ITEM 5 – FEES AND COMPENSATION
Item 5.A
The Funds offer interests or shares (as applicable) only to certain qualified
investors and admission in the Funds is not open to the general public. Limited
partnership interests in the Fund and the Master Fund and shares of the Offshore
Fund are sold only to qualified investors who are “accredited investors” under
Rule 501 of Regulation D of the Securities Act of 1933, as amended, and
“qualified purchasers” as such term is defined in Section 2(a)(51) of the
Investment Company Act of 1940, as amended. The Fund’s offering documents
contain a detailed description of the fee schedule.
It is critical that Investors refer to the relevant Fund’s offering documents
for a complete understanding of how Seven Harbour is compensated for its
advisory services.
Item 5.B
Seven Harbour deducts fees from the assets of the Master Fund. Seven Harbour
generally deducts a management fee based on the net assets of the Master Fund,
quarterly in advance (the “Management Fee”). The management fees range from
1.25% per annum to 1.5% per annum, depending on the class of shares/series of
interests in which an Investor subscribes. Certain charter investors’ interests or
shares have and may be subject to lower Management Fees. To the extent a capital
contribution or withdrawal is made as of any day that is not the first day of a fiscal
quarter, the Management Fee is prorated and charged or refunded at the time of
subscription or withdrawal, as the case may be.
Seven Harbour also charges performance-based compensation in the form of a
performance allocation (the “Performance Allocation”). The performance
allocations range from 17.5% per annum to 20% per annum, depending on the
series of interests/class of shares in which an Investor subscribes. The
Performance Allocation is generally calculated and charged as of the last day of
each fiscal year. Under the loss carryforward provision, generally an Investor
will not be charged an Incentive Allocation until any net loss previously allocated
to such Investor has been offset by subsequent net profits. Certain charter
investors’ interests have and may be subject to a lower Performance Allocation
and different loss carryforward provisions.
Seven Harbour or the General Partner, in their respective sole discretion, has and
may waive or reduce the Management Fee or the Performance Allocation for
certain Investors, including, without limitation, investors that are members,
directors, shareholders, partners, affiliates or employees of the General Partner or
the Investment Manager, members of the immediate families of such persons and
trusts or other entities for their benefit.
The Management Fee and Performance Allocation are generally paid to Seven
Harbour at the Master Fund level. However, the General Partner may, without the
consent of the Limited Partners of the Fund, cause the Management Fee to be
charged to and paid by the Fund instead of the Master Fund.
It is critical that Investors refer to their respective Fund’s offering
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’s offering documents.
Item 5.C
The Fund and the Offshore Fund will bear their own expenses and their pro rata
share of the Master Fund’s expenses, including, without limitation, the
Management Fee; investment expenses (e.g., expenses that, in the General
Partner’s or the Investment Manager’s discretion, are related to the investment of
the Master Fund’s assets, whether or not such investments are consummated
(such as brokerage commissions, expenses relating to short sales, clearing and
settlement charges, custodial fees, bank service fees and interest expenses);
investment-related travel expenses (which are travel expenses incurred by the
Investment Manager or the General Partner related to the purchase or sale of, or
due diligence regarding, the Master Fund’s investments, whether or not such
investments are consummated, excluding travel-related expenses incurred by
Sean Grogan); professional fees (including, without limitation, expenses of
consultants, investment bankers, attorneys, accountants and other experts)
relating to investments; fees and expenses relating to software tools, programs or
other technology utilized in managing the Master Fund’s portfolio (including,
without limitation, third-party software licensing, implementation, data
management and recovery services and custom development costs); research and
market data (including, without limitation, any computer hardware and
connectivity hardware (e.g., telephone and fiber optic lines) incorporated into the
cost of obtaining such research and market data); administrative expenses
(including, without limitation, fees and expenses of the Administrator); directors
fees for the Offshore Fund; legal expenses; external accounting and valuation
expenses (including, without limitation, costs relating to valuation software);
audit and tax preparation expenses; costs related to errors and omissions
insurance and directors and officers insurance for the General Partner, the
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