Item 5 – Fees and Compensation
The Flagship Fund
The Master Fund pays TLCM a quarterly management fee based on the value of its assets calculated at a rate
ranging from 1.5% (per annum) to 2.0% (per annum).
In the event an additional contribution by a Flagship Fund Investor is made to the U.S. Fund or the Offshore
Fund during a calendar quarter, the management fee will be charged as of the date of such contribution and
will be prorated for the number of months remaining in the quarter. The Flagship Fund management fee is
paid in advance at the beginning of each quarter, and TLCM will refund the unearned portion of the
management fee if a withdrawal is made from the Flagship Fund by a Flagship Fund Investor before the end
of a calendar quarter.
At the end of each fiscal year, 20% of the net profits of the Flagship Fund will be reallocated to the capital
account of the Flagship Fund General Partner in the Master Fund, subject to a loss carryforward provision.
The Long Only Fund
The Long Fund pays TLCM a quarterly management fee based on the value of its assets calculated at a rate
of 1%.
Fees and Compensation Generally
The management fee and any performance-based compensation are deducted from the Funds and calculated by
the Funds’ unaffiliated third-party administrator.
In general, these fees are not negotiable. However, the management fee and/or performance-based
compensation may be waived or reduced for Fund Investors that are principals, employees or affiliates of
TLCM, relatives of such persons, and for certain large or strategic investors (including clients of asset
allocators) in accordance with the governing documents of the Funds. TLCM or the Funds may enter into side
letters or similar written agreements with Fund Investors which have the effect of establishing rights under,
or altering or supplementing the terms of, the relevant governing documents.
TLCM is generally responsible for and pays all overhead expenses of an ordinary and recurring nature such as
rent, its compliance expenses, supplies, secretarial expenses, stationery, charges for furniture and fixtures,
employee insurance, payroll taxes and compensation of employees. Generally the Funds bear all other
expenses including expenses (such as legal fees) relating to the acquisition and disposition of investments,
Fund-related insurance costs (including premiums for D&O and E&O insurance for the Fund’s general partner
and TLCM), legal, accounting (including third-party accounting services), audit and other professional fees
and expenses, administration fees and expenses, organizational expenses, research expenses (including
research-related travel), expenses of third-party valuation agents (if any), investment expenses such as
commissions, custodial fees, bank service fees, Fund compliance expenses (including expenses related to
various filings (or portions thereof) TLCM is required to make as a result of managing the Funds’ portfolios,
such as Form PF and expenses related to registration, filing and/or reporting requirements in jurisdictions
where interests in the Funds are offered or sold and other expenses related to the purchase, sale, preservation
or transmittal of Fund assets. To the extent an expense is for a product or service that benefits a Fund and
other clients of TLCM, such Fund will only bear its pro rata share of such expense.
From time to time, the Funds may invest in an investment vehicle managed by an unaffiliated investment
adviser and in such case, the Funds will bear their pro rata share of the investment management fee and other
fees of such fund, which are in addition to the management fee and performance based compensation paid or
allocated to TLCM (or an affiliate of TLCM). In addition, a Fund may invest in other Funds managed by
TLCM or its affiliates (the “Other TL Funds”) if TLCM determines that such investment is in the best interest
of such Fund (for example, to access a particular investment opportunity that is not necessarily feasible for
the Fund to access directly). The Fund will not be subject to any additional management or incentive
fees as a result of its investment in the Other TL Funds; however, the Fund will bear its pro rata share of the
Other TL Funds’ expenses.
The allocation of expenses by TLCM among the Funds represents a conflict of interest for TLCM. TLCM has
adopted an expense allocation policy that is designed to address this conflict. On a quarterly basis, TLCM
will allocate common expenses attributable to multiple Funds pro rata based on gross assets under
management as of the beginning of the quarter in which the expenses are incurred; provided, however, that
TLCM may deviate from pro rata allocations with respect to expenses that, in TLCM’s view,
disproportionately benefit a particular Fund or group of Funds. If TLCM determines that an expense
disproportionately benefits a particular Fund, TLCM may charge all or part of the expense to that Fund, such
that the allocation of the expense is fair and equitable.
Neither TLCM nor its officers or employees accept compensation for the sale of securities or other investment
products.
In addition to Fund expenses, the Funds will incur brokerage and other transaction costs. Please refer to Item