Item 5: Fees and Compensation
Item 5.A.
Management Fee
The Adviser receives a quarterly management fee calculated at the annual rate of 1.5% (0.375% per
quarter) of each Limited Partner’s Class A, B, and Class C capital account (the “Management Fee”).
However, the Management Fee of Limited Partners holding Class A interests shall be reduced to 1.0%
(0.25% per quarter) when the Fund’s assets under management, including the assets under management of
other pooled investment vehicles directly affiliated with the Fund, are greater than $250 million, effective
at the beginning of the first year after assets under management cross this threshold and shall be further
reduced to 0.5% (0.125% per quarter) when the Fund’s assets under management are greater than $500
million effective at the beginning of the first year after assets under management cross this threshold. In
addition, the Management Fee of Limited Partners holding Class C interests shall be reduced to 1.00%
(0.25% per quarter) when the Fund’s assets under management, including the assets under management of
other pooled investment vehicles directly affiliated with the Fund, are greater than $500 million on the
first day of the year. The General Partner’s capital account in the Fund is not charged a Management Fee.
If capital contributions are made at any time other than the beginning of a calendar quarter, a pro rata
portion of the Management Fee will be paid to the Adviser. Accordingly, if a capital account is withdrawn
at any time other than at the end of a quarter, a pro rata portion of the Management Fee will be refunded
to the Limited Partner for such partial quarter.
The Fund previously offered Class A limited partnership interests; such Class A interests are no longer
available.
The Management Fee is generally not negotiable; however, the General Partner, in its sole discretion, may
elect to waive or modify the Management Fee with respect to any Limited Partners.
Incentive Allocation
An affiliate of the Adviser that serves as general partner to the Fund (the "General Partner") will receive
an allocation, generally annually, (the “Incentive Allocation”), equal to (i) 15% of the Net Income
(including realized gain, realized loss, unrealized gain and unrealized loss) allocated for the year to each
Limited Partner’s Class A capital account; (ii) 20% of the Net Income allocated for the year to each
Limited Partner’s Class B capital account; and (ii) 17% of the Net Income allocated for the year to each
Limited Partner’s Class C capital account. An Incentive Allocation is also made as to amounts withdrawn,
as of the effective time of the withdrawal.
Incentive Allocations are subject to a “high water mark” provision. That is, the General Partner will be
eligible to receive an Incentive Allocation only to the extent the Limited Partner’s share of Net Income
exceeds his/her or its previously allocated but unrecouped Net Losses (subject to adjustment for partial
withdrawals).
The General Partner, in its sole discretion, may elect to waive or modify the Incentive Allocation with
respect to any Limited Partners.
The General Partner may designate certain assets as “Side Pockets” when, in its sole discretion,
determines that an asset is illiquid or it’s in the best interest of the Fund to value such investment
separately from the Fund’s other assets. If the General Partner designates an asset as a Side Pocket, the
Limited Partners of the Fund at the time of such designation will have proportionate interest in that
investment. The General Partner shall not receive an Incentive Allocation with respect to any Side Pocket
until the investment is liquidated, and a Partner may not make a withdrawal with respect to a Side Pocket
until that event. Side Pockets shall be included in the calculation of the Management Fee.
Item 5.B.
Tappan Street’s Administrator will deduct fees and compensation for advisory services, at the times
described above under Item 5.A., from the Fund’s assets as incurred.
Item 5.C.
Other Fees Earned and Expenses allocated by the Adviser
The Fund bears its own expenses, including, but not limited to, investment related expenses such as the
Fund’s brokerage commissions, research expenses and interest on margin accounts and other
indebtedness, custodial fees, bank service fees, withholding and transfer fees, taxes, systems and
technology expenses, corporate licensing fees, legal and auditing expenses, accounting, fund
administration, outsourced risk management advisory and software, investment related consultants and
travel costs that are research related, expenses incurred with respect to the preparation, duplication and
distribution to Limited Partners and prospective Limited Partners of Fund offering documents, annual
reports and other financial information, any other services or service provider expenses deemed
necessary by the Adviser on behalf of the Fund. Expenses generally will be shared by all of the Limited
Partners of the Fund, including the General Partner, pro rata in accordance with their capital accounts.
At the discretion of the General Partner, the organizational expenses of the Fund may be amortized over a
period of 60 months from the date the Fund commenced operations. The amortization of organizational
expenses over 60 months is not in accordance with U.S. generally accepted accounting principles and
could result in an exception in the auditors’ opinion in the annual audited financial statements if the
difference between amortization and recognition of these expenditures when incurred is deemed material
from a financial statement point of view.
Item 5.D.
The Management Fee may be paid quarterly in advance, based on the value of each Limited Partner’s
capital account, as of the last day of the preceding quarter and expensed to the Fund as earned each
month. If a Capital Account is withdrawn at any time other than at the end of a quarter, a pro rata portion
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