Item 5 – Fees and Compensation
The Adviser generally receives fees based upon the amount of capital that investors have committed to the Funds
and performance-based fees (carried interest), all as described in the Governing Documents. The specific payment
terms and other conditions of these fees and distributions are set forth in the relevant Governing Documents.
Management Fee
Through June 30, 2014, Fund V and Fund V-B paid NMP an annual management fee of 1% of the remaining net
assets of those Funds. No management fees were paid by Fund V or Fund V-B subsequent to June 30, 2014.
Fund VI paid NMP an annual management fee of 2.5% of total capital committed for the period from inception
through December 31, 2013, after which the management fee declines by 15% per year for 2014, 2015, 2016 and
2017. After December 31, 2017, the annual management fee will be 1% of the remaining net assets of Fund VI.
Fund VII pays NMP an annual management fee of 2.402% of total capital committed for the period from January 1,
2014 through December 31, 2018. After December 31, 2018, the annual management fee will be 2.402% of total
invested capital, which is defined as the cost basis of remaining portfolio investments.
SBIC pays NMP an annual management fee of 2.412% of total capital committed for the period from inception
through December 31, 2018. After December 31, 2018, the annual management fee will be 2.412% of total invested
capital, which is defined as the cost basis of remaining portfolio investments.
Pursuant to the terms of the Governing Documents, the Funds pay management fees on a quarterly basis in advance.
Prepaid management fees will be returned to a Fund in the event of the termination of the advisory relationship
before the end of any quarterly period.
Carried Interest
The NMP General Partners are allocated a carried interest distribution based on any cash generated from the sale of
the relevant Fund’s portfolio investments. The carried interest distribution will generally be an amount equal to 20%
of the profits from each portfolio investment made by a Fund after the return of invested capital to the applicable
Fund investors. Carried interest allocations are subject to a clawback based on the aggregate performance of all
portfolio investments of a Fund.
All performance-based fees (carried interest) payable to each NMP General Partner in connection with all private
funds sponsored by NMP will be effected consistent with the applicable requirements of Section 205 of the
Investment Advisers Act of 1940 (the “Advisers Act”), Rule 205-3.
Other Fees
Typically, members of the NMP General Partners (“Partners”) become board members of the portfolio companies
invested in by the Funds. Although infrequent and not significant in amount, directors’ fees, management fees,
consulting fees and other remuneration, if any, received by a Partner or a NMP General Partner from portfolio
companies or from any other sources related to a Fund’s investment (“Fee Income”) are sometimes paid either in
cash or as a director stock option to such Partner or NMP General Partner. Any and all Fee Income received by the
NMP General Partners or their related persons is treated as a 100% offset against the management fees next payable
by the relevant Fund.
Valuation
The value of the Funds’ investments is relevant to a number of aspects of those entities, including the calculation of
future management fees to be paid by Fund VI (after December 31, 2017), and periodic reporting to investors.
Because higher valuations will result in higher future management fees for Fund VI after December 31, 2017 and
more favorable reporting to investors (thereby potentially incentivizing them to invest in new funds sponsored by
the Adviser), the Adviser has an inherent conflict of interest in connection with its valuation of Fund assets. Further,
for purposes of determining “invested capital” (which is the basis for the calculation of the management fees
charged to Fund VII and SBIC after December 31, 2018), the cost of Fund assets that have been permanently written
off are disregarded, providing the Adviser with an incentive to avoid writing off assets in order to increase the
amount of the management fee.
The Adviser maintains valuation policies, which provide guidelines for valuing the Funds’ portfolio investments and
serve to mitigate the above conflicts of interest. Under its valuation policies, the relevant NMP General Partner
values a Fund’s assets (at fair market value) on a quarterly basis and those values are reviewed by the Fund’s
Limited Partner Committee. (For purposes of reporting to the SBA only, SBIC values its assets in accordance with
valuation guidelines approved by the SBA.) In addition, on an annual basis, the Funds’ independent public
accountants audit the fair market values of the Funds’ portfolio investments for purposes of the Funds’ annual
financial statements.
Indemnification
The Funds are generally obligated to indemnify NMP and its affiliates and personnel under certain circumstances;
provided, however, if the relevant Fund has insufficient assets to cover any indemnification obligations, then
investors will not be required to return to the relevant Fund any amounts beyond the amount of any uncalled capital
commitment plus (except in the case of Fund V and Fund V-B) the lesser of either any distributions made to such
investor or 25% of an investor’s capital commitment.
Fund Expenses
The Adviser is responsible for all usual overhead expenses of managing the Funds, including compensation for its
employees, plus the cost of adequate office space and utilities.
The Funds bear their organizational costs up to an amount specified in the Governing Documents. Organizational
expenses in excess of that amount are paid by NMP.
The Funds pay all expenses related to their operations that are not reimbursed by portfolio companies including:
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