Item 5. Fees and Compensation
As compensation for investment advisory services rendered to the Funds’ General
Partners, Nova receives an advisory fee (each, an “Advisory Fee”). Advisory Fees are
paid to Nova as a result of money received from capital calls issu e d b y th e G e ne ral
P a rt n e rs and p a id from the b a n k accounts of the Funds. Advisory fees are paid
quarterly in advance or are paid directly to Nova from the portfolio companies in accordance
with the Investment Advisory Agreement. In both cases, payment is conditioned upon the
approval by the General Partner of the Fund. The Advisory Fees for these Funds are
calculated based upon capital commitments, invested capital or adjusted capital
contributions and may be lower than this amount at various stages during the life of such
Funds.
The precise amount of, and the manner and calculation of the Advisory Fees is established
through negotiations between Nova and investors in the applicable Fund. Precise details
are set forth in the Investment Advisory Agreement with the applicable Fund, the Fund’s
organizational documents and/or other documentation received by each investor prior to
investment in such Fund.
Nova may, as part of its portfolio management responsibilities, receive fees from actual
portfolio companies or other investment vehicles owned/controlled by the Funds, including
directors and monitoring fees. Although these fees are in addition to the Advisory Fees,
Nova will typically, but is not required to, reduce the amount of Advisory Fees paid by the
applicable Fund in connection with the receipt of a portion of such fees. The amount and
manner of such reduction, if any, is set forth in the Investment Advisory Agreement and/or
organizational documents of the applicable Fund. Additionally, a portfolio company may
reimburse Nova for expenses incurred by Nova in connection with its performance of
services for such portfolio company.
As further set forth in the Investment Advisory Agreements and organizational documents
of the Funds, Nova will generally bear all costs associated with compensation of its
employees, rent, utilities and office supplies. To the extent not paid by the underlying
portfolio companies in which a Fund invests, the Funds will generally be responsible for
all other expenses, including Advisory Board expenses, legal and accounting, consulting,
origination, and diligence expenses related to the Funds’ investing activities, if not borne by
the underlying portfolio companies. In certain situations, the Fund will also bear some of
the costs associated with the remuneration of installing a full time Nova Operating Partner
at the portfolio level.