Item 5: Fees and Compensation
Fund Fees
Management Fees
The Funds pay VARA an annual fund management fee (the “Fund Management Fee”), payable
monthly in advance. The Fund Management Fees are typically a maximum of 1% annually,
calculated prior to the accrual of the Incentive Allocation (defined below). Fund Management
Fees will be prorated (and rebated, if applicable) for any period that is less than a full month.
With respect to any Investor, VARA may reduce, waive, assign, grant participation in or
otherwise share or modify the Fund Management Fee, without the consent of, or notice to,
any other Investor. This includes investments by any affiliates of VARA (including the Fund’s
general partner, VAR AI Fund GP, LLC (“VAR AI GP”)) and/or employees of VARA.
Incentive Allocation
VAR AI GP may receive performance-based compensation from the Funds (the “Incentive
Allocation”) at the end of each fiscal year and upon withdrawal by Investors. The Incentive
Allocation is equal to a percentage, up to 20%, of the amount by which the positive or negative
change in the net asset value attributable to each Investor’s account exceeds a specified
hurdle amount. The exact method of calculation and other terms of the Incentive Allocation
are more fully detailed in each Fund’s Governing Documents. The Firm, in its discretion, may
waive or otherwise modify the Incentive Allocation for certain Investors, including affiliates of
the Firm, its principals, its employees and their family members (and any trusts or other
entities operated for their benefit).
Managed Account Fees
The Managed Accounts pay VARA a management fee based on a percentage of assets under
management of the Client (“Management Fee”), the exact terms of which are determined by the
applicable Governing Documents for each Managed Account Client. Typically, all management fees
are calculated and payable monthly in advance as of the first business day of each calendar
month unless otherwise agreed upon by Client. Management Fees will be prorated (and
rebated, if applicable) for any period that is less than a full billing period.
Expenses
VARA has inserted below a summary of expenses applicable to the Funds and Managed
Accounts; however, specific expense terms for any Client are included in the Governing
Documents.
Fees and Expenses of the Funds
In accordance with the Funds’ Governing Documents, each Fund will bear all of its operational,
organizational and offering expenses on a pro rata basis (the “Operational, Organizational
and Offering Expenses”) and will reimburse VAR AI GP, and any affiliates and/or employees of
VARA, VARA and/or Benjamin Hoskin and David Field, as applicable, to the extent that any of
them bears operational, organizational or offering expenses on behalf of the Fund. Such
Operational, Organizational and Offering Expenses will include, without limitation, all costs
and expenses incurred in connection with the formation of the Funds and the marketing and
offering and sale of the Interests, including, but not limited to, legal, tax, regulatory and
accounting fees and expenses, registration and qualification fees and expenses, fees and
expenses of distribution, including fees and expenses of any distribution agents required
under the laws of any jurisdiction, fees and expenses incurred in connection with the drafting
and negotiating of contracts with service providers in connection with the launch of the Funds,
filing fees, printing costs, and all costs and expenses incurred in connection with the
preparation of offering documents, marketing materials, organizational documents, operating
documents and similar materials and the costs of qualifying, preparing, negotiating,
reproducing, amending, supplementing, mailing and distributing the Governing Documents,
investor presentations, other offering materials, including (as applicable) the Funds’
partnership agreements, private placement memoranda, articles of association, subscription
agreements, side letters, agreements with placement or distribution agents and any other
similar agreements, telephone and other communications and transmittal costs, any
administrative, notices or other filings incurred in connection with the structuring,
organization, negotiation, funding and start-up of the Funds and VAR AI GP and the offering
and sale of the Interests.
The Funds will also bear all operating expenses which include, without limitation (a) expenses
associated with making, holding, financing, monitoring, hedging, maintaining and disposing of
all investments of the Funds and all transaction and other costs associated therewith,
including, without limitation, expenses associated with proxy research and voting services; (b)
professional fees associated with investments and potential investments, including, without
limitation, consulting, due diligence, accounting, valuation, financial, legal and other advisory
fees and expenses; (c) transaction fees, exchange fees and expenses, brokerage commissions,
expenses relating to short sales, custodial fees, clearing and settlement charges, bank service
fees and similar fees and expenses associated with the acquisition, disposition and settling of
investments and potential investments, including, without limitation, in connection with
outsourced trading; (d) expenses associated with tax and legal, including without limitation,
filing fees and costs of software and systems relating to such filings, of the Funds and the
General Partner in the United States, the Cayman Islands, or in any other jurisdiction; (e)
administrative, custodial, appraisal, valuation, legal, regulatory, compliance, consulting,
advisory and similar fees and expenses associated with the Funds’ operations, investments
and transactions, including, without limitation, fees and expenses of the Administrator
(defined below), costs of relationship management systems and fees of any service provider
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