Item 5 – Fees and Compensation
In consideration for the Adviser’s advisory and other services, the Adviser or certain of its affiliates
generally are entitled to receive management fees and performance-based fees or carried interest
with respect to the Funds. While the fees and compensation applicable to each Fund are described
in the applicable governing documents, an overview of the fees and compensation applicable to
the Funds is summarized below.
Management Fees
Prior to the Funds defaulting on their obligations of the revolving credit facility, the Funds paid
the Adviser an annualized management fee ranging from 2.0% to 7.25% of each investor’s
unreturned capital contributions or aggregate drawdown amounts, as applicable. The Funds have
entered into a forbearance agreement which restricts payments or any form of funding to any party,
including the Adviser, except to the extent that such payments are made pursuant to a budget that
must be approved by the lending banks and their administrative agent. As a result, the contractual
management fee will continue to accrue, but the amount of management fees paid to the Adviser
will be reduced in accordance with the budget approved in accordance with the forbearance
agreement.
The management fees payable to the Adviser are used to pay all expenses related to (i) each Fund’s
organizational and startup expenses; (ii) ordinary and administrative overhead expenses incurred
in connection with maintaining and operating the Funds, the General Partner and the Adviser; and
(iii) all other expenses incurred in connection with the administration or operation of the Funds.
As described below, the Funds are responsible for all investment related expenses.
Carried Interest
In addition, the General Partner of the Funds is entitled to receive distributions of carried interests
which vary from Fund to Fund, and which are subject to the Funds attaining returns which also
vary from Fund to Fund (see below under “Performance-Based Fees”).
Investment Related and Other Expenses
Pursuant to the applicable organizational and governing documents, the Funds are responsible for
all investment-related expenses, including expenses associated with the origination, acquisition,
monitoring, maintenance, holding, servicing and disposition of their actual or proposed
investments, including any “broken deal” costs, and any taxes, fees or other governmental charges
levied against the Funds, all to the extent all those costs are not paid for or reimbursed by borrowers
or counterparties and provided that such costs shall be allocated among the Funds pro rata based
on the portion of the applicable investment made by each Fund. Investment-related expenses
associated with the origination of loans and the disposition of investments include commission
expenses. The Funds are also responsible for extraordinary expenses and other expenses set forth
in their respective governing documents (such as litigation, if any).
The Funds will continue to be liable for the payment of all obligations due and owing to the lending
banks under the credit facility. These costs include all costs imposed or incurred in connection
with the forbearance agreement, such as the costs relating to the engagement and retention of Novo
Advisors and the costs related to the retention of the new independent managers/directors.
Miscellaneous Information about Fees and Compensation
The above description of the Funds’ expenses is not intended to be exhaustive. For a description
of the fees and expenses borne by each Fund, please see the applicable Fund’s offering
memorandum and other governing documents, as well as the applicable Fund’s financial
statements. Additionally, such description of the fees and expenses is subject to the terms of the
forbearance agreement entered into with the administrative agent on behalf of itself and the lending
banks under the credit facility.