Item 5: Fees and Compensation
Fees
The applicable fees for each Fund are disclosed to Fund investors in the offering documents of
each Fund. HPI or its designee will generally be entitled to receive a management fees
(collectively, “management fees”) payable and debited quarterly in advance as of the first day of
each calendar quarter by the applicable Fund with respect to each investor (other than any
affiliated investor). The management fee may vary among share classes from 1.00-1.50% based
on the shares and capital account balance maintained in each investor’s capital account.
The General Partner will generally receive a performance allocation, in each case from the
respective Fund. Performance allocations are typically measured as a percentage of the profits of a
Fund and are negotiated separately for each Fund at a rate consistent with industry standards. The
performance allocation may vary among share classes from 15-20% for each fiscal year in excess
of any loss recovery and will be allocated as of the close of each fiscal year.
HPI’s management fee and performance allocations are separate from brokerage commissions,
transaction fees, and other related costs and expenses which are incurred by the Funds and/or
Accounts. Item 12 below further describes the factors HPI considers in selecting or
recommending broker-dealers for client transactions and determining the reasonableness of their
compensation (e.g., commissions).
Please review the offering documents for each Fund for information on management fees and
performance allocations.
The minimum initial capital contribution to the Funds is $1 million, and each additional capital
contribution by Fund investors must be in an amount of at least $250,000; provided, however, that
HPI, in its sole discretion, may accept subscriptions in lesser amounts.
HPI and/or the General Partner may, in its sole discretion, reduce or waive the management fees
or performance allocation with respect to any investor, including with respect to other funds the
General Partner may organize in the future and certain other strategic investors. HPI and/or the
General Partner generally intends to waive the performance allocation for HPI, employees of HPI,
the General Partner, Chief Investment Officer or their other related persons, including estate
planning vehicles of such persons and certain other persons or entities associated with such
persons.
Expenses
HPI is responsible for and shall pay, or cause to be paid, all Overhead Expenses, except as
described below. For this purpose, “Overhead Expenses” for a fiscal year include overhead
expenses of an ordinarily recurring nature such as rent, utilities, supplies, secretarial expenses,
stationery, charges for furniture, fixtures and equipment, employee benefits including insurance,
payroll and other taxes and compensation (and related costs) of all personnel. Notwithstanding to
anything to contrary herein, the Investment Manager will also bear fees payable to third-party sub-
advisors (if the General Partner determines that such an arrangement represents the best way to
access a particular investment opportunity or a difficult to access market or otherwise makes
available specialized investment expertise to the Master Fund) retained pursuant to a portfolio
management agreement with responsibilities for managing a portion of the Master Fund’s
portfolio.
The Master Fund bears all other expenses, which include the following expenses incurred by or
allocable to the Funds, or the Master Fund: Directors’ fees and expenses, legal, accounting,
bookkeeping, tax compliance, auditing, consulting and other professional expenses, including
those of valuation firms; administration fees and other expenses charged by or relating to the
services of third-party providers of administration services; fees payable to sub-advisors (if HPI
determines that such an arrangement represents the best way to access a particular investment
opportunity or a difficult to access market or otherwise makes available specialized investment
expertise to the Master Fund); fees and expenses (including travel expenses) related to research,
market data and the due diligence, analysis, purchase or sale of investments, whether or not the
investments are consummated; interest and fees (including commitment, structuring and
underwriting fees) on margin loans, committed loan facilities, total return swaps and other
indebtedness; bank service, custodial and similar fees; expenses related to the purchase,
monitoring, sale, settlement, custody or transfer of Fund assets (directly or through trading
affiliates); expenses associated with activist investment activities (including public relations,
tender offer and proxy solicitation expenses); third party and out-of-pocket fees and expenses
relating to systems and software used in connection with the operation of the Funds and
investment related activities (including any accounting, risk management, trading and
administrator-like functions, and adviser and fund compliance that HPI performs in-house);
entity-level taxes; fees and expenses relating to the offer and sale of interests (including
organizational fees and expenses and filing and legal fees); Directors and Officers, Errors and
Omissions or similar professional liability insurance purchased on behalf of the General Partner
and HPI; registration, annual and other similar fees payable by the Funds; expenses in the
connection with any advisory committee; fees and expenses incurred with the General Partner’s or
HPI’s compliance with applicable ongoing regulatory requirements to the extent such
requirements are imposed as a result of the organization or operation of the Funds and other
ordinary and extraordinary expenses associated with the operation of Funds and their investment
activities. Notwithstanding the foregoing, General Partner may specially allocate the expenses
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