ITEM 5. FEES AND COMPENSATION
A. Collecting Our Advisory Fees
The Registrant receives compensation for providing advisory services to the Funds. The Registrant
receives an asset-based fee and a performance-based fee or allocation, as applicable, as described in each
of the Funds’ offering documents. Capitalized terms used but not defined in this section have the
meanings ascribed to them in the U.S. Fund’s offering memorandum (the “U.S. Memorandum”), the
Offshore Fund’s offering memorandum (the “Offshore Memorandum”) or the DeFi Fund’s offering
memorandum (the “DeFi Memorandum”), as applicable.
The U.S. Fund
On the first day of each month, the U.S. Fund will pay a monthly management fee (the “Management
Fee”) to the Manager equal to: (i) 1.0% per annum of the beginning balance of each Founders Capital
Account for the month, and (ii) 2.0% per annum of the beginning balance of each Class A Capital Account
for the month. The Management Fee will be calculated on the basis of the actual number of days in a year
consisting of 365 days. In addition, a pro rata portion of the Management Fee will be paid out of any
capital contributions made by new or existing Investors on any date other than the first day of a month,
based on the actual number of days remaining in such partial month. Such fee will be paid upon
contribution of the additional funds to the U.S. Fund.
The Manager shall have the right to waive or reduce, from time to time, all or part of the Management
Fee with respect to one or more Investors, without waiving or reducing the Management Fee with respect
to other Investors. This could result in one or more Investors receiving a greater or lower return on their
investment relative to other similarly situated Investors in the same Class.
In addition to the Management Fee, the Manager will be entitled to receive an incentive allocation (the
“Incentive Allocation”). In the case of the U.S. Fund, the Incentive Allocation will be equal to (a) 10.0% of
the net profit allocated to the Founders’ Capital Accounts, and (b) 20.0% of the net profit allocated to the
Class A Capital Accounts (subject in the case of all Interests to such allocations exceeding the Preference
Amount), but, in each case, only to the extent such net profits are in excess of any balance in the related
Loss Recovery Account for the relevant Allocation Period (as such terms are defined in the U.S.
Memorandum), as appropriately adjusted for redemptions and distributions. Once the Preference
Amount has been fully allocated, the Manager will be entitled to a catch-up allocation so that the Incentive
Allocation, in the aggregate, is achieved.
The Preference Amount means 10.0% return per annum on invested capital.
The Manager may waive or reduce, from time to time, all or part of the Incentive Allocation with respect
to one or more Investors, without waiving or reducing the Incentive Allocation with respect to other
Investors. This could result in one or more Investors receiving a greater or lower return on their
investment relative to other similarly situated Investors in the same Class.
In the case of a withdrawal by an Investor on a date other than the last day of an Allocation Period, the
U.S. Fund will pay the Manager a pro rata portion of the Incentive Allocation, if any, accrued as of the
Withdrawal Date in respect of the related Sub-Account redeemed, and the U.S. Fund may deduct such
pro rata portion of the Incentive Allocation from the amount paid to the withdrawing Investor.
The Manager may assign or distribute its right to the Incentive Allocation to BKCM Management LLC, an
affiliated entity of the Manager.
The U.S. Fund shall bear its own operating and other expenses, and, as a shareholder in the Master Fund,
shall bear its pro rata share of the Master Fund’s operating and other expenses.
The Offshore Fund
On the first day of each month, the Offshore Fund will pay a monthly management fee (the “Management
Fee”) to the Manager equal to: (i) 1.0% per annum of the beginning balance of each Founders Series
Account for the month, and (ii) 2.0% per annum of the beginning balance of each Class A Series Account
for the month. The Management Fee will be calculated on the basis of the actual number of days in a year
consisting of 365 days. In addition, a pro rata portion of the Management Fee will be paid out of any
capital contributions made by new or existing Investors on any date other than the first day of a month,
based on the actual number of days remaining in such partial month. Such fee will be paid upon
contribution of the additional funds to the Offshore Fund.
The Manager shall have the right to waive or reduce, from time to time, all or part of the Management
Fee with respect to one or more Investors, without waiving or reducing the Management Fee with respect
to other Investors. This could result in one or more Investors receiving a greater or lower return on their
investment relative to other similarly situated Investors in the same Class.
In addition to the Management Fee, the Manager will be entitled to receive an incentive allocation (the
“Incentive Allocation”). In the case of the Offshore Fund, the Incentive Allocation will be equal to (a)
10.0% of the net profit allocated to the Founders Series Accounts and (b) 20.0% of the net profit allocated
to the Class A Series Accounts (subject in each case to the net profit exceeding the Preference Amount),
but, in each case, only to the extent such net profits are in excess of any balance in the related Loss
Recovery Account for the relevant Allocation Period (as such terms are defined in the Offshore
Memorandum), as appropriately adjusted for redemptions and distributions. Once the Preference
Amount has been achieved, the Manager will be entitled to catch up so that the Incentive Allocation in
the aggregate is achieved.
The Preference Amount means 10.0% return per annum on invested capital.
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