ITEM 5 – FEES AND COMPENSATION
Management Fee. The Funds will pay the Adviser a Management Fee for managing the Funds’ investment
portfolio and operations. The Management Fee will be calculated separately for each limited partner,
generally at a rate of 1.5% per annum of that limited partner’s capital account, although for investors in
Westerly Partners, the rate for limited partners first admitted to Westerly Partners before May 1, 2012, is
lower.
The Funds pay the Management Fee quarterly in advance based on the value of the limited partners’ capital
account balances as of the beginning of the relevant calendar quarter. As to capital contributed on a date
other than the first day of a quarter, the Adviser will be paid a prorated Management Fee. If a limited
partner were to be permitted to withdraw capital on a date other than the end of the calendar quarter, such
limited partner would not receive any refund of any Management Fee as to the remaining portion of that
quarter. The Adviser may vary the Management Fee as to particular limited partners by separate agreement.
For limited partners in Westerly QP, the Adviser has agreed to “grandfather” at a lower management fee
certain investors who transferred into Westerly QP at its inception prior to May 1, 2012, from another fund
the Adviser manages.
Operating Expenses. The Funds will bear, either directly or through reimbursement to the General Partner
and/or the Adviser, all of the ongoing operating costs. These will include, but will not be limited to:
brokerage commissions on portfolio transactions; interest on margin and other borrowings; borrowing
charges on securities sold short; investment transaction costs (including markups, markdowns and
commissions); custodial fees; transfer and other taxes; bookkeeping, accounting and audit fees and
expenses; legal fees (including fees paid to the General Partner’s and the Advisers’ counsel for services that
benefit the Funds); the General Partner’s out of pocket costs incurred in performing its roles as tax matters
partner or partnership representative; expenses the Adviser incurs for investment research and due
diligence; filing fees; travel and travel-related expenses the Adviser incurs in connection with the Funds’
investment activities (including attending professional investment and industry specific conferences); costs
of reporting to Fund partners; costs of Fund governance activities (such as obtaining Limited Partner
consents if and when necessary or appropriate); fees paid to a third-party administrator; costs of the Funds’
and their affiliates’ (other than the Adviser’s) registration and filings with and licensing by governmental
and self-regulatory organizations and costs associated with regulatory, tax, and other filing and reporting
requirements by or related to the Funds, including filings required of the Adviser and/or its affiliates as a
result of their involvement in the management of or provision of services to the Funds (including Schedules
13G and 13D and Form PF); and all other reasonable expenses related to the management and operation of
the Fund and/or the purchase, sale or transmittal of its assets, all as the General Partner and/or the Adviser
determines in its sole discretion. The Adviser may cause these and other Fund expenses to be paid for by
securities brokerage firms to which the Adviser directs the Funds securities trades.
The General Partner and/or the Adviser may, in their discretion, bear all or a portion of the Funds’ operating
expenses, either directly or through a waiver of a portion of the Management Fee or the Incentive Allocation
to which it would otherwise be entitled. Neither the General Partner nor the Adviser has any obligation to
do so or, if it does so for any period or in any amount, to continue doing so.
The General Partner and/or the Adviser will provide the Funds with office space, utilities, office equipment
and certain administrative services. To the extent those facilities and services comprise part of the General
Partner’s and/or the Adviser’s own operating, general administrative and overhead costs, neither the
General Partner nor the Adviser is entitled to direct reimbursement from the Funds. However, the Adviser
may cause some of these expenses (as well as some or all of the Funds’ direct expenses) to be paid for using
the Funds’ “soft dollars” and may cause the Funds to engage one or more third parties, at the Funds’
expense, to provide administrative services. This may relieve the General Partner and/or the Adviser of
expenses it would otherwise bear.
Offering and Organization Expenses. The Funds will bear, either directly or by reimbursing the General
Partner, all expenses in connection with ongoing offer and sale of interests.