FEES AND COMPENSATION
The fees applicable to each Fund are set forth in detail in each Fund’s offering documents. A brief
summary of such fees is provided below.
U.S. Domestic Funds
Management Fee and Incentive Allocation
Generally, the Manager receives a management fee (the “Domestic Management Fee”) from each
Domestic Fund, typically equal to 1 to 2 per cent per annum of each investor’s capital account paid
monthly in arrears; provided that one or more Funds in certain instances may have a lower (or no)
management fee as disclosed in such Fund’s offering documents. The General Partner may, in its sole and
absolute discretion, elect to reduce, waive or calculate differently the Domestic Management Fee with
respect to any investor.
Generally, at the end of each fiscal year of each Domestic Fund, typically equal to 20 per cent (provided
that one or more Funds in certain instances may have a lower incentive fee percentage) of the excess of
any net capital appreciation allocated to the capital account of each investor in such Domestic Fund for
such year over the Domestic Management Fee debited to such investor’s capital account for such year is
reallocated to the capital account of the General Partner, subject to a loss carryforward mechanism (the
“Incentive Allocation”). Certain Domestic Funds may also include a hurdle rate in the calculation of the
Incentive Allocation.
In the event that an investor withdraws all or a portion of its capital account other than at the end of a
fiscal year, net capital appreciation or net capital depreciation, as the case may be, allocable to such
investor will be determined through the date of withdrawal and the Incentive Allocation, if any, with
respect to the amount withdrawn will be reallocated to the General Partner as set forth above. The
General Partner may, in its sole and absolute discretion, elect to reduce, waive or calculate differently the
Incentive Allocation with respect to any investor.
The General Partner pays the Manager an incentive fee from the Incentive Allocation the General Partner
receives. The Manager pays Arrowgrass UK and Arrowgrass US from such incentive fee and the Domestic
Management Fee such fees as are from time to time agreed between each of them, respectively.
Overseas Funds
Management Fee and Incentive Fee
Generally, the Manager receives a management fee (the “Overseas Management Fee”) from each
Overseas Fund, typically equal to 1 to 2 per cent per annum of each series of shares (excluding
management shares) of each Overseas Fund paid monthly in arrears; provided that one or more Funds in
certain instances may have a lower (or no) management fee as disclosed in such Fund’s offering
documents. The Manager or Arrowgrass may, at its sole discretion, rebate such fees to certain investors.
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Generally, at the end of each fiscal year of each Overseas Fund, the Manager is entitled to an incentive
fee (the “Incentive Fee”) in an amount typically equal to 20 per cent (provided that one or more Funds in
certain instances may have a lower incentive fee percentage) of the net realized and unrealized
appreciation in the net asset value of each series of shares, adjusted for any redemption of shares in the
series made during the year, any distributions and any accruals of the Incentive Fee, and subject to a loss
carryforward mechanism. Certain Overseas Funds may also include a hurdle rate in the calculation of the
Incentive Fee. The Manager or Arrowgrass may, at its sole discretion, rebate such fees to certain investors.
In the event that shares are redeemed other than at the end of a fiscal year, the Incentive Fee is
determined solely with respect to the shares so redeemed as of the redemption date. In the event that
services by the Manager to the relevant Overseas Fund are terminated other than at the end of a fiscal
year, the Incentive Fee with respect to such Overseas Fund will be determined as of the termination date.
The Manager pays Arrowgrass UK and Arrowgrass US from the Management Fee and Incentive Fee such
fees as are from time to time agreed between each of them, respectively.
Expenses
Not all of the Funds bear all of the expenses set forth below. The expenses that the Funds may currently
bear (each as permitted under the applicable offering documents) are as follows:
Each Fund bears its own operating and other expenses, including, but not limited to, (a) any applicable
management fee or incentive fee/allocation and administrator’s fees; (b) the costs and expenses of (i)
sourcing, researching and evaluating potential investments for the Fund’s portfolio (including, but not
limited to, professional fees charged by legal advisers, tax advisers, valuation experts and accountants)
irrespective of whether an investment is subsequently made by the Fund; (ii) all investments and
transactions carried out by it or on its behalf (including costs and expenses (including travel expenses)
incurred by Arrowgrass) specifically associated with researching investment opportunities; and (c) the
administration of the Fund including (without limitation): (i) the costs and expenses associated with
structuring any transaction including “finder’s fees”; (ii) the costs of any independent research and/or
portfolio management systems utilized by Arrowgrass; (iii) brokers’ commissions (if any), borrowing
charges on securities sold short and any issue or transfer taxes chargeable in connection with any
securities transactions; (iv) the fees and expenses of independent valuation agents; (v) all taxes and
corporate fees payable to governments or agencies; (vi) Fund’s directors’ fees (if any) and expenses; (vii)
interest on borrowings, including borrowings from the prime brokers and custodians; (viii) such expenses
incurred by Arrowgrass in soliciting subscriptions for shares as shall be approved by the Fund’s directors;
(ix) communication expenses with respect to investor services and all expenses of meetings of
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