Item 5. Fees and Compensation
A. Fees and Compensation & Payment of Fees
NMFA or its affiliates receive management and advisory fees, and performance fees (or similar incentive
compensation) from each Client. Additionally, consistent with each Client’s Fund Documents, Clients bear
certain out-of-pocket expenses incurred by the Client or by NMFA in connection with the services it
provides to the Client. Descriptions of fees and expenses borne by Clients are provided below.
Fees and expenses differ among Clients. Each Client’s fees and their calculation methodologies, as well as
the expenses each Client could bear, are set forth in the Client’s Fund Documents. These can be the product
of negotiation between NMFA and a Client or be set at the establishment of the Client. Fees and certain
expenses are generally subject to waiver, reduction or cap by NMFA, whether voluntarily or on a negotiated
basis. With respect to certain Private Clients, fees and expenses can also differ among investors in such
Clients, and waivers and reductions can be negotiated with individual investors. Additionally, NMFA or an
affiliate (as applicable based on each Client’s Governing Documents) provides administrative services to,
and receives administrative fees from, certain Clients in addition to the advisory, management and/or
performance fees. In addition to management fees and carried interest, NMFA and its affiliates can receive
directors’ fees, transaction fees, investment banking fees, break-up fees, advisory fees, monitoring fees or
other similar fees with respect to advisory and related services provided in connection with investments by
the Clients.
Guardian Private Credit Clients:
Management Fees
Each of the Guardian Private Credit Clients' management fee is equal to 1.25% of its aggregate capital
contributions, less the sum of proceeds from the disposition of investments representing a return of capital
and the cumulative amount of any write-downs on the investments. For the avoidance of doubt, the
management fee is not calculated on any leverage employed in the investment strategy.
Management fees for each of the Guardian Private Credit Clients are generally charged quarterly in advance
and paid out of proceeds from a Guardian Private Credit Client's investment income that would otherwise
be distributable to such investors. The management fee for each Guardian Private Credit Client is reduced
by the amount of excess organizational expenses paid by investors in such Guardian Private Credit Client,
as well as by a specified percentage of certain other fees received by NMFA as described in “Other Fees
and Expenses” below.
Management fees charged can be reduced, waived, capped or calculated differently in the sole discretion
of NMFA for the Guardian Private Credit Clients or for any one or more investors therein, but will not,
absent an amendment to the Governing Documents, be higher than as set forth herein. No general Guardian
Private Credit Client GP shall bear any management fees with respect to its general partnership interest.
Additionally, the rate of management fees in respect of investors that are affiliates of New Mountain shall
be reduced by 50%.
Incentive Compensation/Carried Interest
As general partner of a Guardian Private Credit Client, the applicable Guardian Private Credit Client GP is
entitled to performance-based allocations and distributions in the form of carried interest. A detailed
description of the carried interest calculation methodology applicable to each Guardian Private Credit Client
can be found in the Guardian Private Credit Client’s Governing Documents. Generally, however, carried
interest for each Guardian Private Credit Client is calculated based on a percentage of the profits generated
from the Guardian Private Credit Client's investments and is subject to the satisfaction of a preferred return,
the recoupment of allocated losses and fees, if any, and expenses and other adjustments or factors set forth
in such Guardian Private Credit Client's Governing Documents. The Guardian Private Credit Client GP
will, in certain circumstances and consistent with the Guardian Private Credit Client’s Governing
Documents, elect to waive or defer all or a portion of the carried interest for the Guardian Private Credit
Client or for any one or more investors therein. The existence of a Guardian Private Credit Client GP’s
carried interest creates an incentive for NMFA to make riskier or more speculative investments on behalf
of a Guardian Private Credit Client than would be the case in the absence of this arrangement, although the
commitment of capital by NMFA professionals to the Guardian Private Credit Clients is expected to reduce
this incentive.
The Net Lease Funds:
NEWLEASE
Management Fees
For NEWLEASE, the management fee is equal to (1) 1.25% of net asset value (“NAV”) for Class I shares
and (2) 1.00% of NAV for the Class A shares and Class F shares, in each case, per annum payable monthly.
Additionally, to the extent that NEWLEASE Operating Partnership LP (the “Operating Partnership”) issues
Operating Partnership units to parties other than NEWLEASE, the Operating Partnership will pay NMFA
a management fee equal to (1) 1.25% of the NAV of the Operating Partnership attributable to Class I units
not held by NEWLEASE and (2) 1.00% of NAV of the Operating Partnership attributable to Class A units
and Class F units not held by NEWLEASE, in each case per annum payable monthly. Notwithstanding the
foregoing, NEWLEASE will not pay NMFA a management fee on Class E shares of NEWLEASE or Class
E units of the Operating Partnership.
Performance Participation Allocation
As set forth in Item 6 below, NEWLEASE Special Limited Partner LP is entitled to receive performance-
based compensation in respect of the total return of NEWLEASE’s investment portfolio above a certain
hurdle amount, subject to a “high water mark” through which the recoupment of past annual total return
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