Item 5 – Fees and Compensation
Management Fee
In consideration for its services, ROI Capital Management, Inc. will receive a fee equal on
an annual basis to 1.00% (0.25% per quarter in respect of investors who made their initial
investment on or after April 1, 2005) and 1.5% (0.375% per quarter in respect of investors
who made their initial investment prior to April 1, 2005) of the capital account of each
Investor. The Management Fee will be paid quarterly in advance. For periods of less
than a quarter, the Management Fee will be prorated for the days remaining in that
calendar quarter. ROI Capital Management, Inc., may waive all or a portion of the
Management Fee or may make other changes in the Management Fee for certain
ROI Capital Management, Inc. Form ADV Part 2A: Brochure
Investors. ROI Capital Management does not solicit or require prepayment of more than
$1,200 in fees six months or more in advance.
Incentive Allocation
In consideration for its services, ROI Capital Management, Inc. will receive a profit
allocation or carried interest equal to 20% (for investors who made their initial investment
on or after April 1, 2005) and 15% (for investors who made their initial investment prior to
April 1, 2005) of the net profit allocated to each Investor’s Capital Account (including net
realized and unrealized gains and net investment income) for the relevant period.
Special Profit Allocations are generally made at the close of each fiscal year, but may
be made more frequently upon the earlier withdrawal of an Investor. The Fund will
maintain a Contingent Loss Account for each Investor. Each Investor’s Contingent Loss
Account will be debited with any net loss (taking into account the Investor’s share of the
Management Fee) allocated to that Investor’s Capital Account. The General Partner will
not be allocated any Special Profit Allocation with respect to an Investor’s Capital
Account until such Investor has recovered all amounts debited to its Contingent Loss
Account (as adjusted for any withdrawals of capital). Any Special Profit Allocation
earned or allocated to ROI Capital Management, Inc. with respect to a particular period
is not subject to reduction, refund, or “claw-back” based on subsequent changes in an
Investor’s Contingent Loss Account. ROI Capital Management, Inc., in its discretion, may
waive all or a portion of the Special Profit Allocation as to an Investor, or may agree with
an Investor to other changes in the Special Profit Allocation respecting such Investor.
Expenses
The Fund will bear all of its operating costs including, without limitation, brokerage
commissions, custodial fees, auditing, accounting and tax preparation fees, expenses,
interest on borrowings, governmental fees and taxes, ongoing legal expenses and
bookkeeping.
The Fund will also bear the expenses of offering and selling Interests. ROI Capital
Management, Inc. may pay or reimburse the Fund for any or all such expenses at its
discretion.
ROI Capital Management, Inc. will provide the Fund with office space, utilities, service
contracts for quotation equipment, news wires and other information services, and
certain clerical and administrative services. While the Fund will not reimburse ROI Capital
Management, Inc. directly for the costs of providing those services, ROI Capital
Management, Inc. may cause some of its overhead expenses (including, but not limited
to, office rent and equipment, and employee and consultant-related compensation),
and some of the Fund’s expenses to be paid using “soft dollars.” See Item 12 for a further
discussion of “soft dollar” use.