Fees and Compensation
Compensation and Fee Schedules
Investors in SkyTop Funds are typically charged an annual management fee equal to 1.5% of net
assets, payable quarterly in advance, and an annual performance fee or allocation equal to 20%
of the amount by which the net market value of each account as of the end of each calendar year
exceeds the net market value of the account as of the beginning of the year. Certain investors in
SkyTop Funds and certain SkyTop co-investment vehicles may be subject to different fees, and
fees may be waived with respect to certain investors.
Prospective investors in any SkyTop Fund should review the governing documents for the
relevant SkyTop Fund for more complete information about the fees and compensation payable
with respect to a particular SkyTop Fund.
Deduction of Fees
The management fee is usually deducted directly from the assets of each account as such fee
becomes payable, which is generally quarterly in advance. The performance allocation is payable
annually in arrears, or upon the termination of a client account. Upon termination of any client
account, SkyTop will refund any unearned portion of the management fee, based on the number
of days remaining in the quarter after the effective date of termination.
Other Fees and Expenses
The clients of SkyTop are responsible for all costs and expenses incurred in connection with the
investments in their accounts, including brokerage commissions; clearing fees; fees, interest and
other costs in connection with margin accounts or other borrowings; borrowing charges on
securities sold short; custodial fees; bank service fees; costs of any outside appraisers, accountants,
attorneys or other experts or consultants engaged by SkyTop in connection with specific
investments (including transactions that fail to close); costs of research and data services; and any
legal fees and costs arising in connection with any litigation or regulatory investigation instituted
against SkyTop or any client.
The SkyTop Funds also pay all of their operating costs, including administrative, legal,
accounting, auditing and insurance costs and expenses, as described in greater detail in the
governing documents of each SkyTop Fund.
For additional information about brokerage expenses, see “Brokerage Practices” below.
Transaction-Based Compensation
Neither SkyTop nor its supervised persons will receive any compensation with respect to the
purchase or sale of securities or other investment products by any client.
Performance-Based Fees and Side-By-Side Management
SkyTop, or an affiliate of SkyTop, ordinarily receives a performance-based fee or special
allocation of profits from each of its clients as described above under “Fees and Compensation.”
Different client accounts may be subject to different performance-based compensation
arrangements. Please refer to the governing documents of the relevant SkyTop Fund for more
complete information about the performance-based compensation arrangements of a particular
SkyTop Fund.
The performance-based compensation arrangements discussed above comply with Rule 205-3
under the Investment Advisers Act of 1940 (the “Advisers Act”).
Performance-based compensation arrangements may create an incentive for SkyTop to
recommend investments that may be riskier or more speculative than those that would be
recommended under a different fee arrangement.
If SkyTop is entitled to receive a higher percentage of the net profits of the account of one client
than the percentage that SkyTop receives from another client, then SkyTop may have an
incentive to favor, or to allocate certain riskier or more speculative investments to, the client that
is subject to the higher percentage. However, all accounts are generally invested on a parallel
basis, except as otherwise discussed with or agreed to by a particular client. SkyTop will as a
policy allocate all investment opportunities among its clients in a manner that it considers fair
and equitable to all clients, considering all factors potentially applicable to each client. Among
the factors that may be considered by SkyTop in allocating trades among client accounts are:
investment policies, guidelines or restrictions; tax considerations; cash availability; liquidity
requirements for payment of redemptions or other purposes; risk tolerances; restrictions under
ERISA or other applicable laws or regulations; available credit lines; counterparty arrangements;
account size; benchmark sector weightings; industry and security weightings; and hedging
objectives and activity.