The Palisades Group LLC

ITEM 5 – FEES AND COMPENSATION
     A. Our Compensation for Advisory Services

The types and amounts of, and the related limitations and restrictions on, fees charged by Palisades may not
be uniform among Clients and may be affected by the extent of services to be provided or the size of the

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account. Therefore, Palisades does not maintain a fee schedule. Palisades’ fees are negotiable. Palisades has
entered into side letter arrangements with certain investors in the Discretionary Funds granting preferential
fee terms.

Base Management Fee
Investors in the Discretionary Funds may be charged a base management fee based on contributed capital
used to purchase investments and excluding capital used for operating expenses and other fees, the fees
associated with each Discretionary Fund are set forth in their respective offering documents. Investors’
interest in the Discretionary Funds may also be subject to performance-based compensation as described in
Item 5 below. The fees and expenses related to Discretionary Funds are fully specified in the offering
materials related to each Discretionary Fund. These materials are available from Palisades upon request.

Non‐Discretionary Clients typically pay a monthly base management fee based on either (i) unpaid principal
balance of the mortgage loans or (ii) amortized cost basis of the mortgage loans either gross or net of
outstanding financing arrangements depending on what we have agreed with the Non‐Discretionary Client
to use as a basis for calculation of our base management fee. We have agreed with certain Non‐Discretionary
Clients that the base management fee will vary depending on the delinquency status of the mortgage loan(s)
as defined in the Non‐Discretionary Client’s advisory agreement.

Incentive Fee
Certain Non‐Discretionary Clients also pay incentive fees if mortgage loans are resolved through a short
payoff, note sale, repurchase, or other types of loss mitigation outcomes. Non‐Discretionary Clients
generally pay incentive fees on a monthly basis. Incentive fees are typically based on a percentage of the
liquidation proceeds or other agreed upon metric for non‐resolution‐based outcomes as defined in each
Non‐Discretionary Client’s advisory agreement. Incentive fees are negotiable. No incentive fee is charged to
the Discretionary Funds.

Settlement Fee
For certain Non‐Discretionary Client accounts, a settlement fee is payable upon achieving certain transaction
settlement milestones, in most cases such milestones represent the completion of the transaction.
Generally, settlement fees are not based on a formula relating to assets under management and do not
fluctuate based upon the future performance of Non‐Discretionary Client assets, rather, they are generally
payable based upon a percentage of the purchase price or notional principal balance of the mortgage assets
being acquired or sold on behalf of the Non‐Discretionary Client account. Any settlement fee generally is
payable to Palisades at the closing of such transactions.

Termination Fee
In some instances, Clients have agreed to pay Palisades a termination fee if the Non‐Discretionary Client
chooses to terminate Palisades as the investment advisor, or sub‐advisor prior to the stated termination
date of the applicable advisory agreement.

Fees for Other Services
Certain Clients pay Palisades and its affiliates fees for performing other services. For example, Palisades
receives fees for performing analytical services for Clients, including the review and analysis of Client

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portfolios. In addition, Palisades receives a fee for performing mortgage loan document remediation services.
Certain Clients also pay structuring, acquisition, and ancillary fees. Such fees are negotiated by the parties in
advance. Generally, these fees are not based on a formula relating to assets under management and do not
fluctuate based upon the future performance of Client assets, rather, they are generally payable based upon
a flat fee per asset, a time allocation with respect to such services, a percentage of notional principal balance
or amortized cost basis of the assets for whom Palisades has provided such service, or other Client negotiated
formula. Fees for other services are paid on terms as agreed to with our Clients.

     B. How We Collect Fees

With respect to Non‐Discretionary Client accounts, applicable advisory agreements generally provide that
all fees are deducted from Client accounts, subject to Client approval, or paid directly by the Client upon
invoicing by Palisades.

With respect to Discretionary Client accounts, fees are deducted from Client accounts when due.

     C. Other Fees and Expenses

Each Discretionary Fund bears and is charged with all costs and expenses relating to the activities and
operations of the Fund, including but not limited to: (i) administrative fees, costs and expenses related to
the operation of the Discretionary Fund (including fees, costs and expenses of accountants, auditors,
administrators, lawyers, independent fiduciaries and other professionals incurred in connection with the
Discretionary Fund’s annual audit, legal compliance, investor record-keeping, financial reporting, legal
opinions, tax strategy and tax return preparation, as well as expenses associated with the distribution of
reports); (ii) fees, costs and expenses related to the acquisition, holding, management, development,
financing, hedging, refinancing, monitoring and sale or other disposition of investments and the evaluation
of potential investments (regardless of whether the potential investments are consummated), including any
travel, financing, legal, accounting, advisory and consulting expenses in connection therewith; (iii) brokerage
...

ITEM 7 – TYPES OF CLIENTS
Palisades provides investment advice to privately offered pooled investment vehicles, insurance companies,
private equity firms and other institutional Clients. Information regarding minimum investment amounts in
each discretionary fund is set forth in the respective offering documents and may be waived at Palisades’
discretion. Palisades does not generally offer its services to the public.