ITEM 5 – FEES AND COMPENSATION
Item 5.A Describe how you are compensated for your advisory services. Provide your fee
schedule. Disclose whether the fees are negotiable.
O.S.S. Capital or O.S.S. Advisors, as applicable, typically charges fees that are
based upon a set percentage of assets under management and performance. Set
forth below are summaries of the fees payable by Investors in the Funds. It
should be noted that detailed disclosure about the fees and other expenses
applicable to an investment in the Funds is provided in the operative documents
for the applicable Fund.
Investors in the Funds are typically charged a management fee equal to 1% per
annum of the amount invested in a particular Fund, payable quarterly in advance.
Investors in the Funds are also typically charged an incentive allocation equal to
17.5% or 20% upon the realization of each investment held in any Special
Investment Accounts or series of Class C Shares (as applicable) of the net profits
allocable to the particular account or shares in each applicable Fund, subject to a
modified loss carry forward provision. Under the modified loss carry forward
provision, the incentive allocation will be reduced by half to 8.75% or 10%, as
applicable, until 2.5 times the loss is recovered for such capital account/series of
shares.
O.S.S Capital or O.S.S. Advisors reserves the right to waive, reduce or calculate
differently such fees for certain Investors, including, without limitation, Investors
that are members, partners, affiliates or employees of O.S.S. Capital, members of
the immediate families of such persons and trusts or other entities for their benefit.
It should be noted that Class G Shares of the Offshore Fund, which are offered
only to O.S.S. Capital’s employees, affiliates or their immediate family members,
are not subject to a management fee or incentive allocation.
It is very important that Investors refer to their respective Fund’s governing
documents for a complete understanding of how O.S.S. Capital is
compensated for its advisory services. The information contained herein is a
summary only and is qualified in its entirety by the relevant Fund governing
documents.
Item 5.B Describe whether you deduct fees from clients’ assets or bill clients for fees
incurred. If clients may select either method, disclose this fact. Explain how often
you bill clients or deduct your fees.
O.S.S. Capital or O.S.S. Advisors deducts fees from the Funds’ assets. Investors
do not have the ability to choose to be billed directly for fees incurred.
O.S.S. Capital typically deducts the amount of the management fee applicable to
each Investor at the beginning of each quarter. The management fee is payable on
the first day of each fiscal quarter based on the net asset value of each capital
account balance or series of shares, as applicable, as of the beginning of such
fiscal quarter (adjusted for capital contributions and withdrawals/redemptions
made during the quarter).
The Funds are also typically charged a performance-based incentive allocation
upon the realization of an investment held in a Special Investment Account or
series of Class C Shares based on the appreciation in each Investor’s Special
Investment Account balance or series of shares, as applicable, subject to a
modified loss carry forward provision. As noted above, O.S.S Capital or O.S.S.
Advisors reserves the right to waive, reduce or calculate differently the
management fee and/or incentive allocation for certain Investors.
It is very important that Investors refer to their respective Fund’s governing
documents for a complete understanding of how fees are deducted from their
assets. The information contained herein is a summary only and is qualified
in its entirety by the relevant Fund governing documents.
Item 5.C Describe any other types of fees or expenses clients may pay in connection with
your advisory services, such as custodian fees or mutual fund expenses. Disclose
that clients will incur brokerage and other transaction costs, and direct clients to
the section(s) of your brochure that discuss brokerage.
The Funds have paid their own organizational and initial offering expenses, which
were amortized over a five-year period from the date in which the Funds
commenced operations.
Domestic Funds
The Domestic Funds will bear their own expenses, such as the management fee,
any applicable investment expenses , legal expenses, audit and tax preparation
expenses, corporate licensing, expenses of creating subsidiaries and other
expenses associated with the operation of the Domestic Funds, including
regulatory expenses (such as filing fees). Such expenses, excluding the
management fee, will be shared on a pro rata basis by all of the Investors.
Offshore Fund
The Offshore Fund will bear its own expenses, and those of the Master Fund,
including, but not limited to, fees to the administrator, fees to the members of the
Board of Directors, any applicable investment expenses, legal expenses, audit and
tax preparation expenses, corporate licensing, expenses of creating subsidiaries
and other expenses associated with the operation of the Offshore Fund, including
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