Item 5: Fees and Compensation
A. Description and Billing
Valo Group’ compensation and billing are as follows:
Valo Group earns its fees and compensation by providing investment management services
to the Fund. The compensation will be in the form of a Management Fee (the “Management
Fee”) and Performance-based fees (the “Performance Fee”), and assessed and billed as
follows:
Group Fund
Valo Group’s Management Fee with respect to the Group Fund is calculated quarterly in
advance. For each limited partner holding Class A Interests, the Management Fee is equal to
0.4375% (1.75% per annum) of such limited partner’s capital account balance as of the
beginning of each quarter. For each limited partner hold Class B Interests, the Management
Fee is equal to 0.30% (1.20% per annum) of such limited partner’s capital account balance as
of the beginning of each quarter. The Management Fee will be appropriately prorated to
reflect any capital withdrawals and contributions which occur during a calendar quarter.
These fees are deducted from each limited partner’s account. Lower fees for comparable
services may be available from other sources. These fees are negotiable.
Partners Fund
Valo Group’s Management Fee with respect to the Partners Fund is calculated quarterly in
advance. For each limited partner holding Class A Interests, the Management Fee is equal to
0.4375% (1.75% per annum) of such limited partner’s capital account balance as of the
beginning of each quarter. For each limited partner hold Class B Interests, the Management
Fee is equal to 0.30% (1.20% per annum) of such limited partner’s capital account balance as
of the beginning of each quarter. The Management Fee will be appropriately prorated to
reflect any capital withdrawals and contributions which occur during a calendar quarter.
These fees are deducted from each limited partner’s account. Lower fees for comparable
services may be available from other sources. These fees are negotiable.
Offshore Fund
Valo Group’s Management Fee with respect to the Offshore Fund is calculated quarterly in
advance. For each holder of Class A Shares, the Management Fee is equal to 0.4375%
(1.75% per annum) of the net asset value of each shareholder’s shares as of the beginning of
each quarter. For each holder of Class B Shares, the Management Fee is equal to 0.30%
(1.20% per annum) of the net asset value of each shareholder’s shares as of the beginning of
each quarter. The Management Fee will be appropriately prorated to reflect any subscriptions
or redemptions which occur during a calendar quarter.
To the extent that the Offshore Fund invests directly in any assets other than its investment in
the Group Fund, Valo Group shall receive an annual Performance Fee in an amount equal to
twenty percent (20%) of each shareholder’s ratable share of the Offshore Fund’s profits for
each year during which the net profits allocated to each shareholder exceeds a a simple (non-
compounded) five percent (5%) rate of return as applied to the prior high net asset value of
each share as of the beginning of such year (the “Hurdle”).
These fees are deducted from each Shareholder’s shares. Lower fees for comparable services
may be available from other sources. These fees are negotiable.
B. Other Fees and Payments
Each Fund shall pay for all of its respective ordinary operating and other expenses, including,
but not limited to, investment-related expenses (such as brokerage commissions, clearing and
settlement charges, custodial fees, interest expenses, expenses relating to consultants, brokers
or other professionals or advisors who provide research, advice or due diligence services with
regard to investments, appraisal fees and expenses and investment banking expenses);
research costs and expenses (including fees for news, quotation and similar information and
pricing services); legal expenses (including, without limitation, the costs of on-going legal
advice and services, blue sky filings and all costs and expenses related to or incurred in
connection with Valo Group’s compliance obligations under applicable federal and/or state
securities and investment adviser laws arising out of its relationship to the Fund, as well as
extraordinary legal expenses); accounting fees and audit expenses; administrative fees; tax
preparation expenses and any applicable tax liabilities (including transfer taxes and
withholding taxes); other governmental charges or fees payable by the Funds; director and
officer and/or errors and omissions liability insurance premiums or fiduciary liability
insurance premiums for directors, officers and personnel of Valo Group; costs of printing and
mailing reports and notices; and other similar expenses related to the Fund, as Valo Group
determines in its sole discretion. To the extent that expenses are borne by a Fund are paid by
Valo Group, the Fund will reimburse Valo Group for such expenses. There may be
additional fees or charges that result from the maintenance of a limited partner’s participation
including, but not limited to, fees associated with purchasing Interests via an IRA and
Qualified Retirement Plan. Other fees are generally deducted from the capital account of
each limited partner.
C. Refund Policy
Group Fund
Investors holding Class A Interests in the Group Fund will generally be permitted to make
withdrawals of capital (not including any value attributable to side pocket investments) as of
the close of business on the last day of each calendar quarter or such other date as the Group
Fund’s general partner may determine in its discretion, provided the withdrawing investor
notifies the general partner not less than 30 days in advance of the applicable withdrawal date
of its intent to make a withdrawal.
Investors holding Class B Interests in the Group Fund will be subject to a “rolling” two (2)
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