ITEM 5 – FEES AND COMPENSATION
A. Advisory Fees and Compensation
The fees applicable to each Advisory Client are set forth in detail in each Advisory Client’s governing
documents. It is critical that investors and prospective investors refer to the relevant governing documents
for specific fee schedules and for a complete understanding of how Sand Grove or its affiliates are
compensated for investment advisory services. A brief summary of such fees is provided below.
Asset-Based Compensation
Certain Opportunities Fund investors pay Sand Grove or the General Partner a monthly management fee
(the “Management Fee”). The Management Fee is based on an investor’s capital account balance or net
asset value of the shares on the last day of the relevant month and is charged monthly in arrears. The
Management Fee for any period that is less than one month is prorated. If additional subscriptions are made
to a Sand Grove Fund during a month, the Management Fee is prorated and charged at the time of such
subscription.
To the extent they are charged, the Management Fees for the Accounts, the SMAs and the CB Accounts
are individually negotiated pursuant to the agreements between Sand Grove and the primary investment
advisers of the respective accounts. The SPF and the Tactical Fund do not directly pay a management fee.
Performance-Based Compensation
For the non-U.S. domiciled Opportunities and Tactical funds, at the end of each fiscal year, such funds pay
Sand Grove an incentive allocation or fee based on the net capital appreciation attributable to each Fund
investor’s capital account or series of shares (the “Incentive Fee”). For the Onshore Fund, generally at the
end of each fiscal year, the fund reallocates an Incentive Fee based on the net capital appreciation
attributable to each investor’s capital account to the capital account of the General Partner. The Incentive
Fee is subject to customary high-watermarks. Generally, any net loss for a fiscal year allocated to a capital
account of an investor or series of shares, as the case may be, is carried forward each fiscal year so that no
Incentive Fee is due from such capital account or series of shares, as applicable, for a particular year unless
these losses have been recouped. In the event an Opportunities or Tactical Fund investor is permitted or
required to withdraw or redeem completely or partially from the Funds other than at the end of the fiscal
year, the Incentive Fee with respect to such Fund investor will be crystallized.
Sand Grove is entitled to receive performance-based compensation from the Account that is invested in the
SPF, as set forth in a trading adviser agreement. Accordingly, performance-based compensation is not paid
directly by the SPF.
Sand Grove is also entitled to receive performance-based fees from all other accounts, typically on an
annual basis (or other relevant periods), and typically subject to a high-watermark, and in the amounts set
forth in the agreements between Sand Grove and the primary investment advisers of the respective accounts.
Generally, an unaffiliated third party will deduct these amounts from the relevant account’s assets.
The performance-based compensation received by Sand Grove or the General Partner is paid in compliance
with Rule 205-3 under the Advisers Act.
Waiver of Fees
In Sand Grove’s sole discretion, the Management Fee and/or Incentive Allocation may be and have been
waived, reduced, or calculated differently with respect to certain investors, including, without limitation,
investors that are members, shareholders, partners, affiliates or employees of Sand Grove or its affiliates.
The governing documents of the Sand Grove Funds allow Sand Grove to waive fees for such individuals
and to negotiate different fees with investors in the Sand Grove Funds.
B. Other Fees and Expenses
The Sand Grove Funds shall bear their own expenses, which include, but are not limited to: investment
expenses (e.g., expenses that, in Sand Grove’s discretion, are related to the investment of the Sand Grove
Funds’ assets, whether or not such investments are consummated, such as brokerage commissions, expenses
relating to short sales, clearing and settlement charges, custodial and depositary fees, bank service fees and
interest expenses); professional fees (including expenses of consultants, investment bankers, attorneys,
accountants and other experts) relating to investments; third party research (including investment research
and corporate access fees); administrative expenses (including fees and expenses of the administrator and
other similar service providers); legal expenses; external accounting and valuation expenses; audit and tax
preparation expenses; fees of the directors of the General Partner, the Master Fund and the Offshore Fund;
costs relating to directors’ and officers’ liability insurance; costs of printing and mailing reports and notices;
taxes; corporate licensing; regulatory expenses (including filing fees); listing fees; organisational expenses;
expenses incurred in connection with the offering and sale of the Sand Grove Funds’ interests and other
similar expenses related to the Sand Grove Funds; indemnification expenses; and extraordinary expenses
related to the Sand Grove Funds and their operations and assets. The SPF is subject to expense arrangements
based on the trading adviser agreement that is in place with the Account invested in the SPF.
Sand Grove has established a "Research Payment Account" to facilitate compliance with applicable
regulatory requirements. The Research Payment Account is used to pay for investment research provided
by prime brokers, executing brokers or other research providers selected by Sand Grove. The methodology
for the Research Payment Account is consistently applied among all Advisory Clients.
Any expenses attributable to a particular series of interests will be allocated solely to such series. To the
...