Item 5: Fees and Compensation
We generally are compensated for our advisory services to the Funds based on a percentage of assets
under management and performance-based compensation. Compensation terms for Clients other than
Funds are negotiated with the participating Investors and generally differ from the arrangements applicable
to the Funds.
Management Fee
Each Fund generally pays us an annual advisory fee (“Management Fee”) equal to 2.0% of the capital
commitments during its specified investment period. Following the end of the investment period, each
Fund’s Management Fee is equal to 1.5% of the cost basis of each Fund’s investments.
We have waived or reduced the Management Fee for certain Investors and may in the future agree with
other Investors or prospective investors to waive, reduce or otherwise alter the Management Fee. The
Management Fee charged by any Fund may be reduced by all or a portion of any origination, transaction,
break-up or similar fees that we may receive as described in the relevant Offering Documents.
Delos Capital Management, LP Form ADV Part 2A
Each Fund’s Management Fee is payable quarterly in advance from drawdowns of the Investors’ unfunded
capital commitments or by withholding the amount of such fee from the investment proceeds that would
otherwise be distributable to the Investors. For Fund II, we expect to make periodic elections to waive a
portion of the Management Fee in exchange for a contingent “profits interest” in the Fund representing a
pro rata share (based on the amount of waived fees) of future Fund profits after return to the Investors
of all invested capital (including amounts contributed by Investors in lieu of the waived fees).
Carried Interest
The General Partners, affiliates of the Firm, are apportioned carried interest distributions from the
respective Fund (“Carried Interest”) based on the net cash proceeds attributable to such Fund’s
investments. We have waived or reduced the Carried Interest as to certain Investors and may in the
future agree with an Investor or prospective Investor to waive, reduce or otherwise alter the Carried
Interest.
The Carried Interest is typically 20% of the profits earned by the relevant Fund on investments following
a preferred return to the Investors. The Carried Interest is also subject to a catch-up on the preferred
return and a clawback if the aggregate distributions exceed the stated carried interest rate. Investors and
prospective investors should refer to the Fund’s Offering Documents for additional or supplementary
information regarding the Fund as well as the fees paid by the Fund.
Expenses
Organizational Expenses
Each Fund bears all legal and other expenses incurred in the formation of the Fund and the offering of the
interests up to an amount of $750,000, with respect to Fund I, and $1,250,000, with respect to Fund II.
Organizational expenses in excess of this amount, and any placement fees, are paid by the relevant Fund
but borne by the Firm through a 100% offset against the Management Fee.
Operating Expenses
The Firm pays all normal operating expenses incidental to the provision of the day-to-day administrative
services to its Clients, including its own overhead. To the extent practicable, third-party costs are charged
to each Fund and its portfolio companies. Each Fund pays all costs, expenses and liabilities in connection
with its operations, including: fees, costs and expenses related to the purchase, holding and sale of
portfolio investments (to the extent not reimbursed); expenses incurred in connection with transactions
not consummated; maintenance of books and records; transaction fees; travel costs; research and other
trading costs; expenses of internal staff of Delos and its affiliates; insurance premiums; taxes; fees and
expenses of accountants, counsel, advisers, finders, search companies and consultants; costs and expenses
of the advisory committee and the annual meeting; regulatory filings by the Firm related to the activities
of the Funds; litigation expenses; and other extraordinary expenses.
The Firm and its affiliates generally charge each Fund’s portfolio companies transaction fees and
monitoring fees and may charge portfolio companies advisory fees, break-up fees and other similar fees.
An amount equal to the Fund’s allocable share of all such fees and of all directors’ fees paid by portfolio
companies that are received by the Firm, its affiliates or any of their employees, net of any unreimbursed
expenses incurred by the Firm or its affiliates in connection with unconsummated transactions and net of
a pro rata portion allocable to the investment in the Fund by the General Partner and its principals, will
be applied to reduce the Management Fee otherwise payable by the relevant Fund. All such fees will be
Delos Capital Management, LP Form ADV Part 2A
allocated among the Fund and any related Co-Investment Funds on the basis of capital committed by each
to the relevant investment. If the Co-Investment Fund is not charged a management fee, the portion of
such fees that would otherwise offset the Co-Investment Fund’s management fee may be retained by the
Firm and its affiliates and will not be used to further reduce the Management Fee. Management Fee
reductions will be carried forward if necessary and any unapplied balance will be refunded to the relevant
Fund and returned to Investors upon termination of such Fund.
In addition, the Funds may enter into letter agreements or other similar arrangements (collectively, “Side
Letters”) with one or more Investors that have the effect of establishing rights under, or altering or
supplementing the terms of the governing documents of the Funds as they apply to a particular Investor.
As a result of such Side Letters, certain Investors may receive additional benefits that other Investors will
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