Item 5 - Fees and Compensation
A. Below is a discussion of how the Adviser is compensated in connection with
providing advisory services to the Fund and Managed Accounts, respectively.
The Fund
The Adviser receives a management fee from each investor’s capital account in
the Fund, calculated and payable as of the beginning of each calendar quarter in
advance, as follows: (A) investors holding founders class interests will pay a
management fee at the rate of one-quarter (1/4) of 1.75% of the net asset value of
each capital account attributable to such investor’s founders class interests and (B)
investors holding standard class interests will pay a management fee at the rate of
one-quarter (1/4) of 2.0% of the net asset value of each capital account attributable
to such investor’s standard class interests. Fees are negotiable on a case-by-case
basis.
Managed Accounts
With respect to the Managed Fund Accounts, the fees vary from Client to Client
and are negotiated with each particular Client. Generally, the Managed Fund
Accounts are subject to a management fee range up to 2.0% of the overall account
value. Fees are negotiable on a case-by-case basis.
Generally
The Adviser may enter into different fee arrangements on a Client by Client or
investor by investor basis and will be negotiated with each Client or investor (as the
case may be).
B. Management fees from the Fund are deducted directly from each investor’s capital
account, and are payable monthly in arrears. With respect to Managed Fund Accounts
that pay management fees based on account value, the management fees are payable
monthly in advance, unless negotiated otherwise. With respect to Managed Fund
Accounts that pay management fees based on a fixed rate, the management fees are
payable monthly in advance or in arrears depending on the specific client account.
Management fees from any Managed Fund Account are generally paid by the owners
of the applicable Managed Fund Accounts and are not deducted by the Adviser.
C. Clients will incur brokerage and other transaction costs. Item 12 of this brochure
discusses how the Adviser selects brokers and determines the reasonableness of their
compensation. The direct expenses borne by each Client are described in more full
detail in each Client’s Offering Documents.
The Fund
The Fund generally will be required to bear and reimburse the Adviser for all of its
Fund expenses. Fund expenses include, among others,: (a) all organizational
expenses, and all expenses, incurred in connection with the offer and sale of interests
(other than placement agent fees), including, but not limited to,
marketing/conference attendance expenses, documentation of performance and the
admission of investors, (b) all operating expenses of the Fund such as tax preparation
fees (including, without limitation, any such fees related to the preparation of tax
returns and Schedule K-1s), governmental fees and taxes (or any other governmental
charges levied against the Fund), Fund administrator, custodial and prime brokerage
fees and expenses, communications with investors and ongoing legal, accounting,
auditing, administration, appraisal, bookkeeping, independent shadow accounting,
consulting and other professional fees and expenses, including for litigation, and
preparation of the Fund’s financial statements and reports, (c) all Fund costs,
expenses and charges incurred in connection with the investment and trading
activities of the Fund (e.g., brokerage commissions, mark-ups, margin interest,
expenses related to short sales, custodial fees, clearing and settlement charges and
other transaction costs to brokers), (d) professional and other advisory and
consulting expenses (including Advisory Board fees and expenses, if applicable) and
travel expenses incurred in connection with investment due diligence, monitoring or
the assertion of rights or pursuit of remedies (including, without limitation, pursuant
to bankruptcy or other legal proceedings, or participation in informal committees of
creditors or other security holders of an issuer), (e) all fees and other expenses
incurred in connection with the investigation, prosecution or defense of any claims
by or against the Fund, (f) interest on, and fees and expenses arising out of, all
borrowings made by the Fund, (g) expenses of any meetings of the investors, (h) the
costs of any litigation and indemnification relating to the affairs of the Fund, (i)
expenses related to third party research, publications, data and data services,
including real time pricing and market information (such as Bloomberg and Reuters
services) and historical pricing and other data, order management system, portfolio
management system and risk management system and advisory, (j) costs of
compliance with applicable laws and regulations of governmental and self-
regulatory bodies, including costs incurred by the general partner, the Adviser and
their respective affiliates in complying with laws and regulations that apply to any
such entities as a result of their services to the Fund, (k) the Fund’s expenses
associated with forming and maintaining the legal existence of the Fund, including
directors’ fees, administrators’ fees, (l) all fees and expenses of any kind related to
the provision of technology for the Fund or for the Adviser, including but not limited
to computers, storage, networking and other physical devices, infrastructure and
processes to create, process, store, secure and exchange all forms of electronic data,
technology associated with research, and/or product testing and remote access, and
third party technology providers, (m) costs associated with regulatory filings
including but not limited to Form PF, and all costs and expenses relating to filings,
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