KPS Capital Partners LP

Fees and Compensation
KPS or an affiliated entity is entitled to a carried interest and also receives a management fee for
providing managerial and administrative services to a Fund. Management fees are generally
payable by a Fund quarterly in advance and are pro-rated for any period that is less than a full
calendar quarter.

The Funds pay their respective management companies (as described in the Advisory Business
section above), each of which is primarily owned by or under common control with KPS, aggregate
management fees ranging from 1% to 1.75% per annum of committed capital or actively invested
capital of each Fund during the life of such Fund. The Funds are also subject to a carried interest
of 25%-30% of profits on distributions derived from the disposition of investments or securities
(following a preferred return of 8% to the Investors), which is paid to affiliates of KPS. As a

general matter, management fees will be payable during term extensions unless otherwise agreed
with Investors.

As is typically the case in private equity funds, the Governing Documents provide that each Fund’s
management fees will be calculated and charged on a basis that generally is not based on the
respective Fund’s then-current net asset value. Subject to the Governing Documents, from the
effective date of the relevant Fund until a date specified in the Governing Documents (the
“Stepdown Date”), management fees generally will be calculated based on a percentage of the
relevant Fund’s aggregate commitments. After the Stepdown Date, management fees generally
will be charged and calculated based on a percentage of the amount of capital invested by the
relevant Fund in portfolio investments (including, where applicable, a Fund borrowing component
(including interest expenses) and the amount of any capitalized transaction fees or expenses) made
by the relevant Fund relating to investments that have not yet been disposed of. For purposes of
calculating management fees, if an investment significantly and permanently declines in value
below its original cost basis, such investment shall be treated as having been the subject of a
complete or partial disposition, as the case may be, only to the extent that (i) the original cost basis
of the investment exceeds its fair market value at such time, as determined by the relevant general
partner; and (ii) such loss has been realized for U.S. federal income tax purposes or as otherwise
specified by the relevant Governing Documents (“Impaired Value Investments”). Due to potential
differences in the criteria set forth in their respective Governing Documents, in the event where
more than one Fund participates in an investment, there is the possibility that an investment will
become an Impaired Value Investment for purposes of one Fund’s Governing Documents but not
those of one or more other Funds.

Under the Governing Documents, where the fair market value of an investment exceeds the total
amount of capital invested in such portfolio investment, post-Stepdown Date management fees
will not be calculated based upon such appreciated value, and will instead continue to be calculated
based on the amount of applicable invested capital.

Except where the Governing Documents expressly provide to the contrary, management fees will
not be reduced (in whole or in part) in the case of a writedown, decrease (including a significant
decrease) in fair value (except in the case of Impaired Value Investments after the Stepdown Date)
or other event not constituting a complete realization, such as partial sales or dispositions,
reorganization, recapitalization (including recapitalizations including dividends), roll-over
investments in connection with a sale or dividend distributions, extraordinary dividends,
repayment of debt or similar event with respect to a portfolio investment that does not involve the
complete disposition of shares or other equity interests. In addition, in the event of a
recapitalization, extraordinary dividend, repayment of debt or similar event with respect to a
portfolio investment that does not involve the disposition of shares or other equity interests, the
relevant general partner is permitted to treat all or a portion of the proceeds of such recapitalization,
extraordinary dividend, repayment of debt or similar event as a return of capital for purposes of
the distribution waterfall contained in the Governing Documents, but not treat any portion of such
portfolio investment as having been disposed of for purposes of calculating management fees.
However, management fees generally will be partially reduced as a result of an actual partial
disposition of the relevant Fund’s shares or other equity interests in a portfolio company.

In many circumstances, such post-Stepdown Date management fee base will include capitalized
transaction-specific fees and expenses of unrealized investments, including certain fees (such as
Transaction Fees (as defined below)) and expenses paid to third parties, Industry Consultants
(defined below), KPS or its affiliates. Further, management fees generally will not be reimbursed
or refunded under the Governing Documents in the event of realizations, dispositions or write-offs
that occur partway through the relevant calculation period.

The Governing Documents set forth the full list of terms under which management fees will be
reduced, offset or otherwise be limited, and consequently Investors should expect to bear the full
specified management fee rate in the Governing Documents until they are reduced in the
circumstances and on the date(s) specified therein.

In connection with the investments of the Funds, various Transaction Fees are paid to
KPS-affiliated parties by a portfolio company; “Transaction Fees” generally include all advisory
fees, break-up fees, commitment fees, director’s fees, termination fees, portfolio company
management fees, and similar fees, payments or compensation received by KPS and certain of its
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Types of Clients
KPS and its affiliates provide advisory services (as described in the Advisory Business section
above) solely to their Fund clients, and references throughout this Brochure to “clients” and to the

related duties of KPS and its affiliates to, and practices on behalf of, their clients and/or Investors
should be construed accordingly. Each of the Funds is a private pooled investment vehicle.
Investors in the Funds include a variety of institutional Investors (e.g., trusts, public and private
employee benefit plans, endowments, foundations, corporations and other types of entities
including private funds) and high net worth individuals and often include, directly or indirectly,
principals or other employees of KPS and its affiliates and members of their families, Industry
Consultants or other Service Providers retained by KPS or a Fund, as well as executives of
portfolio companies. The Funds are operated such that they qualify as “private equity funds” for
purposes of Form PF.

The relevant general partner of a Fund also generally is permitted to establish Funds that are
alternative investment vehicles in order to permit certain Investors to participate in one or more
particular investment opportunities in a manner desirable for tax, regulatory or other reasons.
Alternative investment vehicle sponsors generally have limited discretion to invest the assets of
these vehicles independent of limitations or other procedures set forth in the organizational
documents of such vehicles and the Governing Documents of the related Fund.

Investment in the Funds is limited to Investors that meet certain financial sophistication
requirements. Investors in the Funds must be (i) “accredited investors” within the meaning of
Regulation D under the Securities Act of 1933, as amended, and (ii) “qualified purchasers” within
the meaning of the Investment Company Act of 1940, as amended (the “1940 Act”). Certain KPS
employees who qualify as “knowledgeable employees” under Rule 3c-5 of the 1940 Act are also
permitted to invest (directly or indirectly) in the Funds. Investors considering an investment in the
Funds should consult with their own investment, tax and/or legal consultants prior to investing.

Additional details concerning applicable Investor suitability criteria are set forth in the Governing
Documents of each Fund. The minimum investment in the Funds is generally $10 million,
although the general partners of the Funds are permitted to waive or modify the minimum
investment in their sole discretion.

In addition, the Funds reserve the right to enter into separate agreements, commonly referred to as
“side letters”, with certain Investors, to waive certain terms, or allow such Investors to invest on
different terms than those specifically described in the offering documents. Under certain
circumstances, these agreements could create preferences or priorities for such Investors with
respect to other Investors.

   Methods of Analysis, Investment Strategies and Risk of Loss
In formulating investment strategies and investment advice for a Fund, KPS conducts
comprehensive due diligence. KPS’ analysis typically focuses on the target company’s business,
business model and competitive environment, financial structure and performance, opportunities
for value creation, favorable regulation or regulatory events, current and future cash flow
projections, as well as synergies with KPS’ investment process. KPS primarily focuses on making
controlling equity and equity-related investments in manufacturing and industrial companies
across a diverse array of industries, including basic materials, branded consumer, healthcare and
luxury products, automotive parts, capital equipment and general manufacturing. KPS reserves
the right to also make investments in debt acquired with the aim of establishing a control position,

gaining influence in a restructuring process or access to information, as well as in passive debt
investments. Debt instruments may include, but will not be limited to, bank debt (e.g., first and
second lien debt), bonds and other fixed income instruments. KPS targets investment opportunities
involving corporate divestitures and carve-outs, private transactions (e.g., acquisitions from
families, entrepreneurs and other financial owners seeking to transition ownership), or
restructurings that result in a change of control (whether pursuant to a structure bankruptcy or an
out-of-court transaction). KPS’ investment strategy is based on implementing business
improvement or turnaround plans and strategies predicated on identifiable and reasonably
achievable objectives identified prior to the closing of the acquisition, including, cost reduction,
productivity improvements, margin improvement, capital investment and optimal asset utilization,
other commercial actions, and, in some situations, the introduction of new management.

The KPS Portfolio Operations Group (“KPS Ops Group”) is organically integrated into KPS and
works closely with KPS’ investment professionals and portfolio company management. The KPS
Ops Group seeks to drive performance improvement by institutionalizing structured programs for
continuous improvement at each portfolio company. All members of the KPS Ops Group are full-
time employees of KPS and none of their time is billed to portfolio companies or a Fund. The
KPS Ops Group expects to periodically engage third-party consultants to assist with certain
portfolio company projects. Time and out-of-pocket expenses relating to the activities of these
consultants are billed to the respective portfolio company at cost. More detailed information
regarding KPS’ investment strategy and activities is contained in the Governing Documents of
each Fund.

Acquiring interests in any Fund involves a number of risks. An investment in a Fund may be
deemed a speculative investment and is not intended as a complete investment program. It is
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