary operating expenses, including, as applicable, investment-related
expenses (such as brokerage commissions, clearing and settlement charges, custodial fees, interest expenses,
expenses relating to consultants, brokers or other professionals or advisors who provide research, advice or
due diligence services with regard to investments, appraisal fees and expenses and investment banking
expenses); research costs and expenses (including fees for news, quotation and similar information and
pricing services); legal expenses (including, without limitation, the costs of on-going legal advice and services,
blue sky filings and all costs and expenses related to or incurred in connection with HPC’s compliance
obligations under applicable federal and state securities and related regulations arising out of its relationship to
each Fund (including the costs of compliance consultants to assist in meeting such obligations), as well as
extraordinary legal expenses); the Management Fee; accounting fees and audit expenses; administrative fees;
tax preparation expenses and any applicable tax liabilities (including transfer taxes and withholding taxes);
other governmental charges or fees payable by the Fund; director and officer and/or errors and omissions
liability insurance premiums or fiduciary liability insurance premiums for directors, officers and personnel of
HPC; the compensation payable to and other costs and expenses of the Board of Directors; all government
and regulatory registration and other licensing fees; registered office fees; printing and mailing costs; and
other expenses associated with the operation of the Fund, including any extraordinary expenses (such as
litigation and indemnification). Refer to Item 12 – Brokerage Practices for details regarding the factors that HPC
considers in selecting broker-dealers for Fund and other Client transactions and determining the
reasonableness of their compensation (e.g., commissions).
All expenses of the offering and organization of each Fund (including regulatory, legal and other expenses)
(“Organizational Expenses”) will be paid by such Fund and/or reimbursed by such Fund to the extent paid
by HPC. The Organizational Expenses are amortized and charged to each Fund on a monthly basis over a
period of 60 months commencing from the launch of such Fund’s investment activities.
Certain expenses of the Master Fund that are specific to the Feeder Feeder may be specially charged to the
Feeder Fund, as applicable. As a result, the performance of each Fund may be different.
Additional expenses borne by SMAs are individually negotiated between HPC and such SMA Clients, and are
detailed in the Governing Documents for each SMA.
...