ITEM 5 – FEES AND COMPENSATION
A. Advisory Fees and Compensation
The fees applicable to each Advisory Client are set forth in detail in each Advisory Client’s governing
documents. It is critical that investors and prospective investors refer to the relevant governing documents
for specific fee terms and for a complete understanding of how the Firm or its affiliates are compensated
for investment advisory services. A brief summary of such fees is provided below.
Asset-Based Compensation
Each of the Opportunities Fund and the Keal Fund pays Melqart Asset Management LP (the “Limited
Partner”), which is an affiliate of the Firm, a monthly management fee (the “Management Fee”). The
Management Fee is based on an investor’s capital account balance or net asset value of the shares on the
last day of the relevant month and is charged monthly in arrears. The Management Fee for any period that
is less than one month is prorated. If additional subscriptions are made to a Fund during a month, the
Management Fee is prorated and charged at the time of such subscription.
To the extent they are charged, the Management Fees for SMA clients are individually negotiated pursuant
to the agreements between the Firm and the client and are paid direct to the Firm.
Performance-Based Compensation
The Opportunities Fund and the Keal Fund, at the end of each fiscal year, pay the affiliates of the Firm and
in turn the Firm, an incentive allocation fee based on the net capital appreciation attributable to each Fund
investor’s capital account or series of shares (the “Incentive Fee”). The Incentive Fee is subject to customary
high-watermarks. Generally, any net loss for a fiscal year allocated to a capital account of an investor or
series of shares, as the case may be, is carried forward each fiscal year so that no Incentive Fee is due from
such capital account or series of shares, as applicable, for a particular year unless these losses have been
recouped. In the event a Fund investor is permitted or required to withdraw or redeem completely or
partially from the Funds other than at the end of the fiscal year, the Incentive Fee with respect to such Fund
investor will be crystallized.
The Firm is entitled to receive performance-based fees from SMA clients, typically on an annual basis (or
other relevant periods), and typically subject to a high-watermark, and in the amounts set forth in the
agreements between the Firm and the client. Generally, an unaffiliated third party will deduct these
amounts from the Advisory Client’s assets.
Waiver of Fees
In the Firm’s sole discretion, the Management Fee and/or Incentive Allocation may be and have been
waived, reduced, or calculated differently with respect to certain investors, including, without limitation,
investors that are members, shareholders, partners, affiliates or employees of the Firm or its affiliates. The
governing documents of the Funds allow the Firm to waive fees for such individuals and to negotiate
different fees with investors in the Funds.
B. Other Fees and Expenses
The Funds bear their own expenses and their pro rata share of the relevant master fund's expenses, including
the investment expenses (e.g., expenses that, in the Firm’s discretion, are related to the investment of the
master fund's assets, whether or not such investments are consummated, such as brokerage commissions,
expenses relating to short sales, clearing and settlement charges, custodial and depositary fees, bank service
fees and interest expenses); investment-related travel expenses (which are travel expenses related to the
purchase, sale or transmittal of the master fund's investments incurred by the Firm); professional fees
(including expenses of consultants, investment bankers, attorneys, accountants and other experts) relating
to investments; research and market data (including any computer hardware or software and connectivity
hardware (e.g., telephone and fibre optic lines) incorporated into the cost of obtaining such research and
market data); corporate access; administrative expenses (including fees and expenses of the Administrator
and other similar service providers); legal expenses; external accounting and valuation expenses (including
the cost of accounting, valuation and risk and investment management software packages and third party
reconciliation services); audit and tax preparation expenses; fees and expenses of the Directors; costs
relating to directors' and officers' liability insurance; expenses of the Firm related to members of the Firm
attending meetings of the Directors and onsite visits to service providers of the Funds (including travel,
accommodation and subsistence costs); costs of printing and mailing reports and notices; taxes; corporate
licensing; regulatory expenses (including filing fees and tools to make such filings); listing fees;
organizational expenses; expenses incurred in connection with the offering and sale of the Shares and other
similar expenses related to the Funds; indemnification expenses; and extraordinary expenses.
In respect of the Firm’s Funds, where applicable, the relevant Fund will pay for research (including access
to investment analysts and experts) provided by Prime Brokers or other research providers selected by the
Firm by way of a direct research charge, which will not be linked to the value or volume of transactions
executed on behalf of the master fund. The research charge will be collected on a periodic basis and will be
based on an annual budget for research payments which will be set, and regularly reviewed, by the Firm in
consultation with the Directors. Information on the budgeted amount for research (including any changes
to the budget) and estimated research charge will be made available to the investors on an annual basis, or
more frequently if required under applicable law.
If any of the expenses listed above are incurred jointly for any of the Firm’s Advisory Clients, such expenses
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