Item 5 - Fees and Compensation
The extent to and specific manner in which our clients are responsible for fees, performance-
based compensation and/or expenses are set forth in each client’s applicable written
agreement with us and, in the case of the private investment funds that we manage, in the
offering documents for such funds.
We generally deduct our management fees from the Funds monthly in arrears. Generally,
we are entitled to receive performance-based allocations from the Funds either on an annual
basis in arrears or upon the distribution of capital. We also may receive performance-based
allocations on a withdrawal by a Fund investor.
The Funds will generally bear all costs and expenses associated with their operations,
including, without limitation: (i) all organizational and offering expenses; (ii) all expenses
incurred in connection with the investments made or considered by the Funds, including
without limitation, management fees, brokerage commissions, expenses related to short
sales, clearing and settlement charges, custodial fees, bank service fees, interest expense,
investment-related travel expenses (including, without limitation, travel expenses related
to the purchase, sale or transmittal of, or due diligence regarding, the Funds’ investments,
whether or not such investments are consummated, incurred by the Adviser or the
applicable General Partner) and professional fees (including, without limitation, expenses
of consultants, investment bankers, attorneys, accountants and other experts) relating to
investments; (iii) all legal, administrative, accounting, tax, valuation, audit and insurance
expenses, including fees of the Funds’ administrator and any fees incurred by the Adviser
to comply with the custody rule under the Advisers Act as well as independent director
fees; (iv) all costs of printing and mailing reports and notices; entity-level taxes; corporate
licensing; regulatory expenses (including, without limitation, filing fees); expenses related
to preparing and making regulatory and compliance filings (including Form PF) associated
with the Funds and their investment activities (including, without limitation, filing
preparation and fees, software and systems in connection with such filings and expenses of
service providers such as consultants and advisers); (v) all research-related expenses,
including statistical and market data, conferences, software and software consulting; and
(vi) all extraordinary expenses, such as litigation expenses. The Funds will also bear their
pro rata share of the expenses of the applicable General Partner and related affiliated
entities.
The fees, performance-based compensation and/or expenses that are applicable to clients
other than the Funds are negotiated on a case-by-case basis, and will differ in one or more
respects from those applicable to the Funds.
Management fees, performance-based compensation and/or expenses may be reduced or
waived in certain circumstances, including, without limitation, with respect to investments
in the Funds by our personnel and/or other related persons. Management fees and
performance-based fees or allocations are generally not refundable, including upon the
termination of the advisory contract.
To the extent that we incur any expenses for the benefit of multiple clients, we generally
allocate such expenses in a reasonable manner among such clients. However, it is possible
Vassalou Capital Management, LP Form ADV: Part 2A
that under some of our advisory contracts we may not require a client to incur certain
expenses, despite the fact that such client will receive a benefit in connection with our
incurrence of such expenses. In such an event, the other clients may bear the additional share
of any such expenses that would have been allocable to the client that is not required to incur
such expenses.
We will allocate a portion of certain clients’ capital to exchange-traded funds or derivatives
thereof, and may do so with respect to money market funds or similar fee-bearing products,
or private investment funds and accounts, that are managed by other investment managers.
In that case, such client accounts generally would be responsible for paying any and all fees,
performance-based compensation and expenses associated with such products, which would
be in addition to those discussed above.
The Adviser and its personnel generally can be expected to receive certain intangible
and/or other benefits and/or perquisites arising or resulting from their activities on behalf
of clients and client portfolio investments, including benefits and other discounts provided
from service providers. For example, airline travel or hotel stays incurred as a client
expense typically result in cash rebates, “miles,” “points” or credit in loyalty/status
programs, and such benefits and/or amounts will exclusively benefit the Adviser and/or
such personnel even though the cost of the underlying service is borne by clients. The
value of such benefits and perquisites will neither be subject to an offset against fees or
expenses payable by clients nor will they otherwise be shared with clients and/or portfolio
investments.
In some cases, our clients, investors and/or strategic partners will agree to pay or reimburse
some or all of our overhead expenses.
Our founder serves on the board of directors of certain issuers as described in Item 10, and
in such capacity is reimbursed by such companies for travel costs and other expenses related
to attendance at board meetings.
For a summary of our brokerage practices, see Item 12 below.