Check Capital Management Inc

ITEM 5:        FEES AND COMPENSATION

As discussed below, CCM currently offers Clients two fee-schedule choices for its asset-
management services. One choice is an asset-based management fee and the other is a profit-
based management fee. Clients are advised that profit-based fees involve a sharing of any
portfolio gains between the client and the adviser. Such profit-based fees create conflicts of
interest, which are described in greater detail below in Item 6.

Management Fee Choice #1:

Asset-Based Management Fee: 1% of the Account Assets annually. A quarterly fee of 0.25%
(1% annualized) will be assessed and charged in advance based on the value of the Client’s
Account as of the last day of each calendar quarter. Fees will be pro-rated for the first partial
quarter under management and based on the starting value of the Client’s Account, plus any
deposits and minus any withdrawals during the partial quarter. If the managed account
relationship is terminated by either the Client or CCM, there will be a pro-rated refund of any
fees collected in the final quarter.

Management Fee Choice #2:

Profit-Based Management Fee: 10% of account profits. This option is available only for
Clients who meet the definition of “qualified client” as described below.

As of each Annual Fee Assessment Date (defined below) a prospective fee (“10%-of-Profits
Fee”) will be charged for the Billing Period. The fee is 10% of any “New Appreciation”. New
Appreciation is the amount that the Client’s Account value exceeds the Account’s “High-Water
Mark” (defined below).

The initial “High-Water Mark” for the Client’s Account is the initial Account value. If there are
contributions to the Client’s Account, the High-Water Mark will be increased by the amount of
the contributions. If there are withdrawals from the Client’s Account when the account value is
above the High-Water Mark, the High-Water Mark will be reduced by the amount withdrawn. If
there are withdrawals from the Client’s Account when the account value is below the High-
Water Mark, the High-Water Mark will be reduced by up to the percentage of the Account value
withdrawn. As of any Annual Fee Assessment Date, if the Client’s Account value exceeds the
High-Water Mark, the High-Water Mark will be increased to the then-current Account value.

“Annual Fee Assessment Date” is initially the end of the first four complete calendar quarters.
After the initial Annual Fee Assessment Date, the Annual Fee Assessment Date shall be each
calendar year anniversary thereof.

“Billing Period”, shall be the period of time beginning on the date of the last 10%-of-Profits Fee
(or the Account’s inception if there is no such date) and ending on the Annual Fee Assessment
Date or the termination of this Agreement, if applicable.

The Profit-Based Management Fee is illustrated in the following examples:

Example 1: Client A engages CCM to manage a $1 million account on 8/14/2025. The first
Annual Fee Assessment Date is 9/30/2026. During the initial Billing Period (8/14/2025 -
9/30/2026), the account value gains 10% to $1,100,000 (assuming no deposits/withdrawals).
Below is the calculation for the 10%-of-Profits Fee.

  Account’s inception value (initial High-Water Mark): $1,000,000
  New Appreciation = $1,100,000 - $1,000,000 = $100,000
  10% of any New Appreciation: 10% x $100,000 = $10,000
  New High-Water Mark after year one: $1,100,000

Example 2: Client A engages CCM to manage a $1 million account on 8/14/2025. The first
Annual Fee Assessment Date is 9/30/2026. During the initial Billing Period (8/14/2025 -
9/30/2026), the account value declines 10% to $900,000 (assuming no deposits/withdrawals).
Since there’s no profit, no 10%-of-Profits Fee would have been due. The Billing Period is
extended, and the next Annual Assessment Date is 9/30/2027. In year two (10/01/2026 –
9/30/2027), Client A’s account value appreciates from $900,000 to $1,200,000 (again, assuming
no deposits/withdrawals). Below is the calculation for the 10%-of-Profits Fee due at the end of
year two.

  Account’s inception value (initial high-water mark): $1,000,000
  New Appreciation = $1,200,000 - $1,000,000 = $200,000
  10% of New Appreciation: 10% x $200,000 = $20,000
  New High-Water Mark after year two: $1,200,000

Qualified Client: As of the date of this Brochure, the term “qualified client” generally includes:
(i) A natural person who, or a company that, immediately after entering into an advisory contract
has at least $1,100,000 under the management by CCM; or (ii) A natural person who, or a
company that, CCM reasonably believes prior to entering into the contract, either has a net worth
of more than $2,200,000, excluding the client’s primary residence, or is a qualified purchaser as
defined in section 2(a)(51)(A) of the Investment Company Act of 1940 at the time the contract is
entered into.

Management Fee Payment: We will send Clients an invoice for the payment of our
management fees, or we will deduct our fee directly from Client accounts through the custodian
holding the funds and securities. We will deduct our management fee only when given written
authorization by the Client permitting the fees to be paid directly from their account. Further, the
custodian will deliver an account statement to the client at least quarterly. These account
statements will show all the disbursements from the account. Clients should review all
statements for accuracy. More information regarding directly debiting advisory fees from Client
accounts can be found in Item 15.

Cash Positions: CCM continues to treat cash as an asset class. As such, unless determined to
the contrary by CCM, all cash positions (money markets, etc.) shall continue to be included as
part of assets under management for purposes of calculating CCM’s advisory fee. At any
specific point in time, depending upon perceived or anticipated market conditions/events (there
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ITEM 7:        TYPES OF CLIENTS

CCM manages accounts for individuals, corporations, partnerships, etc. CCM can manage
almost any type of account (individual, joint, trust, IRA, profit-sharing, etc.) that can be opened
at a brokerage firm. In addition, CCM serves as manager to the Blue Chip Investor Fund.

Minimum Account Requirements: CCM imposes a minimum investment of $500,000 per new
Client. This requirement may be waived, at CCM’s sole discretion. The Blue Chip Investor
Fund maintains minimum initial and subsequent investment amounts described in its Prospectus.

There may be times when certain restrictions are placed by a Client, which prevents CCM from
accepting or continuing to manage the portfolio management account. CCM reserves the right to
not accept or terminate management of a Client’s account for any reason.