Item 5 – Fees and Compensation
The Client will pay AOCA a monthly fixed management fee equal to 0.125% (1.50% annually) of
the aggregate amount of capital contributions made by partners in the limited partnership for the
purpose of funding investments, including any amounts reinvested. Fees are paid in advance. If
the Adviser is terminated or an investor withdraws assets, fees will be prorated based on the
effective date of the termination and the total number of days in the billing period. Any fees paid
but unearned will be promptly refunded to AOBL or the relevant investor. The Investment
Management Agreement between AOCA, AOBL, and Hawks I permits Angel Oak to deduct its
Hawks I, LLC
Form ADV, Part 2A
fees directly from the Client’s assets in compliance with regulatory requirements regarding
custody of client assets.
After a 7% hurdle, AOBL will also pay Hawks I carried interest equal to 20% of the total amounts
distributed to limited partners.
Investors and prospective investors in AOBL may negotiate fee terms. AOCA or Hawks I may
waive or reduce the management fee or performance-based fees (as described below) in respect of
any investor in AOBL in their sole discretion. Such waivers or reductions would be memorialized
in a “side letter” between AOCA and the investor or a group of investors. AOCA may from time
to time enter into side letter agreements or other similar agreements (collectively, “Side Letters”)
with one or more investors in AOBL which may provide such investor(s) with additional and/or
different rights (including, without limitation, with respect to management fees, performance fees,
access to information, and minimum investment amounts) than such investors have pursuant to the
general terms of AOBL. AOCA will not be required to notify, or provide copies to, all of the other
investors of any such Side Letters or any of the rights and/or terms or provisions thereof, nor will
AOCA be required to offer such additional and/or different rights and/or terms to all of the other
investors. Certain investors may be provided, though such Side Letters, with “most favored nation”
status and will be notified of Side Letters with other investors and may elect to receive terms which
are the same or better than other investors.
At AOCA’s sole discretion, Hawks I may receive all or a portion of the management fee received
by AOCA from AOBL. Any amount paid to Hawks I will not result in any additional charge to
the Client.
In addition to the management fee and any applicable carried interest, the Client is responsible for
all reasonable costs and expenses incurred in conducting due diligence investigations into actual
and potential loan investments; interest, fees, and expenses on borrowings; commissions and
brokerage fees; trading costs; loan servicing fees; custodial expenses; costs of any fidelity bond or
similar insurance and the costs of any litigation; reasonable fees and expenses for independent
board trustees and other professional third-party service providers; any AOBL liquidation
expenses; and any taxes, fees, or other governmental charges levied against AOBL. See additional
information below under Brokerage Practices. Hawks I or AOCA may cap individual investors’
expenses through side letter agreements. Hawks I does not receive any portion of these costs.
Financial statements, including the calculation of any management fees, are prepared by the
Client’s administrator and provided to the Client on a monthly basis. Payment of fees due to Hawks
I are made by the Client’s administrator.