Item 5: Fees and Compensation
A. Advisory Fees and Compensation.
Sutton Square and its affiliate the General Partner typically receive compensation based on a
percentage of assets under management (the “Management Fee”) and a percentage of the
performance achieved (the “Incentive Allocation”). Sutton Square offers multiple series of
interests or shares in the Funds that each charge a different Management Fee and Incentive
Allocation.
The Management Fee, Incentive Allocation and liquidity terms of each Series vary, as
summarized in the chart below:
Series Management Fee Incentive Allocation Capital Raised Investor Gate
Percentage Percentage
Founders 1.0% p.a. 10% Up to $150mn Yes
Founders 1.25% p.a. 15% Up to $150mn No
Quarterly
A 1.25% p.a. 15% More than Yes
$150mn, less
than $500mn
B 1.50% p.a. 17.5% More than No
$150mn, less
than $500mn
In the future, the Fund may, in the sole discretion of the General Partner and without providing
prior notice to or receiving consent from the Limited Partners (i) offer additional Series of
Interests subject to different terms, including as to fees, incentive allocations, reporting or
liquidity terms or (ii) cease offering any outstanding Series. All Series will participate in the
Fund’s portfolio on a pro rata basis, and there are no limitations of liabilities between the Series.
At the time of each Capital Contribution, a Limited Partner will elect the Series for which they
wish to subscribe. A Limited Partner may elect to have a portion of any Capital Contribution
designated to any one or more Series. If a Limited Partner has designated a portion of its Interest
to more than one Series, each such portion will be accounted for in a separate sub-Capital Account
of such Limited Partner’s Capital Account (a “Sub-Account”). Each Sub-Account of a Limited
Partner is treated separately for the purpose of calculating the Incentive Allocation (defined
below) with respect to such Limited Partner.
The Investment Manager will be entitled to receive a management fee for each Series paid
quarterly in arrears and calculated and accrued monthly based on the net assets (adjusted for
withdrawals and contributions and prior to any accrual of the Incentive Allocation) of the Fund as
of the end of each month during such quarter. The Management Fee will also be calculated and
payable upon any withdrawal from the Fund on any day other than the last calendar day of a
quarter. The Management Fee is prorated for any partial quarters.
The Investment Manager may at any time in its discretion waive all or a portion of the
Management Fee payable in respect of any Limited Partners, including but not limited to
affiliates, principals, limited partners and employees of the Investment Manager and their
respective families and any estate planning and/or other vehicles established by or on behalf of
any of them or any other Series of Interests.
At the end of each Performance Period, the General Partner will have allocated to its Incentive
Allocation Shares in the Master Fund an amount equal to the Incentive Allocation Percentage (as
defined above) for each Series of any Net Profit in excess of any Loss Carryforward Account
balance attributable to each Capital Account (the “Incentive Allocation”). Upon any withdrawal,
distribution or transfer from a Limited Partner’s Capital Account, an Incentive Allocation will be
made at the Master Fund level solely with respect to the amount withdrawn, distributed or
transferred at the Fund level. Any expenses incurred from the Fund or the Other Feeder Funds,
including the payment of the Management Fee, will be included in the calculation of the Incentive
Allocation.
The General Partner may at any time in its sole discretion waive or reduce the Incentive
Allocation in respect of any Limited Partners, including but not limited to affiliates, principals,
Limited Partners and employees of the Investment Manager and their respective families and any
estate planning and/or other vehicles established by or on behalf of any of them.
For the avoidance of doubt, any Capital Contribution made by the General Partner, or any of its
affiliates, will not be counted in calculating the first $500 million raised by the Fund or the
Offshore Feeder Fund, collectively, for purposes of determining the Management Fee Percentage
and Incentive Allocation Percentage to which a Limited Partner is entitled.
Payment of Fees and Incentive Compensation.
Sutton Square deducts fees from the assets of investors invested in the Funds. Investors in the
Funds do not have the ability to choose to be billed directly for fees incurred.
B. Expenses.
In addition to the fees and compensation described above, each Feeder Fund bears its own
expenses and its pro rata share of the Master Fund’s expenses, including, without limitation the
following:
Transaction Expenses: The Master Fund is subject to transaction fees and costs in connection
with its investments and trading, including brokerage commissions, currency and other hedging
costs, spreads, mark-ups on securities, swaps and forwards, short dividends, financing and
borrowing expenses (including interest on any borrowing), exchange fees and other similar costs
and expenses, including all fees and expenses charged by the Master Fund’s prime brokers; fees
and expenses in connection with investigating and monitoring potential and existing investments;
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