Item 5 - Fees and Compensation
The fees applicable to each Client are set forth in the applicable Advisory Agreement or the
applicable Fund’s Governing Documents. Generally, the Firm receives a management fee for its
advisory services (the “Management Fee”). In addition, the Firm may receive an incentive
performance allocation (the “Performance Allocation”).
The Firm expects, and has, in its discretion, agreed to waive all or a portion of the Management
Fee with respect to a capital account of affiliates and employees of Tensor Edge and the General
Partner or, with the consent of the investors, charge a Management Fee on a different basis or at a
different rate. Pursuant to the Governing Documents, the General Partner of a Fund may, from
time to time, reduce, increase, waive, or calculate differently the Management Fee or Performance
Allocation or waive any payment of the Management Fee or Performance Allocation with respect
to any investor. The Firm reduces or waives Management Fees and/or Performance Allocation for
certain affiliates and related persons of the Firm, including, without limitation, limited partners
that are employees or partners of the Firm and/or their immediate family members, and accounts
established for the benefit of such persons. For the avoidance of doubt, the Firm may, in the future,
create additional classes of interest which could have different (and better) economics than those
described herein.
As more fully described in the Advisory Agreement for each SMA and each Fund’s respective
Governing Documents, the Clients will generally bear expenses in connection with their
organizational matters and investment activities, in certain cases subject to an expense cap. The
Firm will allocate expenses in accordance with its expense allocation policies and procedures.
Certain expenses are the obligation of a particular Fund and are borne by such Fund. Conversely,
certain expenses relate to more than one Client and in such instances are generally allocated among
such Clients on a pro rata basis.
Neither Tensor Edge nor any of its supervised persons accept any other forms of compensation.
Fees for Funds
For its services provided to Funds, Tensor Edge generally is entitled to receive a Management Fee
and Performance Allocation. Tensor Edge is paid a Management Fee, payable quarterly in
advance, with respect to each capital account in a Fund. The Management Fee from the Funds
generally is equal to 0.375% (1.5% annualized) of such capital account’s balance. The
Management Fee is calculated and payable as of the first day of each calendar quarter, giving effect
to any contributions on that day. A pro rata Management Fee is assessed on any capital
contributions accepted as of any date other than the first day of the quarter and charged to the
capital account of the contributing investor. If an investor withdraws all or a portion of the balance
of a capital account other than on the last business day of a calendar quarter, Tensor Edge will
repay to the Fund for disbursement to the withdrawing investor a pro rata portion of the
Management Fee charged to such capital account.
Tensor Edge receives a Performance Allocation generally equal to 20% of net profit of each Fund
for each fiscal year; provided, that each such Fund maintains a bookkeeping account to determine
the high-water mark (a “Loss Recovery Account”) that must be exceeded before the performance-
based compensation with respect to an investor in a Fund is charged at a rate of 20%. The Loss
Recovery Account of each investor in a Fund commences at zero. As of each adjustment date, the
Loss Recovery Accounts of each Fund is either (i) increased by an amount equal to two and one-
half times (250%) of any net loss allocated for such fiscal period or (ii) decreased (but not below
zero) by the amount of any net profit allocated for such fiscal period. An investor will bear a
reduced Performance Allocation equal to 10% of its realized and unrealized net profits until the
balance of its Loss Recovery Account is reduced to zero, and a Performance Allocation at the 20%
rate thereafter. In the event that a Fund is terminated or an investor withdraws or redeems other
than at the end of a fiscal year, then for purposes of determining the applicable Performance
Allocation, net capital appreciation will be determined as if such dates were the end of the fiscal
year, subject to certain adjustments.
Fees for SMAs
For its services provided to SMAs, Tensor Edge generally is entitled to (i) a periodic Management
Fee, which is typically payable monthly based on the notional value of the investments managed
in the SMA, based on a negotiated rate; and (ii) if and to the extent earned, an Incentive Allocation
(payable as a fee) based on the performance of the SMA’s investments. With respect to each of
the foregoing, such fees are calculated in accordance with the terms and conditions set forth in the
applicable Advisory Agreement.
SMA fees are either deducted from a Client’s assets invested in the SMA at the payment date,
withheld from distributions or invoiced at an appropriate time, in each case, as provided in the
applicable Advisory Agreement. Management Fees generally are prorated for any period that is
less than a full month.
Expenses
Tensor Edge bears its own normal and recurring operating expenses and overhead costs incurred
in connection with the investment and other management services that it will provide to the Clients,
including expenses related to its office space, utilities, and employees. The Management Fee may
exceed the expenses borne by Tensor Edge on behalf of the Clients.
The Clients will bear, or reimburse Tensor Edge for, expenses of its operations that include, but
are not limited to, ordinary and extraordinary expenses, including (without limitation):
i. research expenses (including costs of developing data analytics and ongoing
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