Fees and Compensation
A. Advisory Services and Fees
Kize, either directly or indirectly through affiliated entities, receives management and
performance-based incentive fees or allocations in connection with the management of the Clients.
The fees and/or allocations applicable to each Client are set forth in detail in each Client’s Offering
Documents and/or the applicable IMA.
A brief summary of such fees and allocations for the Fund Clients is provided below.
Management Fee
Fund Client Investors generally are charged an investment management fee of 1.25% per annum
(the “Management Fee”). The Management Fee is based upon the Investor’s net asset value as of
the beginning of the fiscal quarter. The Management Fee charged on Special Investments is based
on the lower of initial cost or fair value.
Incentive Allocation
At the end of each fiscal year, Kize, through its affiliated entities, will be entitled to receive an
incentive allocation based on investment performance of the Fund Clients (the “Incentive
Allocation”) generally in an amount between 17.5% and 20% of realized and unrealized gains for
the year (excluding unrealized gains on Special Investments) above one or more fixed or variable
benchmark amounts, subject to the recovery of underperformance amounts from prior years. The
Incentive Allocation for Special Investments is calculated upon the realization of such investments.
In the sole discretion of Kize and its affiliated entities, the Management Fee and Incentive
Allocation described above may be waived, reduced or calculated differently with respect to any
Fund Client Investor, including, without limitation, Kize-related Investors.
In addition, Kize occasionally enters into side letter arrangements with certain Investors in which
Kize grants such Investors different or additional terms. These terms include, but are not limited
to, different and more favorable Incentive Allocation rates and information rights.
Kize also charges the SMA a management fee and incentive fee based on the value and
performance of the assets in such account, determined in accordance with the applicable IMA.
B. Payment of Fees
Management fees are paid quarterly in advance. Incentive fees or allocations are paid in arrears as
set forth in a Client’s Offering Documents and/or IMA.
C. Additional Expenses
The fees described above are exclusive of other expenses associated with the provision of
investment advisory services that are paid by Clients. Unless stated otherwise in a Client’s Offering
Documents and/or IMA, each Client generally bears all of its own expenses, including but not
limited to expenses related to its operations and the investment of its assets.
Each Client shall bear those expenses as set forth in the applicable Offering Documents and/or
IMA, as amended from time to time, including but not limited to some or all of the following: (i)
expenses related to the research, due diligence, financing, monitoring and disposition of actual and
prospective investments, whether or not such investment is consummated, including, without
limitation, the following: third-party investment sourcing fees (including, without limitation,
performance-based fees); fees and expenses related to obtaining research and market data
(including, without limitation, any information technology hardware, software or other technology
incorporated into the cost of obtaining such research and market data, and including fees and
expenses related to obtaining, processing and analyzing research or market data); due diligence
expenses including, without limitation, consulting and appraisal fees; travel expenses; brokerage,
prime brokerage and futures commission merchant fees, commissions and expenses; expenses
relating to block trades; expenses relating to short sales; clearing and settlement charges; custodial
fees and expenses; bank service fees; interest expenses and fees related to financings or
refinancings; fees and expenses of proxy research and voting and class action-related services; fees
and expenses of third-party professionals, including without limitation, consultants, investment
bankers, attorneys and accountants; (ii) organizational and reorganizational expenses; (iii) the
Clients’ direct or indirect pro rata share of any compensation payable in connection with the
management of any Special Investment by an unaffiliated third party or management team, which
may include both asset-based fees and performance-based fees or allocations (which, for the
avoidance of doubt, will not offset the Management Fee or Incentive Allocation); (iv) fees and
expenses relating to information technology hardware, software or other technology (including,
without limitation, costs of software licensing, implementation, data management and recovery
services and custom development) used to research investments, evaluate and manage risk,
facilitate valuations and/or facilitate compliance with the rules of any self-regulatory organization
or applicable law (including, without limitation, reporting obligations), facilitate and manage the
order execution of investments or otherwise manage Clients or any trading subsidiary or special
purpose vehicle such as Bloomberg terminals, portfolio management systems, risk management
systems and order management systems; and fees and expenses of third-party risk management
products, models and services; (v) fees and expenses of third-party professionals, including,
without limitation, consultants, investment bankers, valuation service providers, attorneys,
accountants and third-party administrative fees and expenses and including, without limitation, the
costs of engaging or appointing a Money Laundering Reporting Officer, a Deputy Money
Laundering Reporting Officer and an Anti-Money Laundering Compliance Officer; (vi) the costs
of any litigation or investigation involving activities of the Clients or any trading subsidiary or
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