Item 5: Fees and Compensation
DESCRIPTION OF COMPENSATION AND FEE SCHEDULE
In consideration of our advisory services, we are entitled to receive management fees and performance fees, with
respect to the Funds. While our fees are described in detail in the applicable governing and offering documents, a
brief summary of our advisory fees is set forth below.
Management Fees
We generally are entitled to receive an annual management fee, payable on the first business day of each calendar
quarter in advance, equal to (a) 0.50% (2.0% per annum) of the net asset value of each Class A separate account of
an investor and (b) 0.25% (1.0% per annum) of the net asset value of each Class B separate account of an investor.
Performance Allocation
Subject to a high water mark and certain other limitations, at the end of each fiscal year (and at such other times set
forth in the applicable partnership agreement), a performance allocation equal to (a) twenty percent (20%) of the net
profits allocable to each Class A separate account of an investor for the applicable fiscal year and (b) ten percent
(10%) of the net profits allocable to each Class B separate account of an investor for the applicable fiscal year, is
paid to us by the Funds.
A cumulative net loss account (also known as a “high water mark”) is maintained with respect to each separate
account of an investor. At the end of each performance period, each cumulative net loss account is debited with the
cumulative amount of net losses, if any, allocated to the relevant separate account since the immediately preceding
date as of which a calculation of the performance allocation was paid (or if no fee has yet been paid with respect to
such separate account, since such separate account’s establishment) and credited (but not below zero) with the
cumulative net profits, if any, allocated to such separate account since the immediately preceding date as of which a
calculation of a performance allocatin was paid (or the establishment of such separate account, if applicable). We are
not paid any performance allocation with respect to a separate account until the debit balance in the corresponding
cumulative net loss account has been reduced to zero.
Each investor in the Funds generally is required to represent that it is (among other things) a “qualified purchaser” as
such term is defined in Section 2(a)(51)(A) under the Investment Company Act of 1940, as amended (the “Company
Act”).
Our advisory fees generally are not negotiable. However, we have entered and may enter into side letters or similar
arrangements with investors that grant different and more preferential terms (including the reduction or elimination
of fees) to such investors than the terms generally applicable to other investors. As described in the offering
documents, we have entered into a seed letter arrangement (“Seed Agreement”) with certain seed investors, pursuant
to which the seed investors have contributed an aggregate of $24 million to one of the Funds. In consideration of
such capital contribution, the seed investors have been granted certain preferential rights and terms including (a)
lower management fees and performance allocations, (b) participation rights in our gross revenues and (c)
preferential informational rights.
PAYMENT OF FEES
Management fees are payable by investors quarterly, in advance, as of the first business day of each calendar
quarter. Management fees are deducted directly from the separate account(s) of each limited partner. In the event
that a Fund is dissolved, a limited partner withdraws or our advisory services are terminated prior to the end of any
calendar quarter, then an amount equal to a pro rata portion of the management fee, based on the actual number of
days remaining in such quarter, will be refunded to the applicable limited partner(s). Management fees will also be
prorated with respect to capital contributions made by investors during a calendar quarter.
Performance allocations are calculated and paid as of the end of each calendar year (and at such other times as set
forth in the partnership agreements). Performance allocations are paid directly from each separate account of a
limited partner to our separate account.
OTHER FEES AND EXPENSES
In addition to management fees and performance allocations, each Fund generally bears all costs and expenses
relating to the Fund’s activities (other than organizational expenses of the Fund), including the following: (a) all
expenses incurred in connection with the offering, including, but not limited to, documentation of performance and
the admission of investors, (b) all operating expenses of the Fund such as tax preparation fees (including, without
limitation, any such fees related to the preparation of tax returns and Schedule K-1s), governmental fees and taxes
(or any other governmental charges levied against the Fund), administrator fees, communications with investors and
ongoing legal, accounting, auditing, administration, appraisal, bookkeeping, consulting and other professional fees
and expenses, including for litigation, and preparation of the Fund’s financial statements and reports, (c) all Fund
costs, expenses and charges incurred in connection with the investment and trading activities of the Fund, (d)
professional and other advisory and consulting expenses and travel expenses incurred in connection with investment
due diligence, monitoring or the assertion of rights or pursuit of remedies (including, without limitation, pursuant to
bankruptcy or other legal proceedings or participation in informal committees of creditors or other security holders
of an issuer), (e) all fees and other expenses incurred in connection with the investigation, prosecution or defense of
any claims by or against the Fund, (f) interest on, and fees and expenses arising out of, all borrowings made by the
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