Item 5: Fees and Compensation
Nara Capital generally receives a management fee in between 1.25% to 2.0%, dependent upon
share class, per annum paid monthly in arrears as of the first business day of each month based
on the value of each underlying investor’s account and adjusted during the quarter for any
contributions or withdrawals. Management fees may be waived at the discretion of Nara Capital
or board of directors of the Funds.
Nara Capital indirectly deducts management fees and performance allocations from the Funds’
accounts pursuant to authorization through the Administrator.
In the event that Nara Capital accepts Separately Managed Accounts, it shall receive fees and
performance allocations consistent with the terms of the investment management agreement
negotiated for the account.
Subject to the Expense Cap defined below, each respective Fund pays or reimburses the General
Partner, Firm or their respective affiliates for all of the expenses attributable to the activities
of the Fund, including, without limitation: (i) expenses incurred in connection with the evaluation,
acquisition, monitoring or disposition of investments, including, without limitation, loan fees,
appraisal fees, private placement fees, sales commissions, brokerage fees and commissions,
underwriting commissions and discounts, taxes, expenses related to short sales, travel expenses
and legal, accounting, investment banking, consulting, information services and other third-party
professional fees, and travel, communications and other expenses related to the discovery,
investigation, development, making and disposition of investments (whether or not
consummated); (ii) expenses incurred in connection with the carrying or management of
investments, including, without limitation, interest and related expenses, clearing, execution
and settlement charges (including those of Intex, Bloomberg, PolyPaths and similar providers),
hedging expenses, custodial, trustee, record keeping and other administration fees and
expenses, including, without limitation, fees and expenses of the Administrator; (iii) expenses
incurred in connection with any leverage or other indebtedness of the Fund, including, without
limitation, interest, borrowing fees, dollar rolls, reverse purchase agreements, credit facilities,
margin financing, total return swaps, the issuance of debt securities and other costs associated
with any financing; (iv) expenses incurred in connection with the preparation and delivery of the
Fund’s financial statements, reports, tax returns and K-1s (or similar schedules); (v) professional
fees and expenses, including, without limitation, fees and disbursements of attorneys,
accountants, consultants and experts relating to Fund matters, and fees and disbursements
associated with updating the subscription documents and amending or restructuring the
constituent documents of the Fund or other investment vehicles, including, without limitation, the
General Partner; (vi) any costs, including, without limitation, compensation, indemnification and
insurance expenses associated with committees; (vii) any taxes or other governmental charges
that may be levied against or incurred or payable by the Fund; (viii) expenses relating to defaults
by investors in the payment of any Capital Contributions (as defined in the relevant Fund Limited
Partnership Agreement); (ix) insurance premiums or expenses in connection with the activities of
the Fund, including, without limitation, errors, omissions, fidelity, general partner liability, directors’
and officers’ liability and similar coverage for any person acting on behalfof the Fund, the
General Partner or the Firm; (x) expenses (including, without limitation, legal fees and
expenses) incurred to comply with any law or regulation related to the activities of the Fund
(including, without limitation, the offering of interests in the Fund, any “blue sky” filing fees and
expenses and expenses related to the preparation and filing of Form PF, Form PQR and other
similar regulatory filings related to the Fund) or incurred in connection with any litigation or
governmental inquiry, investigation or proceeding involving the Fund, including the amount of any
judgments, settlements or fines paid in connection therewith; (xi) expenses incurred in connection
with the dissolution, winding up or liquidation of the Fund; (xii) expenses incurred in connection
with computing the Fund’s assets; (xiii) expenses incurred in connection with any distributions to
the investors and in connection with any meeting of the investors relating to the Fund; (xiv)
expenses related to the Funds’ indemnification obligations (as described below); (xv)
administration fees payable to the administrator of the Fund; (xvi) expenses incurredin connection
with the formation of special purpose entities; (xvii) the Management Fees; (xviii) expenses
incurred in connection with the preparation and delivery of reports of the Fund and any meetings
with investors; and (xviii) and other similar expenses related to the Funds.
Notwithstanding the foregoing, with respect to any given calendar month, in no event shall the
Funds be responsible for the funding of the foregoing expenses (such expenses, excluding any
Uncapped Expenses (as defined below), the “Capped Expenses”) in an aggregate amount in
excess of the product of 0.04167% and the average Net Asset Value (as defined in the relevant
Limited Partnership Agreement) in such month (the “Expense Cap”).
“Uncapped Expenses” means: (A) Management Fees (as defined in the relevant Limited
Partnership Agreement) and other performance fees; (B) brokerage commissions and expenses
relating to clearing and settlement charges and financing and hedging expenses (but excluding
any investment expenses incurred with respect to unconsummated investments); (C) expenses
related to the indemnification obligations pursuant to the Fund’s constitutional documents; (D) any
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