ITEM 5 FEES AND COMPENSATION
A. DESCRIPTION AND BILLING
The Funds are currently offering multiple classes of Limited Partner interests (“Series of
Interests”) pursuant to the respective Fund’s Offering Documents. Spruce Point receives
compensation in the form of management fees (the “Management Fee”), payable quarterly
in advance of the net asset value of each capital account of such Series of Interest as of the
beginning of such calendar quarter. Spruce Point deducts its fees automatically from each
Limited Partner’s capital account balance pursuant to the fee structure agreed upon
between the Limited Partner and the Funds as detailed in the Fund’s Offering Documents.
Depending on the Series of Interest of the relevant Fund, the Management Fee ranges from
.95%-2.5% per annum. The Management Fee is calculated by dividing ¼ by the respective
applicable Management Fee percentage for each Series of the net asset value of each Capital
Account of such Series, as of the beginning of such quarter (prior to the reduction for any
incentive allocation at the Spruce Point Master Fund level or the accrual of any investor
related taxes).
A pro rata portion of the Management Fee will be paid out of any subscriptions made by
new or existing Limited Partners on any date that does not fall on the first day of a calendar
quarter, based on the actual number of days remaining in such partial quarter. Certain
Series of Interests may not incur a Management Fee. Spruce Point may also in its sole
discretion elect to waive or reduce any accrued Management Fee with respect to certain
Limited Partners.
B. OTHER FEES AND PAYMENTS
The Funds shall pay for all ordinary operating and other expenses, including, but not
limited to, legal, accounting, auditing and other professional expenses, fees paid to an
administrator and other administration expenses, the Management Fee, research expenses
including expenses relating to external consultants, software expenses (limited to risk
management, investment analysis, portfolio accounting and related software), website
development and maintenance expenses, expenses related to the public promotion of
research involving investment theses or ideas, marketing or activist campaign expenses,
and investment expenses such as commissions, interest on margin accounts and other
indebtedness, custodial fees, bank service fees and other expenses related to the purchase,
sale or transmittal of Fund assets, and other similar expenses related to the Fund, as the
General Partner determines in its sole discretion. Please see the Offering Documents for a
complete description of fees and expenses.
In the event Spruce Point provides diligence services to source and develop ideas, in which
the Funds participate, for other institutional investors, the Funds may bear its pro rata
portion of the expenses in connection with such research, diligence and publication of such
research (including, without limitation, expenses relating to the public promotion of such
research and costs and expenses in connection with an activist campaign, but excluding a
portion of expenses related to any defamation or similar proceeding brought by the target
company), based on the relative economic benefit of the Funds and Spruce Point related to
such investments.
C. REFUND AND TERMINATION POLICY
If a Limited Partner makes a withdrawal at any time other than at the end of a quarter
(whether pursuant to ordinary withdrawal rights or where the special consent of the
General Partner is required and, in its discretion, granted), a pro rata portion of the
Management Fee (based on the actual number of days remaining in such partial quarter)
will be repaid by Spruce Point to the Limited Partner. Depending on the Series of Interest
of the relevant Fund, a Limited Partner is subject to a withdrawal reduction of 5% of such
withdrawal amount for a withdrawal prior to a certain date. The sum will be retained by
the Fund and re-allocated to the remaining investors.
D. OTHER COMPENSATION
Neither Spruce Point nor its supervised persons accept any compensation for the sale of
securities or other investment products, including asset-based sales charges or services fees
from the sale of mutual funds.
Spruce Point does not charge a fee to the recipients of published research reports shared with
the broader investment public on its affiliated site.
Payments for Syndication of Research: Spruce Point has agreed to publish (on a delayed basis)
on a professional research platform its research reports on certain investments in which the
Funds will participate. As compensation for these services, Spruce Point will receive royalties
per view by paid subscribers to the platform. The Funds will not be entitled to any portion of
the fees received by Spruce Point in connection with such syndication of its research.