Item 5. Fees and Compensation
A. Advisory Fees and Compensation
The Fund will pay the Firm on behalf of each investor a quarterly management fee (the “Management
Fee”) calculated separately with respect to each investor on the first day of each calendar quarter. The
Management Fee payable for each quarter is 0.25% (1.00% on an annualized basis) of the value of the
investor’s capital account at the beginning of business on the first day of such quarter.
A preferred Management Fee of 0.0625% per quarter (0.25% on an annualized basis) is offered to any
“immediate family” whose “net capital contributed” equals or exceeds $25 million at the inception of
the quarter. For this purpose, “immediate family” means any investor together with such investor’s
siblings, ancestors, biological or legally-adopted descendants, and all of their spouses, as well as all
trusts, foundations, businesses, and other entities in which all of the foregoing collectively hold a
majority interest. “Net capital contributed” means the excess of (1) the cumulative capital contributions
to the Fund made by all such immediate family members over (2) the cumulative amount of capital
returned by the Fund to all such immediate family members. Any qualifying “immediate family” will
become eligible for the preferred Management Fee immediately upon reaching the specified threshold.
For an additional investor admitted on an admission date other than the first day of a calendar quarter,
the Management Fee for that calendar quarter will be prorated and paid on the admission date. Further,
for any redemption on a date other than the end of a calendar quarter, the Management Fee will be
prorated and the excess fee will be rebated.
The Firm may waive or reduce the Management Fee with respect to any investor in its sole and absolute
discretion and it intends to do so with respect to the Firm, family members of Stephen R. Bauer, and
officers and employees of THC and their spouses or descendants (“THC Affiliates”).
In addition to the Management Fee described above, the Fund will pay THC a conditional performance
allocation that is charged on the basis of a share of capital gains upon or capital appreciation of the Fund
for any investor as described below in Item 6.
B. Payment of Fees.
• Management Fee. The Management Fee payable by each investor in the Fund is determined
by the Fund’s administrator based on the market value of the investor accounts, as calculated
by the administrator. The administrator also calculates the dollar amount of the Management
Fee and generates an invoice that is sent to the Firm for review. Upon verification of the
Management Fee amounts, the Firm’s Chief Compliance Officer, Paul Froehlich, will
acknowledge and confirm the invoice amount via initializing the invoice. Stephen Bauer, on
behalf of the Fund, will initiate a journal or wire transfer or write a check from the Fund’s
operation account to the Firm, which is the managing member of the Fund.
• Performance Allocation (as discussed below in Item 6). The Firm has separate capital
accounts for participating capital — the investment return on performance fees allocated
during the current fiscal year — and for contingent incentive fees — the part of the
performance fee that has currently accrued but is not owed until the Performance Period
(as defined below in Item 6) closes. The Fund administrator determines the amount of
the fee based upon each investor’s capital account performance over the Performance
Period. The CCO directs the Fund administrator on how the participating capital and
contingent incentive fee accounts will be allocated once the books are closed. The Fund
administrator then applies the fee to the appropriate capital accounts. At the end of the
year, the Firm will test the Fund administrator’s performance fee calculations.
C. Other Fees and Expenses.
In addition to our advisory fees, the Fund is also responsible for the fees and expenses charged by
custodians and imposed by broker dealers, including, but not limited to, any transaction charges imposed
by a broker dealer with which THC effects transactions for the Fund. Furthermore, additional fund
expenses include administrator expenses, interest charges on its borrowings, insurance costs (if any),
filing fees, and fees payable to outside lawyers, accountants, auditors, and other service providers.
The Firm bears (1) all overhead expenses incurred in the operation of its business, such as salaries and
the costs of office space, utilities, telephone, computer equipment, and computer services and (2) any
costs of subscriptions to proprietary databases and other research costs with the exception of those items
listed under Item 12 below.
D. Prepayment of Fees.
The Management Fee is paid in advance on the first day of each quarter. In the event that a redemption
takes place other than on March 31, June 30, September 30, or December 31, the Fund is entitled to
receive a partial refund of the pre-paid Management Fee on behalf of the redeeming investor, as
applicable. The amount of the refund is calculated on a pro-rata basis and is refunded to the Fund and
credited to the redeeming investor’s capital account as soon as practicable.
E. Additional Compensation and Conflicts of Interest.
We are not affiliated with any broker-dealers so we do not receive investment commissions on
investment transactions. We do not buy or sell securities for our own proprietary account.