Item 5 – Fees and Compensation
A. ADVISORY FEES AND BILLING
JCAM earns its fees and compensation through investment management services to
Clients including the JCP Fund. The compensation is in the form of management fees
(the “Management Fees”) determined based on net asset values and performance-based
profit allocations and fees (the “Performance Allocation” or “Performance Fee”).
JCAM deducts its fees automatically from each JCP Fund Investor’s capital account
balance pursuant to the fee structure agreement between the JCP Fund Investor and the
Fund. Our compensation and billing procedures for the Fund are as follows:
The JCP Fund
A Management Fee is paid quarterly in arrears to JCAM. The Management Fee for the
Fund is equal to 0.375% (1.5% per annum) of the closing Capital Account balance of
each JCP Fund Investor for such quarter.
As of the close of each fiscal year, and subject to the limitations described in the Fund’s
Memorandum, a Performance Allocation will be debited against the capital account of
each JCP Fund Investor of the Fund and simultaneously re-allocated to the capital account
of JCAM. The Performance Allocation for each JCP Fund Investor will be equal to 20%
of such JCP Fund Investor’s allocable share of net profits for such fiscal year from such
JCP Fund Investor’s capital account; provided, however, that no Performance
Allocation will be made for a particular fiscal year unless such JCP Fund Investor’s
allocable share of net profits for such fiscal year (after giving effect to the Loss Carry
forward but before giving effect to the Performance Allocation) are sufficient to provide
such JCP Fund Investor with a rate of return of at least 5% on the beginning capital
account balance for such Limited Partner as of the beginning of the applicable year (the
“Hurdle Rate”). The Hurdle Rate is not compounded or cumulative and is re-set at the
beginning of each fiscal year of the JCP Fund.
Separate Managed Accounts
Clients will pay JCAM a quarterly management fee, payable in arrears on the last business
day of each calendar quarter, based on the closing Net Asset Value of the Separate Account
for such quarter and according to the table below. “Net Asset Value” includes all cash
and all other assets of the Separate Account (generally based on liquidation value) under
management after taking into account all brokerage commissions and fees, and other
expenses of the Separate Account.
Account Value (Net Asset Value) Quarterly Management Fee
Less than or equal to $1,000,000 0.375% (1.5% per annum)
Greater than $1,000,000 0.3125% (1.25% per annum)
JCAM will generally have authority under its Client Agreements to instruct Client qualified
custodians to debit JCAM’s fees from the Client Separate Accounts and pay fees owed to
JCAM. However, the Firm may agree to bill Clients for management fees owed.
All open positions will be valued at their then market value, which means the settlement
price as determined by the exchange on which the transaction is affected, or the most
recent appropriate quotation as supplied by the clearing broker or banks through which
the transaction is affected. If there are no trades on the date of the calculation, positions
will typically be valued at the midpoint between closing bid and ask prices. If on the
date as of which any valuation is being made, the exchange or market designated for
the valuation of any given assets is not open for business, the valuation of such assets
shall be determined as of the last preceding date on which such exchange or market was
open for business. Interest, if any, shall accrue monthly.
Lower fees for comparable services may be available from other sources. These fees
are negotiable.
B. OTHER FEES AND EXPENSES
JCAM bears its own administrative and overhead expenses related to providing
investment management services to the Fund and Separate Accounts, including office
lease expenses, utilities, and salary and other compensation expenses related to JCAM
personnel.
The JCP Fund
The Fund pays for its own ordinary operating and other expenses, including, but not
limited to, 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 JCAM’s compliance
obligations under applicable federal and/or state securities and investment adviser
laws arising out of its relationship to the Fund, as well as extraordinary legal expenses);
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 JCAM; costs of printing and mailing reports and
notices; and other similar expenses related to the Fund, as JCAM determines in its sole
discretion. To the extent that expenses are borne by the Fund are paid by JCAM, the
Fund will reimburse JCAM for such expenses.
There may be additional fees or charges that result from the maintenance of a JCP Fund
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