Item 5: Fees and Compensation
The fees and expenses applicable to each Client are set forth in detail in their respective offering
documents or investment management agreement. A brief summary of such fees and expenses
is provided below. The Firm may enter into different fee arrangements on a Client-by-Client
basis. It is critical that all Clients and Investors refer to the applicable Client’s governing
documents for a complete understanding of how the Firm and its affiliates are compensated for
advisory services. The information contained herein is a summary only and is qualified in its
entirety by each applicable Client’s governing documents.
A. Advisory Fees and Compensation.
Procurement Fee / Management Fee
Generally, the Clients are charged a monthly procurement fee, in arrears, equal to 1/12th of the
applicable rate per annum, based on the net asset value of the assets under management for
such Client, calculated at the end of each month (the “Procurement Fee”). Certain Clients are
charged a monthly management fee, in arrears, equal to 1/12th of the applicable rate per annum,
based on the net asset value of the assets under management for such Client, calculated at the
end of each month whereas other Clients may be charged a management fee for the applicable
period, in advance, equal to the annualised rate for such applicable period, based on the
aggregate capital commitments or invested capital (the “Management Fee”). Clients are only
charged a Procurement Fee or a Management Fee, not both.
Performance Fee
In addition to the Procurement Fee or the Management Fee, as applicable, described above, at
the close of each calendar year certain Clients pay, directly or indirectly, the Firm and its affiliates
a performance-based fee in respect of the performance of the Clients for each performance
period (the “Performance Fee”).
For each performance period, the Performance Fee in respect of the Firm’s Clients will be
specified in the relevant offering documents and governing documents. The applicable
performance allocation will be subject to a cumulative high-water mark.
Incentive Allocation
In addition to the Management Fee, described above, the Firm or its affiliates may receive
incentive allocations with respect to certain Clients equal to 10% of proceeds subject to a
waterfall as described in such Clients’ governing documents.
B. Payment of Fees and Compensation.
Procurement Fees, Management Fees and Performance Fees are generally deducted or charged,
as applicable, directly or indirectly from the Clients. See Section A (Advisory Fees and
Compensation) above for information about the nature and timing of the Procurement Fees,
Management Fees and Performance Fees.
C. Other Fees and Expenses.
In addition to the Procurement Fees, Management Fees and Performance Fees, the Funds are
responsible for the legal, technology and systems, accounting (including any costs associated
with FATCA compliance), tax, audit and administration expenses and other professional costs
associated with the organization of the Funds and with the offering and withdrawal of interests
in the Funds (the “Interests”). For the avoidance of doubt, these include, but are not limited to,
any filing fees and expenses and out-of-pocket expenses, the costs of board support services (to
the extent provided), registered office services and legal and administrative costs incurred in
connection with the procurement of prospective investors. The Firm may agree to bear certain
organizational costs, which may be reimbursed by the Master Fund on terms agreed with the
Firm.
Organizational and establishment expenses incurred in connection with certain Funds are
generally amortized over a 60-month period, or such other period as the General Partner or the
Directors, as applicable, determine. The Funds will bear costs and expenses directly related to
portfolio investments or prospective investments (whether or not the relevant investment is
made), such as brokerage commissions, interest on debt balances or borrowings, research,
market data and other information utilized with respect to the Funds’ investment program
(including journals, papers, consultants and travel and accommodation), the costs of membership
of any exchange, costs incurred in connection with maintaining the Funds and any other
investment subsidiaries, including any administrative, management, custodial or other fees
incurred in connection with the operation of the Funds and such investment subsidiaries, and
any withholding or transfer taxes imposed on the Funds. The Funds will also bear all out-of-
pocket costs of the administration of the Funds, including expenses relating to accounting, audit,
fund administration, depository services, custodial, marketing, travel, communications with
respect to investor services and of preparing, printing and distributing financial and other reports
and proxy forms, administration and legal expenses, the fees and expenses of regulatory, tax
and other filings, reporting and compliance, the costs of any litigation or investigation involving
the Funds’ activities, the insurance (if any) for the benefit of the Directors and the obtaining and
maintaining any future listing of Interests, certain data costs incurred by the Funds, as may be
agreed (for the avoidance of doubt, these may include, but are not limited to, data subscriptions
or other licensing costs, third-party research related costs (to the extent permitted by applicable
law and regulation), quotation and market services), and any costs associated with and resulting
from reporting and providing information to existing and prospective Investors.
Director fees are paid to each of the Directors for acting as directors of the relevant Offshore
Fund, the relevant Master Fund and the General Partner. These fees are reviewed on an annual
basis. The Directors may charge additional fees, with the prior consent of Kirkoswald LLP and the
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