Item 5. Fees and Compensation
A. Management Fees and Performance Allocation
Sirius receives compensation from the Fund comprised of fees based on a percentage of assets
under management or performance-based amounts, depending on fund performance. The
performance-based compensation is in the form of a profit allocation from the Fund to Sirius.
We charge an annual performance allocation (the “General Partner’s Allocation’) of 10% which
is subject to a high-water mark. Sirius is entitled to a 1% Contingent Management Fee
(assuming investment of $3 million or more), only to the extent that the Contingent
Management Fee exceeds the General Partner’s Allocation.
The Contingent Management Fee is paid annually in arrears by deducting the fee from the
Fund investors’ capital accounts and is pro-rated for intra-year capital contributions and
withdrawals. The General Partner’s Allocation is based on realized and unrealized gains and
is paid annually or upon a Fund investor’s withdrawal of capital, subject to a high-water mark.
B. Payment of Fees.
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General Partner’s Allocation or Contingent Management Fee is deducted from an investor’s
capital account at the end of the year or at time of withdrawal.
Compensation payable to Sirius is generally not negotiable, but under certain circumstances
(such as the size of an investment in the Fund, the overall amounts allocated to Sirius for
management by the Fund investor or the extent to which the Fund investor offers strategic
opportunities or benefits to Sirius), Sirius may, in its discretion, waive all or a portion of its
management fees or performance-based compensation for a particular investor.
We currently do not have any side letter arrangements with any Fund investors.
An investor may pay a management fee that is higher or lower than that of another investor, based
on factors such as the number of assets managed overall for the investor.
C. Other Fees and Expenses.
The Fund pays such out-of-pocket costs and expenses as we determine to be necessary or
advisable to the conduct of its business, including without limitation:
• investment advisory, administrative, subscription and redemption fees and all other
costs associated with placing the Fund’s assets under the management of Portfolio
Managers.
• brokerage commissions, dealer mark-ups and all other costs of executing transactions
(including, without limitation, all commissions, clearing fees, valuation and portfolio
pricing, financing charges and applicable withholding and other taxes).
• interest expense.
• insurance expense (for Directors and Officers and Errors and Omissions policies as well
as general liability insurance, including for Sirius, its principals, members and
employees).
• legal, auditing, reporting, accounting, registration and compliance program expenses of
both the Fund and Sirius (including, but not limited to, costs and expenses related to
U.S. and non-U.S. registration, regulatory and self-regulatory filings such as Forms
13D, 13F, 13G, 13H, PF, ADV and CPO-PQR, and other filings and reports the
preparation of which may be required of the General Partner or the Fund, as well as
consulting fees related to compliance and operations).
• fees in connection with the custody of assets of the Fund.
• computer services costs (including both hardware and software costs).
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• Sirius’s office rent and upkeep.
• personnel costs; and
• extraordinary expenses, including expenses relating to litigation, proceedings and
investigations including routine or non- routine requests for information and of actual or
“mock” examinations by the Internal Revenue Service (“IRS”), the SEC, the
CFTC/NFA or other governmental bodies or self-regulatory organizations.
The Fund will also pay an allocable share of our expenses, which includes salaries and bonuses
for trading and administrative professionals, office supplies, accounting, legal and general
administrative expenses, utilities, software, computer equipment, quotation service and data feeds,
rent, travel, entertainment and general expenses; provided, that bonuses paid to partners of Sirius
or others having an ownership interest in Sirius (including Mr. Foreman) are paid exclusively by
Sirius, not the Fund. Sirius will determine the equitable allocation of the expenses described in the
preceding sentence between the Fund and Sirius’ other clients. Investors should note, however,
that as of the date of this document substantially all our attention and resources, and therefore
substantially all such expenses, are allocated to the Fund.
To the extent the Fund’s and our ordinary operating expenses relating to computer services,
personnel and office rent and upkeep exceed during any fiscal year 0.5% (pro-rated in the case of
partial fiscal years and to reflect intra-year Capital Contributions and Withdrawals) of the Fund’s
year-end Net Asset Value (as defined in the Agreement of Limited Partnership), Sirius will absorb
such costs. Investors should note that a substantial portion of the expenses borne by the Fund
(both on its own behalf and on behalf of Sirius), are not subject to the foregoing expense “ceiling.”
D. Additional Compensation and Conflicts of Interest.
We are not compensated for the sale of securities or other investment products and we are not
affiliated with any broker-dealers.