Item 5: Fees and Compensation
Item 5.A.
In general, BlockTower charges a management fee to Clients based on a percentage of assets the Client has
supervised by BlockTower (“Management Fee”). Management Fees are generally deducted from the assets
managed by BlockTower on behalf of a Client on either a monthly or quarterly basis, in advance. BlockTower,
in its discretion, can reduce, waive or calculate differently the Management Fee with respect to any Investor.
While the standard Management Fees charged to Clients vary and are described in the applicable Offering
Documents, below is a general summary of the Management Fee arrangements applicable to each of the Funds:
Management Fees of the Flagship Fund
Generally, the Flagship Fund pays BlockTower a Management Fee equal to: (i) 1/12 of three percent (3.0%) of
the opening account balance of F1 Investors 1; (ii) 1/12 of two and a half percent (2.5%) of the opening account
balance of F2 Investors 2; and (iii) 1/12 of two percent (2.0%) of the opening account balance of F3 Investors 3.
For purposes of calculating the Management Fee payable to BlockTower, each Investor’s account balance will
include the portion of such balance attributable to side pocket investments and will not be reduced by the
Management Fee that is being calculated or the amount of any accrued Performance Allocation (defined below)
not yet made.
The Flagship Fund calculates and pays Management Fees to BlockTower monthly in advance. Management
Fees will be appropriately prorated to reflect any withdrawals/redemptions made on a day other than the last
calendar day of a month and any capital contributions made on a day other than the first calendar day of a month.
BlockTower may, in its discretion, reduce, waive or calculate differently the Management Fee with respect to
any Investor in the Flagship Fund without notice to, or the consent of, other Investors in the Flagship Fund. The
Management Fee with respect to each Investor’s account balance will be paid to BlockTower by the Flagship
Fund.
For purposes of determining the Management Fee, side pocket investments of the Flagship Fund are valued at
the lower of cost and fair value.
Management Fees of the Venture Fund
The Venture Fund pays to BlockTower, and the VC Investors 4 are charged their pro rata portions (based on
capital commitments) of a Management Fee, which is payable quarterly in advance and is an operating expense
of the Venture Fund.
Generally, the Management Fee with respect to each VC Investor is: (i) beginning at the initial closing of the
Venture Fund and until the expiration or termination of the Venture Fund’s investment period, an amount equal
to two percent (2.0%) on an annual basis and half a percent (0.50%) on a quarterly basis of aggregate capital
commitments, and (ii) thereafter, until the final liquidation and termination of the Venture Fund, an amount
equal to one and three quarters percent (1.75%) on an annual basis and 0.4375% on a quarterly basis of aggregate
capital commitments.
“F1 Investors” refers to holders of A1 Interests of BlockTower Capital Partners LP and/or holders of A1 Shares in BlockTower Capital Partners Offshore
Ltd., each as defined in the applicable Offering Documents associated the Flagship Fund.
“F2 Investors” refers to holders of A2 Interests of BlockTower Capital Partners LP and/or holders of A2 Shares in BlockTower Capital Partners Offshore
Ltd., each as defined in the applicable Offering Documents associated the Flagship Fund.
“F3 Investors” refers to holders of A3 Interests of BlockTower Capital Partners LP and/or holders of A3 Shares in BlockTower Capital Partners Offshore
Ltd., each as defined in the applicable Offering Documents associated the Flagship Fund.
As used in this Brochure, references to “VC Investors” refers to holders of limited partnership interests in BlockTower VC I, LP, a Delaware limited
partnership and/or holders of limited partnership interests in BlockTower VC I (Offshore), LP, a Cayman Islands exempted limited partnership.
BlockTower may, in its discretion, reduce, waive, assign, participate, or otherwise share the Management Fee
chargeable with respect to any VC Investor (including with respect to any affiliate of the Venture GP or
BlockTower) without the consent of, or notice to, any other VC Investor. The Management Fee is subtracted
from each VC Investor’s capital commitment or capital contributions.
Management Fees of the Market Neutral Fund
Generally, the Market Neutral Fund paid BlockTower a Management Fee equal to: (i) 1/12 of two and half
percent (2.5%) of the opening account balance of M1 Investors 5; and 1/12 of two percent (2.0%) of the opening
account balance of M2 Investors. 6 For purposes of calculating the Management Fee payable to BlockTower,
each Investor’s account balance included the portion of such balance attributable to side pocket investments and
was not reduced by the Management Fee that was being calculated or the amount of any accrued Performance
Allocation (defined below) not yet made.
The Market Neutral Fund calculated and paid Management Fees to BlockTower monthly in advance.
Management Fees were appropriately prorated to reflect any withdrawals/redemptions made on a day other than
the last calendar day of a month and any capital contributions made on a day other than the first day of a month.
BlockTower may, in its discretion, reduce, waive or calculate differently the Management Fee with respect to
any Investor in the Market Neutral Fund without notice to, or the consent of, other Investors in the Market
Neutral Fund. The Management Fee with respect to each Investor’s account balance was paid to BlockTower
by the Market Neutral Fund.
For purposes of determining the Management Fee, side pocket investments of the Market Neutral Fund were
valued at the lower of cost and fair value.
Management Fees of the Credit Fund
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