Item 5 – Fees and Compensation
The below describes how the Adviser is generally compensated in connection with providing
advisory services to its Clients. However, the Adviser may enter into different fee arrangements on
a Client by Client basis. A potential investor in a Fund or any potential Client should review any
and all Offering Documents in their entirety before making any investment decisions.
A. Set forth below is a description of the fees and expenses paid by the Funds and Managed
Accounts, respectively:
The Funds
In consideration for its services to the Funds, Merewether is entitled to receive a quarterly
Management Fee calculated at an annual rate of (i) 1.25-1.5% of each Investor’s Capital
Account (a “Capital Account”) attributable to Standard Class Interest and (ii) .75% to 1.0%
of each Investor’s Capital Account attributable to any Founders Class Interest (the
“Management Fee”). The Management Fee is payable in advance as of the first business day
of each calendar quarter. The Management Fee may be waived, reduced or discounted from
time to time in the Adviser’s discretion with respect to one or more Investors without consent
of the other Investors.
Merewether Special Partners, LP, an affiliate of the general partner, is entitled to a Performance
Allocation (the “Performance Allocation”) at the end of each calendar year, generally
calculated as follows: (i) with respect to any Standard Class Interest, the Performance
Allocation is equal to 17.5% of the amount by which the Fund’s net profits allocated to the
associated Standard Class Capital Account for such calendar year (after reduction for the
Management Fees debited to such Standard Class Capital Account) exceeds the associated loss
carryforward; and (ii) with respect to any Founders Class Interest, the Performance Allocation
is equal to 15% of the amount by which the Fund’s net profits allocated to the associated
Founders Class Capital Account for such calendar year (after reduction for the Management
Fees debited to such Founders Class Capital Account) exceeds the associated loss carryforward.
Merewether Special Partners, LP may, in its sole discretion, reduce, waive or rebate the
Performance Allocation with respect to any Investor, including, without limitation, any
affiliated investors, without entitling any other Investor to the same or similar or identical
reduction, waiver or rebate, and shall not be required to obtain the consent or approval of, or
give notice to, any Investor in connection therewith.
Managed Accounts
In connection with the advisory services provided to the Managed Accounts, Merewether
typically will charge a management fee and a fee based on the performance of the Managed
Account (a “Performance Fee” and together with the Performance Allocation,
“Performance Compensation”), each negotiated with the Managed Account Client on an
account-by-account basis.
B. The Funds pay a management fee quarterly in advance as compensation for the management
services to be performed by the Adviser. Such fees are generally deducted from the Investor’s
Capital Account. The Adviser has the right to reduce, waive, assign, participate or otherwise share
or modify the management fee chargeable with respect to any Investor (including any affiliate
of the Fund’s general partner or the Adviser) without the consent of, or notice to, any other
Investor. Fees are not automatically deducted from the Managed Accounts. Merewether bills the
applicable Managed Account for fees incurred. The Adviser is compensated pursuant to advisory
agreements that were individually negotiated with each Managed Account.
C. The Funds pay all expenses of the organization of the Fund and the offering of interests,
including legal and accounting fees, printing costs, travel, “blue sky” and other regulatory filing
fees and expenses, and out-of-pocket expenses, but not including placement fees.
Each Fund bears its own operating and other expenses, including but not limited to: (i) costs
and expenses related to its investment program, including expenses related to proxies,
underwriting and private placements, data feed hardware and software, research, evaluation,
due diligence, negotiation, consummation, management, valuation and disposition of
investments, trade publications, brokerage commissions, bank service fees, interest on debit
balances or borrowings, custody fees, fees assessed by prime brokers, and other third-party
service fees, and any taxes (including, but not limited to, withholding and transfer taxes)
imposed on the Fund, expenses relating to any short sales, clearing and settlement charges, and
travel expenses related to the investment process; (ii) costs and expenses related to operations,
portfolio and trading-related software, including trade order management software (i.e.,
software used to route trade orders and manage the portfolio) and related connectivity costs;
(iii) all out-of-pocket costs of the administration of the Fund, including, without limitation, fees
and expenses of any Administrator, bookkeeping accounting, audit, tax and tax preparation
expenses, legal expenses, costs of any litigation or investigation involving the Fund’s activities,
printing and duplication expenses, and costs associated with reporting and providing
information to existing and prospective Investors, the costs of holding any meeting of the
partners, and any costs of procuring and maintaining insurance for the benefit of the Fund, the
Fund’s general partner, and the Adviser; (iv) any governmental, regulatory, licensing, filing or
registration fees and expenses (including any fees and expenses associated with any regulatory,
operations or compliance consultant) incurred by the Fund, the Fund’s general partner or the
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