Item 5: Fees and Compensation
In general, SKKY receives a management fee and a carried interest in connection with the provision of advisory
services to its clients. The Adviser and/or other SKKY entities or affiliates receive additional compensation in
connection with management and other services performed for portfolio companies of the Funds and, to the extent
provided in the relevant Governing Documents, such additional compensation will offset in whole or in part the
Management Fees (defined below), if any, otherwise payable to the Adviser in accordance with the relevant Governing
Documents. In addition, in certain circumstances, the Adviser receives compensation for management and other
services performed in connection with co-investments made in portfolio companies of the Funds. Investors in a Fund
also bear certain expenses.
Management Fee
The Adviser and/or its designated affiliate expect to receive a management fee (the “Management Fee”) from each
Fund as set forth in the applicable Governing Documents. The Management Fee will typically be based on a percentage
of non-affiliated Fund investor capital commitments (“Commitments”) or actively invested capital, payable quarterly
in advance. Investors participating in a closing after the first closing of Fund I bear the Management Fee retroactive
from the effective date of Fund I, plus interest. Installments of the Management Fee payable for any period other than
a full quarterly period are typically adjusted on a pro rata basis according to the actual number of days in such period.
As a general matter, Management Fees will be payable during term extensions unless otherwise agreed with investors
or specified in the relevant Fund’s Governing Documents.
As is generally the case in private equity funds, the Governing Documents provide that a Fund’s Management Fees
will be calculated and charged on a basis that generally is not tied to the Fund’s then-current net asset value. As further
specified in the Governing Documents for certain Funds, from the effective date of the relevant Fund until a date
specified in the Governing Documents (the “Stepdown Date”), Management Fees generally will be charged based on
a formula tied to the amount of the relevant Fund’s aggregate Commitments held by partners not designated as
“affiliated partners” by the relevant General Partner (including any Commitment of a limited partner of the relevant
Fund that is admitted, or any increase in Commitments, in each case, as if made as of the effective date of such Fund).
However, after the Stepdown Date, Management Fees generally will be charged and calculated based on a formula
tied to the amount of investment contributions made or payable to the relevant Fund (or amounts borrowed by the
relevant Fund in advance of such investment contributions being made) with respect to portfolio company investments
that have not been disposed of or completely written off for U.S. federal income tax purposes (such investments,
“Impaired Value Investments”). Certain Funds will pay Management Fees charged and calculated based on the amount
of investment contributions with respect to Impaired Value Investments from the effective date of the relevant Fund.
Under the Governing Documents, where the fair market value of an investment exceeds the total amount of investment
contributions relating to such investment, post-Stepdown Date Management Fees will not be calculated based upon
SKKY Partners, LP Form ADV Part 2A
such appreciated value, and will instead continue to be calculated based on the amount of such investment
contributions. Conversely, the Governing Documents do not require Management Fees to be reduced or refunded
following the occurrence of a writedown, decrease (including a significant decrease) in fair value or other event not
constituting a complete realization, such as reorganization, roll-over investment in connection with a sale or dividend
distribution, except in the case of investments meeting the relevant Impaired Value Investment standard under the
Governing Documents. For the avoidance of doubt, following the Stepdown Date (where applicable), if the fair market
value of an Impaired Value Investment is less than the total amount of investment contributions relating to such
Impaired Value Investment, then the amount of Management Fees otherwise payable relating to such investment will
be reduced solely based on the ratio of the fair market value of each relevant remaining investment(s) as compared
against the amount of total investment contributions relating to such investment(s) as of the date of the relevant event.
As a result, and as is generally the case for private equity funds, the amount of Management Fees generally will not
correspond with fluctuations in the net asset value of individual investments or of the Fund, including following the
relevant investment period, and will not be reduced in connection with any write downs (whether temporary or
permanent), except in the case of Impaired Value Investments. Except where the Fund’s Governing Documents
expressly provide to the contrary, Management Fees will not be reduced (in whole or in part) in the case of partial
distributions (e.g., those resulting from a dividend recapitalization) or reorganizations, restructurings, roll-over
investments, extraordinary dividends or similar transactions, or in circumstances where one or more other Fund(s)
divest their respective investment(s) in the relevant portfolio company, whether in whole or in part, in each case in
circumstances that do not result in the complete disposition of the relevant Fund’s interest therein, and even in cases
where the value of the Fund’s investment or the Fund’s ownership percentage in such investment has been reduced
(including substantially reduced) as a result of such transaction.
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