Item 5: Fees and Compensation
DESCRIPTION OF COMPENSATION AND FEE SCHEDULE
In consideration of our advisory services, we are entitled to receive management fees and our affiliate is entitled to
receive performance-based allocations and/or fees with respect to the Funds. While fees and allocations are described
in detail in each Fund’s governing and/or offering documents, our basic advisory fee schedule is set forth below.
Management Fees
We generally are entitled to receive a management fee, payable with respect to each calendar quarter in advance, at a
rate of between 0.25% (1.0% per annum) and 0.5% (2.0% per annum) of the aggregate value of each investor’s capital
account with the Master Fund. The rate of the management fee applicable to each investor varies depending upon the
size of their investment.
Starting January 1, 2015, we announced our intent to reduce the management fee of all investors on a go-forward basis
when certain milestones are met regarding the total net assets collectively managed in the Onshore and Offshore
Funds. Using a starting point of $100 million, it is our intent to reduce the management fee of each then-existing
investors in the Funds by 10 basis points (0.1%) on the first day of the calendar year following each milestone when
total net assets doubles (e.g., $200 million, $400 million, $800 million, etc.).
Performance Allocations
In addition, one of our affiliates generally is entitled to receive an annual performance allocation equal to 20% of the
portion of each investor’s pro rata share of net profits of the Master Fund for each fiscal year in excess of net losses
which have been allocated to such investor’s capital account with the Master Fund and carried forward from prior
years (i.e., subject to a high-water mark), excluding any unrealized gains or losses with respect to any Special
Investments (as defined below) of the Master Fund.
General
To the extent that a Feeder Fund holds investments directly (rather than through its limited partnership interests in the
Master Fund), management fees and performance-based allocations will be charged at the Feeder Fund level in
accordance with the terms described in the applicable offering documents.
Each investor in a Feeder Fund generally is required to represent, among other things, that it is a “qualified purchaser”
as defined in Section 2(a)(51)(i)(A) of the Investment Company Act of 1940, as amended (the “Company Act”).
Our advisory fees with respect to the Funds and each investor generally are not negotiable. However, we have entered
into and may in the future enter into side letters or similar arrangements with certain investors that grant different
terms (including the reduction or elimination of fees) to such investors than the terms generally applicable to other
investors. Pursuant to side letters, certain affiliated investors are not currently required to pay any management fees.
PAYMENT OF FEES
Management fees generally are payable by investors quarterly, in advance, as of the first business day of each quarter
(after taking into account the allocation of net profit or net loss and withdrawals or distributions or other allocations
to such investor’s capital account effective as of the end of the preceding quarter and capital contributions as of the
beginning of the current quarter, excluding any unrealized gains or losses with respect to Special Investments).
Management fees are deducted directly from each investor’s capital account with the Master Fund. In the event that
a Fund is dissolved or an investor withdraws or redeems prior to the end of any calendar quarter, then a proportionate
amount of any unearned management fees will be refunded to the applicable investor(s).
Performance allocations and/or fees generally are calculated and allocated as of the close of each fiscal year (and at
such other times as set forth in the applicable governing documents). With respect to certain illiquid assets or securities
(“Special Investments”), performance allocations are calculated and allocated as of the end of each fiscal period in
which a realization or deemed realization of that Special Investment occurs, as described in the applicable governing
documents. Performance allocations generally are re-allocated from an investor’s capital account with the Master
Fund to an affiliate’s capital account with the Master Fund.
OTHER FEES AND EXPENSES
We generally bear our own operating expenses, personnel, research services, office space, office equipment, supplies
and other necessary operating, administrative and clerical services provided to each Fund. In addition to management
fees and performance-based allocations, the Funds will bear all other legal, auditing and accounting fees and all other
expenses of the Funds, including, without limitation, expenses relating to subscriptions for interests in the Funds,
third-party administration fees, custodian fees, taxes and fees on securities transactions (including legal and transfer
fees and expenses directly related to settlement of investment transactions, which may be capitalized or expensed at
our discretion), interest on borrowed moneys, brokerage fees and commissions and any other similar fees, clearing
expenses or other fees and expenses not payable by us as provided above. However, any investment expense relating
specifically to a Special Investment shall be charged against the capital accounts of the investors participating in such
Special Investment in proportion to their respective participating percentage interests therein. The Funds generally
are responsible for and pay all brokerage fees. See Item 12 below. Subject to certain limitation described in the
paragraph below, organizational expenses of each Fund are borne by such Fund, and will be amortized over 180
months for tax purposes (and over 60 months for accounting purposes).
We generally are required to pay for amortization of the Offshore Fund’s organizational costs and audit and accounting
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