FEES AND COMPENSATION
A. Advisory Fees and Compensation.
The fees applicable to each Fund are set forth in detail in each Fund’s offering documents.
The fees applicable to each Managed Account are set forth in detail in each Managed Account’s
investment management agreement. A brief summary of such fees, expenses, and compensation
(all of which is qualified by and subject to the language of the client’s offering documents or
investment management agreements, as applicable) is provided below.
1. Domestic Fund
Management Fee. The Domestic Fund pays the Investment Manager as of the beginning
of each month a fee for management services (the “Management Fee”) equal to the product of the
applicable Management Fee Rate (as defined below) multiplied by the balance of each capital
account of a limited partner as of the beginning of such month (before taking into account the
estimated accrued Incentive Allocation (as defined below), if any).
“Management Fee Rate” means 2.0% (annualized).
Payment of the Management Fee will be made within 10 days of the beginning of each
month or as soon as reasonably practicable thereafter.
The Investment Manager, in its sole discretion, may elect to reduce, waive or calculate
differently the Management Fee with respect to any limited partner, including, without limitation,
any employee or affiliate of the Investment Manager, any family member thereof or trusts, estate
planning and other investment accounts and/or vehicles established by or for the benefit of such
persons. The Fund General Partner and certain other affiliates of the Investment Manager will not
be charged the Management Fee. The Fund General Partner may, without the consent of the
limited partners, cause the Management Fee to be charged to and paid by the Master Fund instead
of the Domestic Fund.
Incentive Allocation. Generally, at the end of each fiscal year of the Domestic Fund, the
Domestic Fund will reallocate from each capital account of each limited partner to the capital
account of the Fund General Partner an amount (the “Incentive Allocation”) equal to the result of
the Incentive Allocation Rate (as defined below) multiplied by the amount of the net capital
appreciation allocated to such capital account of such limited partner for such fiscal year after
reduction by an amount equal to the amount of the Management Fee debited to such capital account
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for such fiscal year; provided, however, that the net capital appreciation upon which the calculation
of the Incentive Allocation is based will be reduced to the extent of any balance in such capital
account’s Loss Recovery Account (as defined below). The Incentive Allocation will also be made
with respect to net capital appreciation attributable to amounts withdrawn and to amounts
transferred (provided that such transfer results in a change in the beneficial ownership of the
interest transferred) and in connection with the termination of the Domestic Fund.
The “Incentive Allocation Rate” means 20%.
The Domestic Fund maintains a loss recovery account (a “Loss Recovery Account”) for
each capital account of a limited partner that tracks the losses that must be recouped before an
Incentive Allocation can be made with respect to such capital account of a limited partner (i.e.,
tracks the “high water mark” of such capital account). The balance in each capital account’s Loss
Recovery Account is adjusted at the end of each fiscal year to reflect the aggregate net capital
depreciation with respect to such capital account, if any, and is adjusted as necessary to account
for net capital appreciation and intra-year withdrawals. Solely for purposes of determining an
adjustment to the balance of a capital account’s Loss Recovery Account, net capital appreciation
and net capital depreciation for any applicable period will be calculated by taking into account the
amount of the Management Fee debited to such capital account for such period. Additional capital
contributions do not affect the balance of any Loss Recovery Account. The Incentive Allocation
is not made with respect to a capital account until the balance of such capital account’s Loss
Recovery Account has been reduced to zero.
The Fund General Partner, in its sole discretion, may elect to reduce, waive or calculate
differently the Incentive Allocation with respect to any limited partner, including, without
limitation, any employee or affiliate of the Investment Manager, any family member thereof or
trusts, estate planning and other investment accounts and/or vehicles established by or for the
benefit of such persons.
2. Offshore Fund
Management Fee. The Offshore Fund pays the Investment Manager as of the beginning of
each month a fee for management services (the “Management Fee”) equal to the product of the
applicable Management Fee Rate (as defined below) multiplied by the NAV of each series of
shares as of the beginning of such month (before taking into account the estimated accrued
Incentive Fee (as defined below), if any).
“Management Fee Rate” means 2.0% (annualized).
Payment of the Management Fee will be made within 10 days of the beginning of each
month or as soon as reasonably practicable thereafter.
The Investment Manager, in its sole discretion, may elect to reduce, waive or calculate
differently the Management Fee with respect to any shareholder, including any employee or
affiliate of the Investment Manager, any family member thereof or trusts, estate planning and other
investment accounts and/or vehicles established by or for the benefit of such persons. The
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Investment Manager may, without the consent of the shareholders, cause the Management Fee to
be charged to and paid by the Master Fund instead of the Offshore Fund.
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