FEES AND COMPENSATION
Funds:
The Funds bear a management fee paid quarterly in advance by the Master
Fund to Jet Capital equal to 1.0% or 1.5% per annum of the beginning net asset value of each
capital account of an investor for such fiscal quarter.
If an investor withdraws or redeems from a Fund effective other than as of the
first day of a fiscal quarter, any unearned prepaid portion of the management fees will be
refunded to the investor pro rata.
The General Partner is entitled to receive an incentive allocation with respect
to investors' capital accounts in the Funds, based on net capital appreciation ultimately
attributable to investors' capital accounts on an annual basis. The incentive allocation rate
(the "Incentive Allocation") is equal to either 15% or 25% (depending upon the achievement
of certain performance benchmarks) of the net capital appreciation (which includes both
realized gains and losses and unrealized appreciation and depreciation of securities held in
the Funds' portfolios) allocated to an investor's capital account for such fiscal year after
deducting the Management Fee debited to such investor's capital account for such fiscal year.
Incentive Allocations are subject to a "high water mark" provision such that no allocation is
made until prior losses are recouped.
Sub-Advised Funds:
Jet Capital charges Sub-Advised Funds a fixed management fee of not more
than 1.5% payable at the beginning of each quarter, and/or an incentive fee or allocation of
15%, payable in arrears and subject to a loss carry forward limitation. Fees for Sub-Advised
Funds are subject to negotiation and are established pursuant to each Managed Account's
investment management agreement. Investment management agreements are terminable
upon receipt by either party from the other of prior written notice of termination and after the
expiration of a certain notice period and Managed Account clients will be entitled to any
unearned prepaid portion of the management fee to the extent applicable.
Jet Capital’s Sub-Advised Funds are sub-advisory arrangements, where Jet
Capital manages a portion of a pooled investment vehicle for another, unrelated investment
adviser. These sub-advisory arrangements are disclosed in Schedule D, Section 7. B.(2) of
Form ADV Part 1A, and in Item 10 hereof.
DOC ID - 24022285.3 3
Payment of Fees:
Fees and compensation paid to Jet Capital or its affiliates by the Funds or Sub-
Advised Funds are deducted from the assets of such Clients. As discussed above,
management fees are deducted on a quarterly basis and incentive compensation is deducted
on an annual basis unless Jet Capital and the Client agree otherwise in the investment
management agreement.
Expenses:
Funds and Sub-Advised Funds bear their own operating and other expenses
including, but not limited to, investment-related expenses (e.g., brokerage commissions,
expenses related to short sales, clearing and settlement charges, custodial fees, interest
expense, bank service fees and investment-related travel expenses), legal expenses and costs,
professional fees (including, without limitation, fees and expenses of consultants and
experts), accounting, audit and tax preparation expenses, interest and fees associated with any
borrowing; insurance premiums, entity-level taxes and other governmental charges (including
from governmental authorities, regulators or exchanges), fees and expenses of third party
administrators and directors, organizational expenses, expenses incurred in connection with
the offering and sale of interests or shares and other similar expenses; and non-recurring or
extraordinary expenses. Generally, all expenses borne by the Funds will be debited to all
investors on a pro rata basis in accordance with their ownership percentages.
See Item 12 for a description of Jet Capital's brokerage practices.
DOC ID - 24022285.3 4