Fees and Compensation
Separate Accounts
Compensation for investment advisory services provided to the separate accounts is generally
negotiated in each instance and is particular to each advisory contract. Typically, each separate
account client pays a fee pursuant to the following fee schedule, which is based on the market
value of the assets under management in each separate account, including cash or cash equivalents:
Assets under Management with the Advisor Annual Fee
<$1,000,000 1% of market value of assets under
management with the Advisor.
≥$1,000,000 and <$5,000,000 0.80% of market value of assets under
management with the Advisor.
≥$5,000,000 All fees are negotiable.
The Advisor will in certain situations negotiate fees depending on account size and service
requirements. Differences in advisory fees paid by certain clients reflect factors such as, but not
limited to, start dates or the entirety of the client’s relationship with the Advisor. There is no
minimum annual fee.
The Advisor has a hybrid fee arrangement with a separate account client which is comprised of a
discounted annual management fee and deferred performance fee calculated annually upon the
account’s return on invested capital. While the account adheres to the manager’s value philosophy
and holds names that the manager owns in other accounts, this particular account is run in a
concentrated manner and might over/under-perform depending upon market moves.
The annual fee for each separate account is calculated quarterly based on the market value of the
assets under management as of the last business day of the quarter. Separate account clients are
invoiced quarterly in arrears. Not less than 48 hours following the distribution of the invoice to the
separate account clients, the Advisor submits a request to the custodian of the separate account for
payment of the management fee, which payment is authorized under the investment management
agreement between the Advisor and the separate accountholder. Performance fee arrangements are
negotiated on a case-by-case basis and set forth in the applicable client’s advisory contract.
The Fund
The Fund pays to the Advisor a quarterly management fee in arrears, equal to the product of
0.125% and the capital account balances of the limited partners in the Fund (calculated prior to
any performance fee allocations and withdrawals effected at such time) as of the last business day
of each quarter. Management fees payable by any limited partner for any incomplete or partial
fiscal quarter will be prorated over the applicable fiscal quarter.
The General Partner is authorized to, and does, in limited situations, waive, or reduce the
management fee with respect to any one or more limited partners. The Advisor will not assess
management fees on the General Partner’s portion of the Fund’s committed capital.
In addition to the payment of ongoing management fees, the Fund (and, indirectly, the limited
partners) is also required to pay to the General Partner, an affiliate of the Advisor, performance
fees based upon the Fund’s return on invested capital. For additional details regarding such
performance-based compensation, please refer to Item 6 - Performance-Based Fees.
Management fees, performance fees, and/or any other compensation payable to the Advisor or the
General Partner by the Fund were negotiated with the Fund and the limited partners of the Fund
and depend on, among other factors, the amount of capital committed to the Fund. Investors should
carefully review the Partnership Agreement for complete information about fees and
compensation. Similar advisory services may be available from other investment advisers for
comparable or lower fees.
The SPV
The Relying Adviser shall not be entitled to any management fees, compensation, or other
remuneration for its services, except that the SPV shall reimburse the Relying Adviser for all
expenses incurred by the Relying Adviser or its affiliates in the performance of its services in
accordance with the Agreement of Limited Partnership. The Relying Adviser is entitled to receive
an incentive fee of 10% participation in realized profits, if any, from the sale of the SPV’s single
holding following the return of limited partner contributed capital.
The SPV shall pay, and shall reimburse the Relying Adviser to the extent not directly paid by the
SPV, for all reasonable, ordinary and extraordinary expenses relating to its activities including,
without limitation, organizational expenses and liquidation expenses of the SPV and all other
expenses properly chargeable to the activities of the SPV, including insurance and legal expenses,
and fees payable to third parties in connection with the evaluation and holding of prospective or
consummated investments of the SPV. Investors should consult the Agreement of Limited
Partnership for a complete disclosure of all fees and expenses.
Impact of Valuation on Fees for the Fund and Separate Accounts
While the separate accounts and the Fund primarily invest in securities of public companies, they
do, from time to time, hold illiquid securities. Illiquid securities include those securities that are
not traded actively, have no public market value, or are otherwise restricted from trading due to
contractual or legal restrictions. For example, a client of the Advisor may purchase securities of a
public company but due to a reorganization, the client may end up holding securities of a private
company.
Generally, bids are available from reputable dealers or purchasers for the illiquid securities
purchased by the Advisor for the benefit of a client. The Advisor values listed securities for its
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