Ann: Investment Report & NTA Update - September 2018, page-10

Hi Sharkies - I'm not a lawyer so suggest you read the management agreement and see if you agree with my interpretation. However, as I read it:

- shareholders can't kick NAOS out in the first 5 years
- at 5 years the agreement automatically and immediately rolls over for another 5 year term
- at any time after the rollover, shareholders can vote them out ... but NAOS then receives a fee equivalent to their management fee for the remainder of that term.
- therefore, if broken immediately by shareholders, fee would be 1.15% x 5 years (5.75%). Just realised GST would also be payable too ... so ~6.3% (inc GST).
- if they were voted out at say the 6 year mark, only fee would be 1.15%x4years etc etc

NAOS can be removed without a fee at the 10 year anniversary, but shareholders will need to be organised as if the contract rolls over ... it's back to a 5 year fee.

They couldn't get ASIC to agree with an initial 10 year term, so it seems NSC shareholders ended up with this pseudo 10 year term.