ITEM 5: FEES AND COMPENSATION
In lieu of paying Parplus Partners an asset-based management fee, each Fund will bear its allocable share
of all operating and overhead expenses incurred by Parplus Partners and its affiliates (such expenses,
“Parplus Partners Overhead and IT Expenses”), including salaries, bonuses and other compensation
and benefits for their employees, principals, members, partners and consultants (except for salaries and
bonuses paid to portfolio managers and traders); information and technology related expenses (e.g., fees,
expenses and upgrade costs related to hardware, software development, API development, systems
engineering, development and operation, development of analytical programs, risk management
programs, trading tools, quote and order logic and management programs, hedging tools, connectivity,
data and other similar items); and other overhead expenses (e.g., fees and expenses of preparing and
submitting regulatory filings, compliance-related expenses, rent, utilities, office supplies, secretarial
services and other similar items), together with any such expenses paid to Ronin Capital, LLC and/or its
affiliates (collectively, “Ronin”) under the services agreement described below.
As a registered investment adviser, the Adviser owes a fiduciary duty to all of its clients. In 2006, the decision by the
Court of Appeals for the D.C. Circuit in Goldstein v. SEC, 451 F.3d 873 (D.C. Cir. June 23, 2006), with respect to
private funds, clarified that the “client” of an investment adviser to a private fund is the fund itself and not an investor
in the fund.
Parplus Partners and Ronin have entered into a services agreement pursuant to which Ronin may provide
certain information technology and back office services to Parplus Partners, Parplus Management and the
Parplus Equity Funds, which specific services may be agreed upon from time to time. Such services may
include (but are not limited to) advice and assistance concerning the operations and administration of
Parplus Partners, as needed from time to time, including assisting Parplus Partners in the maintenance of
books and records and establishing and administering risk management and compliance policies.
In addition, Parplus Management receives a performance-based fee as described below in Item 6
“Performance- Based Fees and Side-by-Side Management.”
Other Fees and Expenses. Each Fund will incur other expenses in connection with its operations, in
addition to any fees payable to Parplus Partners, including transaction fees, brokerage commissions,
custody fees and other related costs and expenses that will be incurred by the Parplus Equity Funds with
respect to the transactions for their account.
Each Fund has incurred legal and organizational expenses in connection with its formation and offering,
which will be borne by each Fund (and, therefore, indirectly by its investors). In addition, each Fund will
also bear ongoing operating expenses, which may include, without limitation, legal, bookkeeping,
accounting, auditing, recordkeeping, administration, computer and clerical expenses (including expenses
incurred in preparing reports and tax information for regulatory authorities and expenses for specialized
administrative services); taxes; filing fees; the costs of any future restructuring of such fund and/or
updates to such fund’s organizational and offering documents; printing and duplication expenses;
investment-related travel expenses, investment research expenses, market data, newswire and data
processing expenses; software and connectivity charges; each Fund’s allocable share of Parplus Partners
Overhead and IT Expenses; brokerage commissions, bank charges, custody fees and borrowing costs;
exchange, board of trade or other trading or execution facility membership or participation expenses;
reasonable costs of attending directors’ meetings; annual registration fees; directors’ fees; directors’ and
officers’ liability insurance; fees and expenses of preparing and submitting regulatory filings and other
compliance-related expenses; and such other expenses necessary to perform the operation of such fund.
Each Fund will also be responsible for any applicable extraordinary expenses of such fund (including
taxes, indemnification costs, litigation costs, trade errors or damages). The Parplus Equity Funds will also
bear the investment management or other fees charged by any mutual funds, exchange traded funds
(“ETFs”) or collective investment vehicles in which they may invest, as disclosed in the prospectus for
the applicable Fund.