ITEM 5: FEES AND COMPENSATION
Management fees and performance fees associated with the Carmenta Funds are
received by Carmenta’s affiliates, each of which serves as general partner to one or
more of the Funds (collectively, the “General Partner”). Performance fees are discussed
in more detail in Item 6. Carmenta’s compensation, as well as other costs associated
with management by Carmenta, is discussed generally below and in more detail in
relevant offering materials.
The General Partner and the Firm are together filing this single Form ADV in reliance
on the position expressed in the No Action Letter dated January 18, 2012, addressed to
the American Bar Association.
A. Fee Schedule
1. Management Fee
The General Partner (or its designee) shall be compensated for services rendered during
the term of a Fund by a payment by the Fund in cash to the General Partner (or its
designee) of a management fee (the “Management Fee”) calculated and charged
separately with respect to each Limited Partner. The Management Fee will be paid
annually in advance in an amount equal to 1% of such Limited Partner’s capital
commitment to the Fund. For Carmenta Co-investments, the Management Fee to be
paid may be up to a maximum aggregate amount equal to 3% of such Limited Partner’s
capital commitment to the Fund. The General Partner may, for significant investors or
and by prior arrangement, allocate a smaller Management Fee to such significant
investor.
2. Performance-based Fees
Carmenta Funds also are subject to performance-based compensation (which may be
structured as an incentive fee, performance allocation, preferential dividend, or other
form) up to 15% of the actual realized returns of the Fund’s portfolio. Calculations are
net of management fee and include only realized gains and losses. Please refer to the
relevant Fund’s offering materials for further detail.
3. Fee Comparison
Client expenses, including the management fee and any performance-based fees, may
constitute a higher percentage of average net assets than could be found in other
investment programs.
In addition, fees for future Carmenta Funds may vary. Fees may be negotiable and
Carmenta may, in its discretion, waive or reduce management and performance fees
charged to particular Investors.
4. Different Fee Schedules
Management Fee may be waived in respect of investments by the General Partner and
its members and affiliates (including other Carmenta Funds). In addition, Carmenta
may discount or waive its fees with respect to any Investor for any particular period of
time at the sole discretion of Carmenta (or the General Partner, as applicable). This
discounted rate or waiver is not available to all or even most Investors in the Funds.
5. Side Letters
Carmenta or the General Partner, as appropriate, has and may in the future, waive or
modify the terms of investment for certain large or strategic investors, in side letters or
otherwise, in its sole discretion, including but not necessarily limited to, a waiver or
lowering of the Management or Performance Fees or fee structure. We may also agree
to increased transparency or reporting though we would typically provide similar
increased transparency and/or reporting to other Investors upon their request.
B. Payment of Fees
Management fees are automatically deducted from the accounts of Fund Investors.
With respect to Fund Investors, management fees generally will be calculated and
payable to the General Partner annually in advance.
In addition, the Carmenta Funds are structured as private equity-like term vehicles with
carried interest or incentive fees payable upon realization of assets. Carried interest is
generally up to 15% of net profits; subject to payback of capital contributions to the
Investors. The General Partner will distribute cash proceeds from any realization event
promptly after receipt.
C. Other Expenses
The Funds bear all reasonable and documented third-party costs and expenses related
to the purchase, holding, sale or exchange of securities (whether or not ultimately
consummated), fees and expenses relating to outsourced finance, accounting and
compliance services, indemnification obligations pursuant to the Fund offering
documents, liability and other insurance premiums. The Funds also bear all costs and
expenses incurred in the organization, syndication, liquidation and termination of the
Fund and its General Partner, including but not limited to legal and accounting fees and
expenses. The General Partner shall bear all private placement and similar fees. In
addition, the Funds bear all expenses (including any interest expense) related to initial
purchase(s) of securities by the General Partner or warehoused by the Fund.
Please see Item 12 of this Brochure for further details on Carmenta’s brokerage
practices.
D. Advance Billing
As discussed above, with respect to the Carmenta Funds, the management fee is
payable annually in advance.
E. Sales-based Compensation
Not applicable.