Item 5: Fees and Compensation
The fees and allocations applicable to the Feeder Funds and the Segregated Portfolios
are set forth in detail in the applicable Fund’s confidential private offering memorandum
or confidential explanatory memorandum (the “Memorandum”). A brief summary of those
fees and allocations is provided below. In its sole discretion, Orange Capital and/or the
General Partner (as applicable) may, in effect, waive or reduce any fees and
compensation to be paid by investors in the Funds where such investors are members,
principals, officers, directors, employees or affiliates of the General Partner or Orange
Capital or relatives of such persons or certain large or strategic investors.
Feeder Funds
Orange Capital receives a fixed fee from the Feeder Funds based on net assets under
management ranging between 1.0% and 1.5% (depending on the applicable class of
shares or series of interests) annually (the “Fixed Fee”). The Fixed Fee is paid in
advance after the first day of each calendar quarter based on the prior quarter-end net
asset value adjusted, on a pro-rata basis, for subscriptions made during quarter. The
Fixed Fee is deducted on a quarterly basis from the Feeder Funds by the third party
administrator.
In addition, the General Partner receives performance-based compensation at a rate
ranging between 17.5% and 20% (depending on the applicable class of shares or series
of interests) of the Feeder Funds’ net profits, if any, subject to a “loss carryforward”
provision (the “Incentive Allocation”). The Fixed Fee and Incentive Allocation are
negotiable for investors in the Feeder Funds.
Segregated Portfolios
Orange Capital does not receive a Fixed Fee from the Segregated Portfolios.
Orange Capital receives a performance fee from Segregated Portfolio A (the
“Performance Fee,” collectively with the Incentive Allocation, the “Performance
Compensation”) and an Incentive Allocation from Segregated Portfolio B.
Segregated Portfolio A pays Orange Capital a Performance Fee of 10% of the net
appreciation, if any, of the net asset value of all realized investments, which may be
netted against other investments.
Orange Capital will be allocated 10% of the proceeds realized upon the disposition of the
assets of Segregated Portfolio B, subject to the return of capital contributions to
investors.
Expenses
In addition to paying the Fixed Fee (in the case of the Feeder Funds) and being subject
to the Performance Compensation, the Funds are also subject to other expenses such as
legal, auditing, accounting (including out-sourced accounting) and other professional
expenses, administration expenses, research and investment expenses such as
commissions, interest on margin accounts and other indebtedness, custodial fees, bank
service fees and other expenses related to the purchase, sale or transmittal of Funds’
assets. The Feeder Funds indirectly share the administrative and other expenses of the
Master Fund pro rata based on their respective interest in the Master Fund. The Funds’
assets may be invested in money market mutual funds, ETFs or other registered
investment companies. In these cases, the Funds will bear their pro rata share of the
investment management fee and other fees of such entities, which are in addition to the
fees and allocations paid to Orange Capital and the General Partner, respectively.
Please refer to “Brokerage Practices” below in this Firm Brochure for a discussion of
Orange Capital’s brokerage practices.
If any expenses are incurred jointly for multiple Client accounts managed by Orange
Capital or its affiliates, such expense will be allocated among the Client accounts in a fair
and reasonable manner as determined by Orange Capital. Orange Capital may use
various methods to allocate particular expenses among the Client accounts depending
on the circumstances (e.g., pro rata based on assets under management,
relativeparticipation in the transaction related to the expense, general amount of trading
activity etc.). Additionally, if any expenses are incurred jointly among Client Accounts
and the account of Orange Capital or its affiliates, Orange Capital will be allocated a
portion of such expense as the Company deems to be fair and reasonable under the
circumstances.