ITEM 5. FEES AND COMPENSATION
Management Fees
Pursuant to the terms and subject to the conditions set forth in the Fund Governing Documents and
the subscription and other agreements with each investor, Socorro or an affiliate is authorized to
receive management fees from the Fund. The Firm will receive a management fee, payable
monthly in advance, equal to a percentage of the net asset value of each investor’s capital account,
as of the beginning of the calendar month. The Firm has designated its initial limited partners,
including certain affiliates of such limited partners, as “Founders Class” investors. For Founders
Class investors, the management fee is generally (i) 0.70% per annum with respect to capital
accounts with a net asset value less than $50 million, (ii) 0.60% per annum with respect to capital
accounts with a net asset value between $50 million and $100 million, and (iii) 0.50% per annum
with respect to capital accounts with a net asset value in excess of $100 million. The Founders
Class will remain open until the Firm deems Founders Class closed. Founders Class investors will
receive discounted fees for the life of their investment. The management fee will be increased by
0.10% (10 basis points) with respect to capital accounts for non-Founders Class investors.
Management fees are deducted directly from each investor’s capital account.
Management fees with respect to each investor generally are not negotiable. However, subject to
certain conditions and limitations, as outlined in the Fund Governing Documents, the Firm may
reduce or waive the management fee with respect to any investor.
The Firm charges management fees to each SMA generally at the same rate as charged to the Fund,
including Founders Class or similar discounts, payable quarterly in arrears, equal to a percentage
of the net asset value of the SMA. Management fees for each SMA are charged pursuant to terms
negotiated in the agreement with each Client based on various factors, including, but not limited
to, the size of the SMA and the nature of the advisory services provided. Accordingly, SMA
management fees may differ from Fund management fees.
At the end of each quarter, the Firm sends an invoice to each SMA Client setting forth the
applicable management fees and any pro rata expenses due and payable with respect to the SMA
for the applicable period. The SMA Client generally is responsible for paying (or otherwise
causing or directing its custodian to pay) the applicable management fees in cash within 30
business days after receipt of the invoice. In general, management fees are payable from the SMA.
However, the Firm does not have any authority to deduct fees (or direct the custodian to deduct
fees) directly from SMA accounts.
If the investment management agreement with the Fund or any Client is terminated prior to the
end of the period, the Firm will refund any unearned pre-paid management fees, prorated to the
date of termination.
Socorro Asset Management, LP 6
CONFIDENTIAL
Sub-Advisory Fees
The Company receives an Advisory Fee for the sub-advisory services of advising on a model
portfolio provided to the Sub-Advisory Client. The advisory fee is generally calculated and paid
quarterly in arrears.
Other Fees & Expenses
In addition to management fees, the Fund is responsible for expenses as set forth in Fund governing
documents. The Fund generally bears all expenses of the organization of the Fund and the offering
of interests (including legal and accounting fees, printing costs, travel, regulatory filing fees
(including any “blue sky” filing fees) and other out-of-pocket expenses), and compliance with any
applicable federal and state laws. The Fund intends to amortize such organizational expenses over
a period of 60 calendar months.
The Fund generally bears all (i) costs, fees and expenses directly related to its investment program,
including expenses related to proxies, underwriting, technology and systems, data feed hardware
and software (including Bloomberg terminals for members of the investment team), research, trade
publications, brokerage commissions and other execution and transaction costs, bank service fees,
interest on debit balances or borrowings, investment banking fees and expenses, custody fees, and
other third-party service fees and any taxes (including, but not limited to, withholding and transfer
taxes) imposed on the Fund, exchange, clearing and settlement charges, and travel expenses; (ii)
all out-of-pocket costs of the administration of the Fund, including, without limitation, fees and
expenses of any Fund Administrator, accounting, appraisal, audit, tax and tax preparation
expenses, legal expenses, costs of any litigation or investigation involving the Fund’s activities,
and costs associated with reporting and providing information to existing and prospective limited
partners, the costs of holding any meeting of the partners (if any), and any costs of procuring and
maintaining insurance for the benefit of the Fund, the General Partner, the Investment Manager or
any other Indemnified Persons (as defined herein); (iii) any expenses relating to organizing
investment subsidiaries through which investments can be made; (iv) any governmental, regulator,
licensing, filing or registration fees and expenses (including any fees and expenses associated with
any regulatory, operations or compliance consultant) related to and incurred by the Fund in
compliance with the rules of any self-regulatory organization or any federal, state or local or other
applicable laws; (v) any withholding, transfer or other taxes imposed on, or payable by, the Fund
or any of its Partners; (vi) all costs, fees and expenses associated with the ongoing offering of the
Interests; (vii) any costs or expenses associated with the winding up and liquidation of the Fund;
and (viii) the management fee.
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