Item 5 Fees and Compensation
SQNVP charges fees for its services and all fees are negotiable in SQNVP’s sole discretion. Several
factors contribute to the amount of the fee charged such as the size of the account and the type of
assets managed. Investors should refer to the applicable Governing Documents for additional
information on fees and expenses related to investment in a Fund. It is also important to note that any
new fund launched by SQNVP may have the same, similar or materially different terms than those
summarized below. The applicable Governing Documents set forth the precise amount and calculation
of the management fees and the full list of terms under which a management fee will be reduced,
offset or otherwise be limited. Investors should expect to bear the full specified management fee in the
relevant governing documents until reduced in the circumstances and on the date(s) specified therein.
SQNVP generally deducts fees from the Funds, as applicable, pursuant to such Fund’s Governing
Documents. Investors must understand the proposed method of compensation to SQNVP and its
affiliates and the risks prior to investing in any Fund.
Management Fees: The Funds pay a management fee to SQNVP for investment advisory services
provided to the Funds. Generally, management fees on an annual basis range from 1.5%-2.00% of the
original principal amount of outstanding portfolio investments. Depending on the Fund, the
management fee percentage may also be tiered based on the aggregate amount of capital contributed
by a limited partner to the Fund. Such fees are generally calculated quarterly and payable in advance
on a monthly basis. Management fees are more fully detailed in each Fund’s Governing Documents
expressly provide to the contrary, the amount of management fees with respect to a Fund generally will
not correspond with fluctuations in the Fund’s net asset value. Therefore, management fees generally
will not be reduced (in whole or in part) in the event of partial distributions or write downs of
investments. Such Governing Documents may also provide that a Fund’s borrowings may be taken
into account for purposes of calculating the management fee. As permitted under the applicable
governing document, SQNVP has in the past and may in the future reduce or waive the management
fee with respect to an investor, in its sole discretion.
Distributions: Distributable cash from portfolio investments, if any, will be preliminarily apportioned to
the general partner (an affiliate of SQNVP, through common ownership and control) and limited
partners in proportion to their respective contributed capital. The amount apportioned to the general
partner and affiliated limited partners will be distributed to them. Distributions will be allocated to limited
partners (other than affiliated limited partners) in proportion to their contributed capital, and will be paid
as follows: (i) 100% to the limited partner, until the amount distributed equals 100% of the partner’s
aggregate contributed capital plus a preferred return equal to 8% to 10% per annum on each such
partner’s contributed capital; thereafter, (ii) 100% to the general partner until the general partner has
received an amount equal to 20% of the total preferred return paid to the limited partner; thereafter,(iii)
80% to the limited partner and 20% to the general partner (together with the amounts distributed under
(ii), the “Carried Interest.” Distributions from portfolio investments are more fully detailed in each
Fund's Governing Documents.
Special Distributions: Net proceeds from equity investments and warrants (subject to the terms of
each Fund’s partnership agreement, this may also include options, success fees, prepayment
penalties, and other instruments and arrangements that are intended to provide additional
compensation or value tied to the success of a portfolio company or other investment) will be
distributed 80% to the limited partner (other than affiliated limited partners) and 20% to the general
partner and the affiliated limited partners as special cash distributions and amounts distributed to the
limited partners will be applied toward the preferred return until all limited partners have received their
preferred return. Thereafter, any amount in excess will be distributed in accordance with the
“Distributions” section above. Special distributions are more fully detailed in each Fund’s Governing
Documents.
Clawbacks: Each Fund’s general partner will be subject to a look-back contribution obligation in the
event of excess distributions to the general partner pursuant to the terms of the applicable Fund
Governing Documents.
Origination or Structuring Fees: In connection with each portfolio investment transaction, the
applicable Fund will pay a fee to the general partner in an amount equal to 1.5% of the capital invested
in such transaction, whether in the form of a loan, lease, equity investment or otherwise.
Organizational and Offering Expenses: The Funds will reimburse the general partner in an amount
ranging from 2.0% to 3.0% of either the maximum offering amount or aggregate committed capital (see
relevant Fund Governing Documents for further information) for the organizational, startup expenses
and offering expenses of the Funds and related entities, including legal, travel (which may include
business or first-class airfare), accounting, filing, printing, capital raising and other expenses. The
General Partner will bear the cost (through an offset against the management fee or otherwise) of all
organizational expenses in excess of the percentage threshold, as noted in each Fund’s Governing
Documents. The Funds will engage an affiliate of SQNVP and the general partner or one or more third
parties to offer interests in the Funds to potential investors. All such fees paid to such affiliate or third
parties will be paid out of the organizational and offering expenses described above.
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