Item 5 – FEES AND COMPENSATION
Management Fee and Performance Allocation
The Adviser receives compensation from the Funds in connection with providing discretionary investment
advisory services in the form of a fixed management fee (the “Management Fee”) payable to the Adviser
and based on the total value of each investor’s capital account in the respective Fund. The General
Partner, an affiliate of the Adviser, is entitled to a performance allocation (the “Performance Allocation”)
based on the net gains (if any) earned by investors in the Domestic Fund and the Master Fund. The
Management Fee and the Performance Allocation are described in more detail below.
As more fully described in the respective Fund’s Memorandum, each of the Domestic Fund and the
Offshore Fund has issued four classes of limited partner interests or shares, as applicable, to underlying
investors (each referred to herein as a “Class”). Each Class is subject to different liquidity provisions and
Management Fee and Performance Allocation rates. The Funds are no longer offering Founders Class
interests. The Management Fee and Performance Allocation rates associated with each Class are outlined
here:
Class Management Fee Rate Performance Allocation Rate
Founders Class 1.50% 17.5%
Class A 1.50% 20.0%
Class B 1.25% 15.0%
Class C 1.00% 14.0%
The Management Fee is paid to the Adviser by the Funds, in advance, at the beginning of each calendar
quarter. The Management Fee is payable within ten days after the beginning of each quarter. The
Performance Allocation is calculated annually, subject to a traditional high watermark, and takes the form
of a reallocation of net gains to the capital account of the General Partner.
The Management Fee will be calculated after taking into account capital contributions as of the beginning
of a calendar quarter and net of withdrawals as of the end of the prior calendar quarter. In addition, the
Management Fee will be prorated for capital contributions and withdrawals during any calendar quarter
based on the date such capital contribution or withdrawal is made (and, with respect to withdrawals, the
Management Fee will be reduced by a prorated amount for the ultimate benefit of the withdrawing
investor). Further, the Management Fee will be prorated for any calendar quarter during which the
Adviser does not serve as the Adviser of the Funds for the entire calendar quarter.
As of the end of each fiscal year, increases in the Funds’ net worth allocated during such fiscal year to the
capital account attributable to an investor shall be, subject to a high watermark, reallocated so that the
General Partner’s capital account shall receive an allocation equal to the rates outlined above. If there is
a reduction of an investor’s capital account as a result of a withdrawal prior to the end of a fiscal year,
such allocations to the General Partner’s capital account will be made on a pro rata basis as though they
were being made at the end of the fiscal year.
In addition, and as disclosed in each Fund’s Memorandum, Class B interests are subject to a rolling three-
year soft lock-up provision and Class C interests are subject to an initial one-year hard lock-up provision
immediately followed by a rolling three-year soft lock-up provision. Class B and Class C interests may be
withdrawn on the business day immediately preceding each one-year anniversary during a rolling three-
year soft lock-up period, subject to a fee equal to: (i) 5% of the amount withdrawn for withdrawals
occurring on the last business day immediately preceding the one-year anniversary of the commencement
of a rolling three-year soft lock-up period; and (ii) 3% of the amount withdrawn for withdrawals occurring
on the last business day immediately preceding the two-year anniversary of the commencement of a
rolling three-year soft lock-up period. Such withdrawal fees are payable to the Fund from which the Class
B interest or Class C interest is withdrawn and allocated pro rata to the remaining investors in such Fund.
If such Class B interest or Class C interest is withdrawn prior to the expiration of a rolling three-year soft
lock-up period, the Adviser is entitled to an additional Management Fee equal to the difference between
the actual Management Fee paid and the Management Fee that would have been paid had such Class B
interest or Class C interest been subject to the Class A Management Fee. In addition, if such Class B
interest or Class C interest is withdrawn prior to the expiration of a rolling three-year soft lock-up period,
the General Partner shall receive an additional Performance Allocation equal to the difference between
the actual Performance Allocation and the total Performance Allocation that would have been charged
had such Class B interest or Class C interest been subject to the Class A Performance Allocation.
The Management Fee rate and the Performance Allocation rate are generally not negotiable. However,
the Adviser and the General Partner have the authority to waive, reduce or rebate the Management Fee
and/or the Performance Allocation attributable to any investor, including without limitation, any
employee, agent, or affiliate of the Adviser and/or the General Partner.
The Management Fee and the Performance Allocation are generally deducted from each Fund account
upon the Adviser’s instructions.
Expenses
The Adviser and the General Partner do not receive additional compensation from the Funds other than
the Management Fee and the Performance Allocation described above. However, the Funds will incur
their own operating and investment expenses. Operating expenses will include, but are not limited to,
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