Item 5 – Fees and Compensation
The Funds’ Offering Documents set forth the terms of the relationship between each
Fund and each Investor in such Fund, including such matters as advisory fees,
custodial arrangements, management of the Fund and withdrawals or redemptions
of assets. Incision generally charges each Fund an investment management fee,
Part 2A of Form ADV
Brochure for Incision Capital Management, LP
calculated at an annual rate of 2.0% (0.5% per quarter) of (i) in the case of the
Master Fund, the balance of each Investor’s capital account and (ii) in the case of the
Offshore Fund, the net asset value of each Investor’s series of shares (the
“Management Fee”). The Management Fee is calculated and paid quarterly in
advance, as of the first day of each calendar quarter, based on the applicable capital
account balance or net asset value of the applicable series of shares as of such date.
With respect to the Offshore Fund, the Management Fee is calculated and paid by
the Master Fund on behalf of the Offshore Fund based on the Master Fund’s net
assets attributable to the net asset value of each Investor’s series of shares. If an
Investor makes a contribution or subscription other than at the beginning of a
calendar quarter, a pro rata portion of the Management Fee is paid to the Firm
based on the actual number of days remaining in such partial quarter. If an Investor
withdraws or redeems other than at the end of a calendar quarter, a pro rata
portion of the Management Fee is refunded to the Investor based on the actual
number of days remaining in such partial quarter.
In addition to the Management Fee, Incision or the General Partner, as applicable, is
generally entitled to a performance-based allocation or fee (“Performance
Allocation” or “Performance Fee”) with respect to certain classes of interests in the
Master Fund and, in the case of Offshore Fund Investors, with respect to the Master
Fund interests corresponding to each Investor’s series of shares. The Performance
Allocation and Performance Fee are generally equal to 20% of the net income
(including realized and unrealized gains and losses) attributable to (i) a Class A
Investor’s or Founders Class A Investor’s capital account in the Master Fund (as
applicable) or (ii) the Master Fund interests corresponding to an Offshore Fund
Investor’s series of shares, in each case to the extent such net income exceeds the
applicable “Hurdle Rate” measured against the applicable “High Water Mark”. With
respect to Class A interests in the Master Fund and the Master Fund interests
corresponding to series of Offshore Fund shares, the Hurdle Rate is an annual return
of 10% on the High Water Mark and resets each calendar year to 10% of the then-
current High Water Mark. With respect to Founders Class A interests in the Master
Fund, the Hurdle Rate is an annual return of 10% compounded annually over the
applicable multi-year performance period, as further described in the Master Fund’s
Offering Documents. The High Water Mark generally represents the highest value of
the applicable capital account or series of shares as of any prior date on which a
Performance Allocation or Performance Fee was assessable against such capital
account or series of shares (regardless of whether the Hurdle Rate was exceeded as
of that date), or, if no Performance Allocation or Performance Fee has previously
been assessable, the value as of the date of the applicable Investor’s initial capital
Part 2A of Form ADV
Brochure for Incision Capital Management, LP
contribution or subscription, in each case adjusted as described in the applicable
Fund’s Offering Documents.
Performance Allocations with respect to Class A interests in the Master Fund and
with respect to Master Fund interests corresponding to series of Offshore Fund
shares are generally made at the end of each calendar year and as of any date on
which the applicable Investor withdraws or redeems. Performance Fees with
respect to Founders Class A interests are paid on the last day of the calendar year
ending after the second anniversary of the applicable Investor’s capital contribution
and at three-year intervals thereafter and as of any date on which the applicable
Founders Class A Investor makes a withdrawal. With respect to Founders Class A
interests, performance periods are subject to grouping and netting across capital
contributions made within the same calendar year, as described in the Master
Fund’s Offering Documents. See Item 6 – Performance-Based Fees and Side-By-Side
Management of this Brochure for additional information.
For Investors, these fees are generally not negotiable. Investors that are affiliates of
the Firm, the General Partner, or a Principal (including their respective employees,
officers, members, directors, consultants, family members, trusts, and estate-
planning vehicles) are not subject to the Management Fee, and the Performance
Allocation or Performance Fee with respect to such Investors generally is also
waived. In addition, Incision (or the General Partner, as applicable) retains the right
to waive, reduce, rebate, or calculate differently the Management Fee, Performance
Allocation, or Performance Fee attributable to investments made by any other
Investor in the Funds.
Each capital contribution to the Master Fund and each subscription for shares of the
Offshore Fund is subject to a one-year lock-up period during which the applicable
Investor may not withdraw or redeem, other than upon payment of an early
withdrawal or early redemption fee equal to 5% of the proceeds, which is paid to
the applicable Fund. After the applicable lock-up period, an Investor in the Master
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