Item 5 - Fees and Compensation
The extent to and specific manner in which our clients are responsible for fees,
performance-based compensation and/or expenses are set forth in each client’s applicable
written agreement with us (and, in the case of clients that are private investment funds, in
the offering documents for such funds).
Soviero Asset Management, LP Form ADV: Part 2A Page 4
In general, we deduct our management fees from the Funds quarterly. We generally receive
performance-based fees or allocations from the Funds on an annual basis and upon the
distribution of capital (such as a withdrawal by a Fund investor).
Clients that are private investment funds generally bear all costs and expenses associated
with their operations, including, without limitation: (i) expenses related to the research,
execution and monitoring of actual and prospective investments (whether or not
consummated) and the consummation of investments, including, without limitation, the
following: third-party investment sourcing fees; consulting fees; expert fees; fees and
expenses of and related to obtaining research, analytics and market data (including, without
limitation, any information technology hardware, software and data subscriptions (such as
Bloomberg and FactSet) or other technology incorporated into the cost of obtaining such
research and market data); due diligence expenses including, without limitation, consulting
and appraisal fees; investment- and research-related travel expenses; any outsourced
trading provider fees; brokerage and prime brokerage fees, commissions and expenses
(including the costs of negotiating, documenting and/or amending agreements with prime
brokers, ISDAs and other agreements with trading and financing counterparties); expenses
relating to borrowing securities to be sold short; clearing and settlement charges; custodial
fees and expenses; bank service fees; interest expenses and other borrowing costs; fees and
expenses of proxy research and voting services; broken deal expenses; and fees and
expenses of third-party professionals, including, without limitation, consultants,
investment bankers, attorneys and accountants; (ii) organizational expenses and expenses
incurred in connection with the offering and sale of the interests in such private investment
funds, including, without limitation, the following: the preparation and amendment of each
such private investment fund’s Confidential Private Placement Memorandum and other
governing documents; fees and expenses of the Adviser incurred in connection with “world
sky” matters and private placement regimes, including the European Alternative
Investment Fund Managers Directive, and Form D and blue sky and similar fees and
expenses; (iii) operational expenses, including, without limitation, the following: fees and
expenses relating to information technology hardware, software or other technology
(including, without limitation, costs of software licensing, implementation, data
management and recovery services and custom development) used to research investments,
evaluate and manage risk, facilitate valuations, facilitate accounting functions, facilitate
compliance with the rules of any self-regulatory organization or applicable law (including,
without limitation, reporting obligations) in connection with the activities of such private
investment funds, facilitate and manage the order execution of securities or otherwise
manage such private investment funds (such as portfolio management systems and order
management systems); fees and expenses of third-party risk management products, models
and services; third-party administrative fees and expenses, including fees and expenses of
such private investment funds’ administrator and any middle or back office service
provider; fees and expenses of third-party professionals, including, without limitation,
consultants, valuation service providers, attorneys, accountants and tax preparers; third-
party audit and tax preparation expenses; insurance expenses, including, without limitation,
directors and officers liability insurance, errors and omission insurance, and cybersecurity
insurance and liability insurance covering such private investment funds, the General
Partner, the Adviser and the members, partners, officers, employees and agents of any of
them, and the members of such private investment funds’ governance committee (in each
Soviero Asset Management, LP Form ADV: Part 2A Page 5
case, even if such insurance covers conduct for which indemnity would not be available
from such private investment funds); fees and expenses associated with investor, director
and governance committee meetings, including, without limitation, expenses related to the
organization and conduct of such meetings (including, without limitation, travel, lodging
and meal expenses), and director fees (including registration fees) and governance
committee member fees; costs of preparing and distributing reports and notices to investors
(including the development, implementation and maintenance of an investor electronic
delivery site and/or system); entity-level taxes; fees and expenses related to compliance
with applicable law and regulations in connection with the activities of such private
investment funds, including, without limitation, any governmental, regulatory, licensing,
filing, reporting or registration expenses, fees or taxes (including, without limitation, fees
and expenses incurred in connection with the preparation and filing of Form PF, Section
13 filings, Section 16 filings and other similar regulatory filings, and any filings or
reporting with respect to compliance with the Foreign Account Tax Compliance Act,
international tax compliance and the exchange of information with the United States, and
the OECD Standard for Automatic Exchange of Financial Account Information – Common
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