Item 5—Fees and Compensation
A. KIS receives compensation for its investment advisory services based on a percentage
of assets under management. The Firm tailors its advisory services based on the needs of the
client. All advisory and management fees are agreed upon with the client depending on the
scope of services provided and are negotiable. Each potential client should review the
relevant investment management agreement for complete information on fees and
compensation payable to KIS, which includes specifics concerning calculation and payment
methodology.
B. Each client’s investment management agreement describes how fees are charged by
KIS. KIS will typically bill its fees on a monthly or quarterly basis, calculated and paid in
arrears. Accounts initiated or terminated during a calendar month are charged a pro-rated
fee.
C. With respect to KIS-sponsored CLOs (“KIS CLOs”), the indenture and management
agreement for each KIS CLO will specify how fees are charged by KIS. KIS will typically
receive its fees on each payment date set forth in the indenture for each KIS CLO. Typically,
fees earned by KIS will contain a base fee, which is calculated as a percentage of assets in the
KIS CLO, and an incentive fee, which is earned when the return to equity investors in the
applicable KIS CLO exceeds individually negotiated thresholds. All fees are negotiated with
KIS CLOs before the advisory relationship commences.
D. Clients generally pay for charges imposed by custodians, brokers and other third
parties such as brokerage commissions, transaction fees, and other related costs and
expenses, custodial fees, odd-lot differentials, transfer taxes, wire transfer and electronic
fund fees, servicer fees, and other fees and taxes on brokerage accounts and securities
transactions. Certain clients may receive custodial coordination services per their
investment management agreement, and the associated custodial fees will be paid by the
Firm on their behalf.
These charges, fees and commissions are in addition to KIS’s investment management fee,
and KIS shall not receive any portion of these commissions, fees, and costs except for those
additional services provided for in the investment management agreement, as applicable.
Item 12 further describes the factors that KIS considers in selecting or recommending
broker-dealers for client transactions and determining the reasonableness of their
compensation (e.g., commissions).
E. KIS may earn additional fees in the form of structuring, origination or diligence fees
in connection with directly sourced investments. Any such fees would be paid to KIS by the
applicable borrower/issuer of the investment and not by the client.