Item 5: Fees and Compensation
AREX Capital Management, LP 4
The fees applicable to each Fund and the SMAs are set forth in detail in each Fund’s offering
documents and investment management agreement. A brief summary of such fees is provided
below.
Management Fee
For the Fund, AREX Capital is paid a per annum investment management fee (“Management
Fee”) ranging between 0% and 1.5%.The Management Fee is normally charged within ten (10)
days after the beginning of each quarter and is paid in advance based on the Fund’s net asset
value on the first day of the quarter. If a new Investor account is established during a quarter,
or an Investor makes an addition to its account during a quarter, the Management Fee is be
prorated.
AREX Capital also manages other accounts and co-investment vehicles and is paid a per
annum investment management fee for those products ranging between 0% and 1.5%.
The General Partner (defined below) shall have the authority to alter or change the manner and
method of calculating and/or paying the Management Fees for the purpose of ease of
administration including, without limitation, charging such Management Fees at the Master
Fund level, if applicable, provided that no such alteration or change in the method of
calculation and/or payment, as applicable, shall in any way adversely alter or affect the
substantive rights of the Investors including, without limitation, the economic provisions and
voting rights herein or in the Fund, or otherwise adversely affect Investors.
Performance Allocation
AREX Capital’s affiliate, AREX Capital GP, LLC, (the “General Partner”) will be entitled to an
annual Performance Allocation (“Performance Allocation”) of 20% subject to certain hurtles
for the Series B and Series C Interests in the Master Fund.
The General Partner may reduce, waive, assign, grant participation in, or otherwise share,
reallocate, or modify the Performance Allocation allocable with respect to any Investor
(including for any affiliate of the General Partner or the Firm) without the consent of, or notice
to, any Investor.
In the event that a Fund is terminated, or an Investor withdraws other than at the end of a
fiscal year, then, for purposes of determining the Performance Allocation allocable at such
time to the General Partner, the deduction of the Performance Allocation will be made with
respect to such withdrawn capital as though it were being made at the end of a fiscal year.
AREX Capital Management, LP 5
Limited Partners in the co-investment vehicles managed by AREX Capital are entitled to
return distributions specific to each product and detailed in that vehicle’s offering
documents. The Performance Allocation owed to affiliates of AREX Capital ranges from 10%
to 18% and may be subject to a hurdle rate.
The General Partner will be entitled to an annual performance allocation of up to 15%
depending on each individual series terms.
Other Types of Fees or Expenses
AREX Capital will pay, without reimbursement by the Funds, all of its own ordinary
administrative and overhead expenses including, without limitation, all costs and expenses
related to office rent; furniture and fixtures; stationery; secretarial/internal administrative
services; salaries and bonuses; entertainment expenses; all travel-related expenses, including
research-related travel; employee insurance, and payroll taxes. Each of the Funds have
incurred and will incur Organizational Expenses, Investment Expenses, and Operating
Expenses. The term “Organizational Expenses” means the expenses incurred by the Funds,
as applicable, in connection with its organization. The term “Investment Expenses” means
the expenses associated with the investment program of the Funds, as applicable, which
includes, without limitation, brokerage expenses, commissions, dealing and spread costs
(which vary depending on a number of factors including, without limitation, the bank, broker
or dealing counterparty utilized for the transaction, the particular instrument traded andthe
volume and size of the transaction), execution, give-up, exchange, clearing and settlement
charges, initial and variation margin, regulatory commissions and fees, delivery, custodial
fees, escrow expenses, insurance costs (including D&O and E&O insurance for the Investment
Manager, the General Partner, outside directorship and any advisory committee to the Fund),
third-party research (except as otherwise paid for using soft dollars within Section 28(e) of
the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder by the SEC (the “Exchange Act”)), interest and borrowing charges on margin
accounts and other indebtedness, bank, broker and dealer service fees, interest expenses
and consulting, risk reporting services, trade management systems, advisory, investment
banking and other professional fees relating to particular investments or contemplated
investments, and all other research expenses and all other expenses directly or indirectly
related to the investment program. The term “Operating Expenses” means, without limitation,
administrative expenses, custodial expenses, legal expenses, Fund-related compliance and
regulatory expenses (including, without limitation, expenses related to regulatory filings in
connection with the Fund’s investment activities) and expenses related to the registration,
filing and reporting requirements in any jurisdiction in which interests are offered and sold,
including those related to Alternative Investment Fund Manager’s Directive (“AIFMD”), as
applicable, external accounting expenses, audit and tax preparation expenses, interest, taxes,
costs in the Master Fund, as applicable, external accounting expenses, audit and tax
preparation expenses, interest, taxes, costs, all expenses incurred in connection with the offer
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