Item 5: Fees and Compensation
General
Venetus provides investment advisory services to each of the Funds pursuant to separate
investment advisory or letter agreements (the “Agreements”). The Agreements for each Fund,
along with specific organizational documents of the Fund, set forth in detail the fee structure
relevant to each such Fund. The terms of the Agreements are generally established at the time of
the formation of the applicable Fund.
Venetus typically receives compensation from fees based on a percentage of assets under
management and incentive allocations. Investors should review all fees charged by the Advisor to
fully understand the total amount of fees to be paid by a Fund and, indirectly, by their Limited
Partners.
Management Fee
The fee structure varies between Funds. The standard fee schedule for the Venetus Funds includes a
1.75% fee per annum for investment management services (the “Management Fee”). The Co-
Investment Funds generally pay a Management Fee of 0.50% per annum, however such fees are
negotiated and agreed upon in advance. The Management Fee is payable quarterly in advance and
based upon the beginning net asset value for such fiscal quarter.
The Advisor and its affiliates reserve the right to waive or reduce the Management Fee for certain
Investors, including employees, immediate family members of employees, and others as may be
determined in the Advisor’s sole discretion.
Incentive Allocations
A portion of each Fund’s net investment profit may be allocated to the capital account of its
General Partner (the “Incentive Allocation”). The fee structure varies between Funds. The standard
fee schedule for the Venetus Funds includes a 20% incentive allocation based on investment
performance. The standard fee structure of the Co-Investment Funds includes a 10% incentive
allocation based on investment performance, however such fees are negotiated and agreed upon in
advance. For the Venetus Funds, the Incentive Allocation is subject to a loss carry forward
provision that generally requires that any losses be offset by net profits before the General Partner
can receive the Incentive Allocation. As is the case with Management Fees, Venetus and its
affiliates reserve the right to waive or reduce the Incentive Allocation for certain investors,
including employees, and others as may be determined in the Advisor’s sole discretion.
Other Expenses Charged to the Funds
In addition to Management Fees and Incentive Allocations, the Funds’ Limited Partners will bear
the fees and expenses charged to the Funds. Those fees and expenses will vary by Fund, but
typically will include, among other things: investment expenses, whether or not such investments
are consummated (such as brokerage commissions, expenses relating to short sales, clearing and
settlement charges, custodial fees, bank service fees, research related travel and interest expenses);
professional fees (including, without limitation, fees and expenses of consultants, investment
bankers, attorneys, accountants and other experts) relating to investments; fees and expenses
relating to software tools, programs, risk analytics or other technology utilized in managing the
Fund's portfolio (including, without limitation, third-party software licensing, implementation,
data management and recovery services and custom development costs); research and market data
(including, without limitation, any related computer hardware and connectivity hardware (e.g.,
Bloomberg terminals) incorporated into the cost of obtaining such research and market data); fees
and expenses of the Administrator; legal expenses; external accounting and valuation expenses
(including, without limitation, the cost of accounting software packages); audit and tax
preparation expenses; costs related to directors and officers insurance and errors and omissions
insurance for the General Partner and the Advisor; entity-level taxes; costs incurred to comply
with the rules under Sections 1471-1474 of the Code or other similar laws (whether imposed on
the Funds, the General Partner or the Advisor); corporate licensing; regulatory expenses
(including, without limitation, expenses relating to compliance and preparation of regulatory
filings (e.g., Form PF, 13D and Section 16 filings), and related fees and expenses of consultants);
organizational expenses; expenses incurred in connection with the offering and sale of the
interests and other similar expenses related to the Fund; indemnification expenses; and
extraordinary expenses. Generally, particular Fund expenses, other than the Management Fee,
any Investor-Related Taxes and any expenses that the General Partner determines in its sole
discretion should be allocated to a particular Investor or Investors, will be charged to the Capital
Accounts of all the Investors of that particular Fund on a pro rata basis. Expenses for research
related products and services may be paid through "soft dollars" generated by the Fund. To the
extent that expenses to be borne by the Fund are paid by the General Partner or the Advisor, the
Funds will reimburse such party for such expenses.
The Advisor and its affiliates are permitted to receive consulting fees, investment banking fees,
advisory fees, breakup fees, director’s fees, closing fees, transaction fees and similar fees in
connection with actual or contemplated investments. To the extent that such fees are received, the
portion of the Management Fee received by the Advisor will be reduced or offset accordingly (and
on a pro-rata basis to the extent such fees relate to an investment or proposed investment of
multiple Funds), with the excess of any such reduction or offset rolling forward to subsequent
months until so applied.
The Advisor allocates expenses to Funds in a manner that it believes is fair and equitable,
considering all factors as it deems relevant, but in its sole discretion, subject to each Fund’s
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