Item 5: Fees and Compensation
Asset-Based and Performance-Based Compensation
The fees and compensation applicable to each of the Funds are set forth in detail in the
corresponding Offering Documents, while the fees and compensation for each Account are
negotiated with the Account’s investor and documented in its Advisory Agreement. A brief
summary of the fees and compensation applicable to the Clients is provided below.
• Management Fee
Parsifal is paid an investment management fee (the “Management Fee”) by certain Funds
monthly in advance based on the net asset value of the applicable Funds on the first
business day of each month and by the Account monthly in arrears. The Management Fee
is prorated for any period that is less than a full month and adjusted for any contributions
and withdrawals made during the month. The Management Fee for the Flagship Funds
and the Account ranges from 1.00% to 2.00% per annum, subject to reductions in certain
cases based on an Investor’s holding period or assets under management thresholds,
while the Co-Invest Fund is not charged a Management Fee.
At times, Parsifal, in its sole discretion, will waive or modify the Management Fee for
certain Investors or with respect to an Account.
• Performance-Based Compensation
Parsifal or an affiliate will receive performance-based compensation from its Clients in the
form of an incentive allocation or fee. With respect to the Funds, performance-based
compensation percentage ranges from 10% to 30% per annum; provided that with respect
to certain Investors, performance-based compensation is payable only if and to the extent
that a certain minimum rate of return (a “hurdle”) is exceeded Performance-based
compensation is generally charged at the end of each fiscal year or upon a redemption by an
Investor via a reallocation from the account of the Investor to the account of the General
Partner (as defined below). Performance-based compensation arrangements for Accounts
are customized and negotiated prior to engagement of Parsifal as an investment manager.
Performance-based compensation may be calculated and paid annually, or with respect to
distribution proceeds, as specified in the relevant Account documentation. Parsifal, in its
sole discretion, may waive or modify the Incentive Allocation for certain Investors. An
initial seed investor in the Flagship Funds (the “Strategic Investor”) is entitled to receive a
portion of the Management Fees and performance-based compensation payable by
Clients.
Payment of Fees
Parsifal has the ability to deduct fees directly from the Funds’ assets and Parsifal bills the
Account for all fees on a monthly basis.
Prepayment of Fees
If for some reason an Investor in a Fund redeems prior to the expiration of a period in which that
Investor pre-paid fees, Parsifal would typically rebate the unearned fees for the period of time
during which the Investor was not invested.
Other Types of Fees or Expenses Applicable to the Funds and the Account
Parsifal is authorized to incur and pay in the name and on behalf of the Funds all expenses which
it deems necessary or advisable.
The Firm is responsible for and shall pay, or cause to be paid, all of its own ordinary administrative
and overhead expenses, including, without limitation, all costs and expenses related to rent,
furniture, fixtures, equipment, office supplies, clerical expenses and all salaries, bonuses and
benefits paid to, or on behalf of, personnel of the Firm.
The Funds bear all expenses relating to their ongoing structure and operation, including: (i)
management fees; (ii) all investment-related costs and expenses (i.e., expenses that, in the Firm’s
sole discretion, are related to the investment of the Funds’ assets, whether or not such
investments are consummated), including commissions and charges, interest on margin accounts
and other indebtedness, expenses relating to short sales, clearing and settlement charges, option
premiums and custodial and service fees, research-related expenses (including research-related
travel expenses), expenses relating to consultants, attorneys, brokers or other professionals or
advisors who provide research, advice or due diligence services with regard to investments; (iii)
fees and expenses related to portfolio exposure and performance management systems, risk
management services and software related to trade reconciliation, treasury, margin, financial and
counterparty management, risk monitoring, performance reporting, valuation quotation services
(e.g., Bloomberg terminals, historical and live financial data and other similar services and data
feeds) and trade order management systems (including systems that facilitate trade compliance,
commission management, stock locates and transaction cost analysis, and third party service
providers used for implementation, custom reporting, updates, consultations, support,
maintenance, monitoring and data extracts); (iv) the Funds’ legal, accounting, tax preparation and
other tax-related expenses (including preparation and mailing costs of financial statements, tax
returns and other reports to investors), auditing, consulting and other professional expenses; (v)
third-party administration costs, fees and expenses (including any costs, fees and expenses related
to investor communications, relations, reporting or other investor materials, tax preparation and
related reporting, performance information, data extraction and other types of reporting and any
audit or accounting services provided by a third-party administrator); (vi) all fees and charges of
custodians, clearing agencies and banks; (vii) compliance and reporting expenses and expenses
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