Item 5. Fees and Compensation
A. Compensation
Compensation to the Adviser for investment advisory services takes the form of advisory fees
and may, from time to time, also take the form of a performance fee or performance allocation
(as further set forth in the Client’s applicable Governing Document). The fees described in this
section are strictly for investment advisory services and do not include other fees, such as certain
brokerage and custody fees or fees charged by other service providers retained by the Client’s
accounts.
When a broker is used in connection with an investment by a Client, such Client will incur
brokerage and other transaction costs. For additional information regarding brokerage practices,
please see Item 12 below.
B. Payment of Fees
Client fees vary by Client and may be negotiable on a case-by-case basis based on various
factors, including, but not limited to, potential growth, account size, strategy, and services
rendered. As compensation for investment advisory services rendered to Clients, the Adviser
receives an advisory fee (each, an “Advisory Fee”) typically calculated based on net asset value
or assets under management, as applicable. Advisory Fees and expenses paid by a Private Fund
are indirectly borne by investors in such Private Fund, including any Clients that invest in such
Private Fund. The Adviser receives Advisory Fees ranging from 0.15% - 0.45% per annum of
the applicable Private Fund’s net asset value or Managed Account’s assets under management.
The precise amount of, and the manner and calculation of, the Advisory Fees for each Client are
established by the Adviser or its affiliates, as modified by negotiations with the Client, their
affiliates or the investors in the applicable Private Fund and are generally set forth in such
Client’s Governing Documents.
The Advisory Fee structures described herein may be modified from time to time. Advisory
Fees may differ from one Client to another, as well as among investors in the same Private Fund.
Investors in each Private Fund may pay differing amounts of Advisory Fees based upon factors
established by the Adviser or a Private Fund’s General Partner from time to time, and reduced
fee levels may be available to certain investors (which may include principals, strategic partners
and employees of the Adviser and their family members and related vehicles) based upon those
factors (and such factors may include, for example, whether such investors have subscribed prior
to others or the aggregate amount of such investors’ subscriptions). Upon termination of an
advisory agreement, Advisory Fees that have been prepaid are generally returned on a prorated
basis.
The market value of the Client accounts is determined by the custodians on the appropriate day
at month end.
C. Additional Expenses
Private Funds
The Adviser and the applicable Private Fund’s general partners are authorized to incur and pay in
the name and on behalf of the Private Fund all expenses which they deem necessary or advisable.
The Adviser will be responsible for and shall pay, or cause to be paid, all Overhead Expenses,
except as described below. For this purpose, “Overhead Expenses” for a fiscal year include
overhead expenses of an ordinarily recurring nature such as rent, utilities, supplies, secretarial
expenses, stationery, charges for furniture, fixtures and equipment, employee benefits including
insurance, payroll taxes and compensation (and related costs) of all personnel, and expenses
associated with the Adviser’s compliance with the Investment Advisers Act of 1940, as amended
(“Advisers Act”) and other applicable regulations.
All other expenses will be borne by the Private Fund, including legal, accounting, bookkeeping,
tax compliance, auditing, consulting (including fees and expenses of operating partners, industry
advisors and other third-party consultants) and other professional expenses, including those of
valuation firms, and expenses associated with compliance with securities regulations; directors’
fees; costs associated with regulatory compliance (including, but not limited to compliance with
U.S. Foreign Account Tax Compliance Act (“FATCA”) and the Common Reporting Standard
(“CRS”); fees and other expenses charged by or relating to the services of third-party providers
of administration, back office or other similar services; fees and expenses associated with the
preparation and distribution of reports to the Limited Partners; third-party and out-of-pocket
research and market data expenses (including, without limitation, news, quotation, statistics and
pricing services; hardware, software, data bases and other technical and telecommunications
services and equipment used in the investment management and order management processes;
and consulting fees and travel expenses in connection with research and investigating and
monitoring potential and existing investments, whether or not the investments are
consummated); interest and fees (including, without limitation, commitment, structuring, and
underwriting fees) on margin loans, committed loan facilities, total return swaps and other
indebtedness; bank service, custodial and similar fees; fees and expenses (including travel
expenses) related to the analysis, purchase or sale of securities, whether or not the investments
are consummated; expenses related to the purchase, monitoring, sale, settlement, custody or
transfer of Private Fund assets (directly or through trading affiliates); third-party and
out-of-pocket fees and expenses relating to systems and software used in connection with the
operation of the Private Fund and investment related activities; fees and expenses in connection
with any advisory board or committee; entity-level taxes (except that the Private Fund and the
general partner will determine in their sole discretion the portion of any taxes, interest, additions
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