Avatar Capital Management LLC

ITEM 5 - Fees and Compensation

   A. Below is a discussion of how the Manager is compensated in connection with providing advisory
      services to the Avatar Private Funds. The fees and expenses associated with Avatar Private Fund’s
      accounts are described in further detail in the Avatar Private Fund’s Offering Documents.

      Asset Management Fee. Generally, the Manager is entitled to a management fee, which is paid by
      the Avatar Private Fund investors and may vary depending on the interest held by the applicable
      investor, at an annualized rate of One Percent (1%) of the assets under management, calculated and
      payable monthly.

      Profit Participation. The Manager is generally entitled to profit participation equaling Fifty Percent
      (50%) of the Avatar Private Fund’s net profits, paid by Avatar Private Fund, and distributed on a
      yearly basis.

      Loan Origination Fees and Lender Discount Points. Loan origination fees, exit fees, and lender
      discount points shall be payable to the originator. Such fees and points average Three Percent (3%)
      of the loan origination amount, depending on market conditions. However, if any loan origination
      fee exceeds Three Percent (3%), the excess percentage shall be payable to the Avatar Private Fund.

      It is presently anticipated that Avatar Financial Group LLC, a Delaware limited liability company,
      will serve as the loan originator for the Avatar Private Funds. Avatar Financial Group, LLC is an
      Affiliate of the Fund. Notwithstanding the foregoing, the Manager may, in its sole and absolute
      discretion, appoint a different Affiliate, retain the services of a third-party, or originate the Avatar
      Private Fund loans itself (each herein shall be referred to as the “Originator”). The Originator may
      be compensated by the Avatar Private Funds and/or borrowers for originating the Avatar Private
      Fund loans. To the extent applicable, the Manager will oversee the activities of the Originator.

      Purchase of Existing Loans. The Manager is generally entitled to a fee for the purchase of existing
      loans (or pool of loans), which is paid by the Avatar Private Funds. This fee is comparable to a loan
      origination fee.

      Loan Extension and Modification Fees. The Manager is generally entitled to a fee for the loan
      extension and modifications, which are collected from borrowers by the Manager on the Avatar
      Private Fund’s behalf and shared between the Manager and the Avatar Fund, as follows: Fifty
      Percent (50%) of the loan extension and modification fees shall be payable to the Manager and
      Fifty Percent (50%) of the fees shall be retained by the Avatar Fund.

      Servicing Fee. If the Manager retains the services of a third-party servicer, such servicer shall be
      entitled to certain compensation, which shall be considered an expense to the Avatar Private Funds.
      It is presently anticipated that the Avatar Private Fund’s loans will be serviced by the Manager.

      Loan Processing, Loan Documentation, and Other Similar Fees. Generally, loan processing,
      documentation, and other similar fees are collected from the borrower and payable to the originator
      at prevailing industry rates as part of the originator's compensation.

      Other Loan Fees. All other fees paid by borrowers on account of the loans will be shared between
      the Manager and the Avatar Fund as follows: Fifty Percent (50%) of the other loan fees shall be
      payable to the Manager and the remaining Fifty Percent (50%) shall be payable to the Avatar Fund.

B. Asset Management Fee is deducted directly from the Avatar Private Fund’s capital and payable
   monthly, provided that any such asset management fee shall be subject to any deferred, waived, or
   assigned asset management fee election made by the Manager.

   The Avatar Private Funds shall pay its own general administrative and operating expenses (“Avatar
   Private Fund’s Expenses”), which may include, but are not necessarily limited to, the following
   reasonable expenses incurred in connection with the execution of the Avatar Private Fund’s
   strategy: Avatar Fund and/or Avatar REIT’s operating costs, tax preparation, accounting fees, legal
   fees, third-party fund administration fees, loan origination and/or other fees associated with any
   capital partner or credit facility not otherwise considered a Avatar Private Fund’s Expense, any
   portion of the Manager, third-party, or Affiliate fees that may be paid through the Avatar Fund
   and/or Avatar REIT, and any other expenses associated with the operation of the Avatar Private
   Funds and the management of the lending activities, including any reasonable reserves against
   future Avatar Private Fund Expenses that the Manager determines in its sole discretion are prudent
   or necessary for the operation of the Avatar Private Funds.

   The Avatar Private Funds shall reimburse the Manager or its Affiliates for any expenses incurred
   by the Avatar Private Funds or its Affiliates stated herein, as well as those that are properly
   considered ordinary and reasonable business expenses of the Avatar Private Funds. These Avatar
   Private Fund’s expense reimbursements will be calculated as of the first day of the month and paid
   out as of the first day of the following month.

   The direct expenses borne by Avatar Private Funds are described in more full detail in the Offering
   Documents.

C. Not applicable.

D. Not applicable.

ITEM 7 - Types of Clients

Avatar provides discretionary investment advisory services to the Avatar Private Funds which is operating
as limited liability company exempt from registration as an investment company pursuant to Section 3(c)(5)
of the Investment Company Act.

Investments in the Avatar Private Funds are only offered and sold to investors that meet the criteria for
“Accredited Investor,” as defined by the SEC in Rule 501(a) of Regulation D.