Item 5 - Fees and Compensation
A. Below is a discussion of how the Adviser is compensated in connection with
providing advisory services to the Fund and Managed Accounts, respectively.
The Fund
Management Fees. The Adviser receives a management fee calculated and payable
monthly in arrears as of the last day of each calendar month. The management fee
will be equal to 1/12th of 1.5% for Class A interests and 0% for Class B interests of
the capital account of each limited partner at the end of each month (after taking into
account any contributions or withdrawals as of such date).
Performance Allocation. The Adviser is entitled to a performance-based profit
allocation at the end of each calendar year equal to fifteen percent (15%) of the net
increase in the value of the interests over the relevant fiscal year, reduced in
accordance with traditional high watermark treatment (the “Net Return”).. The
performance allocation with respect to Class B interests will be equal to a blend of
percentages of the Net Return. Class B allocation percentages means an amount equal
to (1) 50% of the net profits that is less than or equal to 3%; and (2) 20% of the net
profits that is greater than 3%.
Managed Accounts
With respect to the Managed Accounts, the fees vary from client to client and are highly
negotiated with each particular client. Generally, the Managed Accounts are subject to
management fees and performance-based fees. Management fees can be structured as a
fixed fee or as a percentage of overall account value. Performance fees are typically a
percentage of the overall performance of the account during a given period of time.
B. Management Fees and Performance Allocations are deducted directly from the
Fund’s capital and payable monthly in arrears. With respect to the Managed
Accounts, the advance performance fee is payable monthly in advance. Such fees are
generally paid by the owners of the applicable accounts and not deducted from the
assets of the Managed Accounts.
C. Clients will incur brokerage and other transaction costs. Item 12 of this Brochure
discusses how the Adviser selects brokers and determines the reasonableness of
their compensation.
The Fund will bear all of its reasonable expenses, including organizational expenses,
initial and ongoing offering expenses, operating expenses and other expenses. The
Fund also will be responsible for reimbursing the adviser and/or the general partner for
all reasonable costs and expenses directly incurred by them in connection with the
organization of the Fund.
Additionally, the Fund will pay (or reimburse the general partner or the Adviser, as
applicable, for) all: administration costs and expenses, including fees of the Fund’s
administrator; brokerage and clearing commissions and services and similar expenses
necessary for the Fund to receive, buy, sell, exchange, trade and otherwise deal in and
with securities and other property of the Fund; trade support services including, but not
limited to, pre-and post-trade support software and related support services; research
(including computer, newswire, quotation services, publications, periodicals,
subscriptions, data base services and data processing that are directly related to
research activities on behalf of the Fund) and consulting, advisory, investment
banking, finders and other professional fees relating to investments or contemplated
investments; interest expenses (including interest on margin); custodian and transfer
agency services (including the costs, fees and expenses associated with the opening,
maintaining and closing of bank accounts, custodial accounts and accounts with
brokers on behalf of the Fund (including customary fees and charges applicable to
transactions with such broker accounts); legal, accounting, auditing and tax preparation
fees and expenses; expenses incurred in connection with the Fund’s operations and
trading activities, including travel; taxes and similar charges (including penalties);
expenses relating to the organization of the Fund and the offering of interests in the
Fund, including the cost of updating the Fund’s confidential private placement
memorandum and other relevant documents, the negotiation of side letters and any
related costs and legal and regulatory expenses associated with such offering (e.g.,
“blue sky” filings); expenses related to the maintenance of the Fund’s registered office
and corporate licensing; legal fees and related expenses, including legal costs and
expenses of Indemnified Parties (such as indemnification and advances on account of
indemnification) that may be payable by the Fund pursuant to the indemnification
obligations under the Offering Documents or any threatened or actual litigation
involving the Fund, which may include monetary damages, fees, fines and other
sanctions, whether as a result of such regulatory authorities or such commercial
interests prevailing, or the Adviser determining to settle such threatened or actual
litigation; legal and compliance third-party fees and expenses including, without
limitation, filing and registration fees and expenses associated with regulatory filings,
audits and inquiries with state securities authorizes, the Securities and Exchange
Commission and the U.S. Commodity Futures Trading Commission; the cost of any
insurance premiums; extraordinary expenses; interest cost and taxes; wind-up,
liquidation and other similar expenses; and any other expenses related to the activities
of the Fund as shall be determined by the general partner in its sole discretion.
Each limited partner shall bear its pro rata share of the expenses incurred by the Fund,
appropriately adjusted with respect to any memorandum account, as reasonably
determined by the general partner in its sole discretion. In general, any Fund expense
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