Item 5 - Fees and Compensation
Adviser Compensation
The Adviser is paid an annual management fee (the “Management Fee”) in accordance
with the Partnership Agreement and Management Agreement of each Fund, as applicable, a
portion of which may be borne by Alternative Investment Vehicles formed in connection with
certain transactions of a Primary Fund, as applicable. Co-Investment Funds (including Kelso-
Investment Funds) generally do not pay Management Fees, however certain Co-Investment Funds
will be subject to an administrative allocation intended to cover the Adviser’s administrative costs.
Management Fees are generally payable to the Adviser in tri-annual installments in advance,
funded by drawdowns of unfunded capital commitments of the Limited Partners or out of
distributable proceeds and gains of the Funds, as applicable, in each case in accordance with each
Fund’s Partnership Agreement.
Management Fees have not been paid in respect of Fund VII and Fund VIII since 2014 and
2018, respectively.
As of March 31, 2026, Management Fees are not paid in respect of Fund XI. The
Management Fees paid to Fund IX were generally calculated with respect to each Limited Partner
on a blended basis taking into account both the capital commitments of Limited Partners and total
capital used for investments through the end of the investment period. Thereafter the Management
Fee was a percentage of funded capital commitments that remained invested in Fund IX’s portfolio
companies. Limited Partners in Fund IX have chosen between two different Management Fee
schedules, which vary in timing and percentage.
Fund X and Fund XI have a Management Fee structure pursuant to which the Management
Fee is initially based (during the applicable commitment period) on a percentage of the capital
commitments of Limited Partners, and thereafter steps down, to a lesser percentage, of funded
capital commitments plus outstanding borrowings used for investments. Management Fees are
subject to a nine-month fee deferral period.
The Management Fee calculated with respect to each Limited Partner of the Primary Funds
is typically subject to reduction in each period for certain amounts, including: (a) such Limited
Partner’s pro rata share of any placement fees paid or payable by the applicable Primary Fund in
such calendar year (with the result that placement fees are borne by the Adviser); (b) such Limited
Partner’s pro rata share of a percentage (specified in the relevant Partnership Agreement) of
director’s fees, investment fees, consulting fees, break-up fees, advisory fees, monitoring fees or
other similar fees received in the previous calendar year by the Adviser in respect of the Primary
Fund’s investments to the extent such fees exceed unreimbursed expenses (collectively, “Fee
Income”); and (c) such Limited Partner’s pro rata share of any Organizational Expenses (defined
in “Additional Fees and Expenses” below) that were paid by the Primary Fund in the previous
calendar year and that exceed the threshold set forth in the respective Partnership Agreement. For
purposes of the preceding sentence, a Limited Partner’s pro rata share is based on the aggregate
capital commitments of the Limited Partners to such applicable Primary Fund. Any excess
Management Fee reductions will be carried forward if necessary to offset future Management Fee
payments. The Management Fee base is initially calculated based on capital commitments. After a
stepdown, a Fund’s Management Fee is generally calculated as a percentage of all capital
contributions that are attributable to portfolio investments that have not been realized. In certain
cases, certain transaction-specific fees and expenses are capitalized into the cost of an investment.
Such capitalized amounts include, without limitation, transaction fees, acquisition costs, financing
and borrowing fees and expenses, legal fees and expenses, due diligence expenses, and fees or other
amounts paid to service providers in connection with an investment, including any fees paid to the
Adviser or its affiliates in connection with the acquisition, monitoring, or exit of an investment.
Fee Income relating to investment activities will generally be allocated among the
applicable Primary Funds, Kelso Investment Funds and other Funds (if any) in accordance with
each applicable limited partnership agreement. Fee Income allocated to a Primary Fund will reduce
the Management Fees of such Primary Fund as described above. Fee Income allocated to a Kelso
Investment Fund will be retained by the Adviser. For Fund IX and Fund X, Fee Income allocated
to a Co-Investment Fund (other than any Kelso Investment Fund) that does not benefit from a fee
offset (in the case of a Management Fee that has been subject to offset) is allocated to the Primary
Fund. For Fund XI, Fee Income allocated to a Co-Investment Fund (other than any Kelso
Investment Funds) offsets the Management Fees payable by such Co-Investment Fund (if any) and
any excess is retained by the Adviser. If upon the dissolution of Fund IX, Fund X or Fund XI, as
applicable, there is unapplied Fee Income remaining after all applicable reductions in the
Management Fee payable, each Limited Partner of Fund IX, Fund X or Fund XI, respectively, will
be entitled to elect to receive its pro rata share of such unapplied Fee Income. The Adviser will be
entitled to retain any remaining Fee Income attributable to non-electing Limited Partners of Fund
IX, Fund X or Fund XI, respectively, as well as remaining Fee Income relating to prior Primary
Funds that do not have an election mechanic.
The Management Agreements of the Funds generally provide that upon termination of the
Management Agreement, the Adviser shall repay to the Fund or to a replacement manager, as
directed by the Fund’s General Partner, the unearned portion (computed on the basis of the number
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