Item 5 – Fees and Compensation
Fees
We are generally entitled to receive a management fee in consideration of the management and
administrative services we provide to the Funds. The management fee we receive from the Funds is payable
quarterly in advance and is equal to 0.4375% (or 1.75% on an annualized basis) of the net asset value of
the Funds excluding the allocable share attributable to the firm and its affiliates. The management fees are
charged on a pro rata basis to each investor, other than such investors, if any, as we may designate. We
may agree to different fee terms with respect to separate accounts.
We are entitled to receive performance-based compensation from the Funds equal to 20% of the net profits
(including realized and unrealized profits and losses) allocated to each investor in the Funds for each six-
calendar month period above a “high-watermark” (i.e., any prior losses allocated to an investor in respect
of such investment must be recouped before we may receive any performance-based compensation in
respect of such investor). The performance-based compensation we receive from the Funds is calculated
separately with respect to each investment by each investor. In addition, each investment in the Funds is
subject to recurring, successive 18-month lock-up periods (each 18-month lock-up period, a “lock-up
period”). The performance-based compensation amount with respect to the final six-calendar month period
in the initial lock-up period applicable to such investment will be reduced if the aggregate performance-
based compensation made with respect to such investment for the six-calendar month periods from the date
of investment through the end of the initial applicable lock-up period exceeds a hypothetical single
performance-based compensation amount calculated using the entire period from the date of investment
through the end of the initial lock-up period applicable to such investment (any such reduction, a
“clawback”). Performance-based compensation charged to a separate account is negotiated with respect to
a separate account individually.
Expenses
Each Fund shall bear all operating expense and other costs incurred by such Fund including, but not limited
to:
accounting, bookkeeping and auditing fees and expenses (including the allocable share of the
costs, fees and expenses relating to internal accounting and tax preparation functions – inclusive
of salaries of any personnel of the firm or any affiliate performing such functions – should the
firm or an affiliate determine not to use third-party providers for such services);
legal fees and expenses, including, but not limited to, fees and expenses incurred in connection
with the confidential private offering memorandum of the Fund and/or the partnership agreement
of the Fund, any offering of interests in the Fund (including, without limitation, negotiations and
agreements with current and prospective investors), fund contracts and investments;
all fees and disbursements of the Fund’s, the firm’s and their affiliates’ attorneys, consultants and
other third parties performing work benefiting such Fund (including, without limitation,
administrator fees, custodian fees, trustee fees, the legal and other fees, costs and expenses of the
Fund in any threatened or actual litigation or governmental investigation or proceeding, and the
amount of any judgments or settlements paid in connection with such litigation or fines or
penalties levied as a result of any such proceeding or investigation);
insurance and bonding costs;
all trading expenses and transaction costs, including, but not limited to, brokerage commissions
and expenses relating to short sales, clearing and settlement charges, interest on loans and debit
balances, margin interest, broker service fees and other clearing and custodial expenses;
fees or assessments in connection with any regulatory registrations, qualifications and/or
approvals of the Fund, the firm or an affiliate, and related compliance fees and expenses, deemed
appropriate by the firm or its affiliate;
such research and portfolio management expenses as the firm or an affiliate deems appropriate,
which may include, but are not limited to, expenses incurred in connection with due diligence
investigations or research as to investments or potential investments, including travel, lodging and
other expenses incurred in connection with visits to companies, meetings, research symposiums
and communications with company management, security holders, analysts and other third
parties, costs of research reports, data feeds and databases, data loading and cleansing software,
Bloomberg terminals, Reuters feeds or similar, news wires and quotation services, periodical
subscription fees and costs of software (including risk control and market analytic software)
utilized by the firm or an affiliate in connection with managing the Fund’s portfolio;
fees of the Fund’s registered agent;
the cost of preparation and distribution of reports and statements to investors;
all filing and recording fees;
all custodial fees, bank service fees, and fees or expenses associated with insuring the Fund’s
assets,
the management fee; and
all applicable federal, state, local and foreign taxes payable by the Fund.
Each Fund’s investors shall bear these fees on a pro rata basis. In addition, the Onshore Fund and Offshore
Fund, as unitholders of the Master Fund, indirectly bear their ratable portion of the costs and expenses of
the Master Fund described above.
Expenses incurred in the organization of the Funds were borne or reimbursed by the Funds. As unitholders
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