Item 5 – Fees and Compensation
A. The fees charged by the Registrant for advisory services rendered to the Clients are described
in the applicable LPAs. Fees for services provided typically consist of fixed management fees
and/or performance-based fees. Fees are non-negotiable but may be waived or reduced at the
Registrant’s discretion, as described in more detail in each Client’s governing documents.
In April 2021, the Registrant and its three Clients, 1901 Partners, LP, 1901 (Offshore) Partners
I, LP and 1901 (TE) Partners, LP, agreed to [1] extended the term of the Clients; [2]
significantly reduced management fees in recognition of the late stage in the Client’s
investment cycle; [3] change in the structure of the waterfall; and [4] clarify certain Client
expenses. Such items are described in more details in each of the Clients’ amended and
restated LPA. 1901-VEL Partners, LP continues to be a no-fee structure fund.
As all of the Registrant’s clients are “qualified purchasers”, as defined in Section 2(a)(51)(A)
of the Investment Company Act of 1940, as amended, the Registrant is not required to provide
a detailed fee schedule herein.
B. The Registrant bills Clients for management fees incurred on a quarterly basis. As a private
equity firm, the performance-based fees are billed as investments are realized and not on any
set schedule.
C. In addition to the management and performance-based fees described above, as described in
more detail in each Client governing documents, each Client bears its own start-up costs and
placement fees, including, but not limited to, legal and other organizational and offering
expenses of the Client; investment-related expenses, including any and all costs and expenses
incurred in connection with the acquisition or disposition of investments; costs and expenses
incurred in connection with the carrying or management of investments, including custodial,
trustee, record keeping and other administration fees; expenses incurred in connection with the
production of financial statements and reports, tax returns, Schedules K–1 (and similar
schedules) and other communications with investors; fees and disbursements of attorneys,
accountants and fund administrators; taxes and other governmental charges; insurance
premiums or expenses incurred by the Client in connection with the activities of the Client;
any and all expenses incurred to comply with any law or regulation related to the activities of
the Client; expenses related to defaults by investors in the payment of any capital contributions;
expenses incurred in connection with any amendments, modifications, revisions or
restatements to the constitutive documents of the Client; expenses incurred in connection with
distributions to investors; expenses incurred in connection with any meeting of the investors
or the advisory board called by the general partner of the Client; expenses related to the
Client’s indemnification obligations under the constitutive documents; any expenses incurred
in connection with the dissolution, winding up or termination of the Client. All transaction
fees, monitoring fees, breakup fees, commitment fees, investment banking fees, termination
5|Page
fees, Portfolio Company management fees, director fees and similar fees, payments or
compensation received by the Registrant or its affiliates in connection with potential or actual
investments of the Clients, and any placement fees paid by Clients, shall reduce future
management fees in accordance with the terms of the applicable LPA.
Clients may incur brokerage and other transaction costs to the extent that a Client holds
publicly-traded securities. In the event Clients incur such brokerage costs, see Item 12,
Brokerage Practices for a detailed discussion of the Registrant’s brokerage practices.
As described in more detail in the amended and restated LPA of 1901 Partners LP, 1901
(Offshore) Partners I, LP and 1901 (TE) Partners, LP, the general partner shall prepare an
annual budget for the Registrant (and deliver such annual budget to the advisory board) for
each fiscal year. Each annual budget shall include, for such fiscal year, all projected investment
expenses and partnership expenses. Each annual budget shall be subject to the approval of the
advisory board.
D. Management fees are payable quarterly in advance at a fixed annual rate, as further set forth in
each Client’s constituent documents. In the unlikely event that the Registrant does not provide
services for the full period, the management fee is typically required to be returned to investors
in the applicable Client. In the event that the advisory contract is terminated before the end of
the billing period, the Client may obtain a refund of a pre-paid fee. In general, the amount of
fees returned is calculated based on the number of days remaining in the applicable period.
Also, as referenced above, 1901-VEL Partners, LP continues to be a no-fee structure fund.
Performance-based fees are not paid in advance.
E. Neither the Registrant nor any of the Registrant’s supervised persons accepts compensation for
the sale of securities or other investment products.