Item 5. Fees and Compensation
The Firm is compensated for advisory and sub-advisory services through fees based upon the
amount of assets under management on behalf of its Clients (e.g., the Funds). Fees may vary based
upon the relationship with the Client, amount of assets under management, level of service
required to maintain the relationship and potential for growth in the relationship. The
“Management Fee” will generally be calculated by the Firm. The Investors in the Quentec Funds
pay the investment adviser the Management Fee quarterly in advance based upon the value of each
Limited Partner’s capital account in the Quentec Funds, as of the first business day of each calendar
quarter. The Management Fee is adjusted for subscriptions and redemptions occurring during the
quarter. As described more fully under Item 6, the General Partner also receives performance-
based compensation
The Single Funds pay a Management Fee to the Firm as set forth under the terms and conditions
in the Agreements; generally paid in advance based upon the value of the assets under management
in each Single Fund’s account as of the first business day of each calendar quarter. In addition to
the Management Fee, the Agreements also include the terms under which the Firm may collect
performance-based compensation as described more fully in Item 6 listed below. The Firm
structures any performance-based compensation in accordance with Section 205(a)(1) of the
Investment Advisers Act of 1940, as amended (the “Advisers Act”) and the rules and regulations
set forth in thereunder.
The Firm deducts Management Fees from the Quentec Funds’ assets quarterly in advance. The
Firm bears the cost of overhead expenses such as office rent, furniture and fixtures, stationary,
secretarial/administrative services, employee insurance and payroll taxes. The Quentec Funds pay
all other expenses incurred including, but not limited to; the Management Fee; Fund legal fees,
Fund administration expenses, audit and accounting expenses (including third party accounting
services); expenses of regulatory and tax compliance (including compliance with FATCA, as
defined herein), to the extent they are in connection with, relate to or derive from the Fund or its
investment activities; organizational expenses; investment expenses such as commissions,
research fees and expenses; interest on margin accounts and other indebtedness; borrowing charges
on securities sold short; custodial fees; bank service fees; Fund-related insurance costs (including
Directors & Officers Liability and Errors & Omissions Coverage insurance for the Adviser and
outside Directorship liability); the Fund’s pro rata share of the expenses of the Master Fund; and
any other expenses related to the purchase, sale or transmittal of Fund assets. From the date the
Fund commenced operations through June 30, 2014, the Fund’s pro rata share of accrued and
incurred expenses attributable to non-trading related items such as Fund administration, legal fees,
audit fees or organizational expenses in any given month during that period was limited to a
maximum amount of .05% (i.e. .60% per annum) of the Master Fund’s net asset value as of the
end of such month. Any portion of such costs that exceeded .05% (i.e. .60% per annum) per month
of the Master Fund’s net asset value was borne by the Adviser. Organizational expenses were paid
by the Fund and, for net asset value purposes, are being amortized over a period of up to 60 months
from the date the Fund commenced operations. For more details on the types of expenses that the
Quentec Funds may bear, please refer to each of the Funds’ offering documents.
For a full list of expenses that Funds may bear, please refer to each of the Funds’ offering
documents.
Quentec’s Clients incur brokerage and other transaction costs. Please see, “Item 12 Brokerage
Practices” for further information.
The Firm’s Management Fees are based on the value of each Limited Partner’s capital account in
such Feeder Fund. Should a Limited Partner redeem its interests in the Funds at or after the
Management Fee has been paid, the Firm will not reimburse the Management Fee that the Feeder
Funds have paid in advance.
The Firm negotiates fees with its Clients as set forth in the relevant Agreements; therefore the fees
and expenses paid by the Single Funds may differ from the fees and expenses paid by Investors in
the Quentec Funds. Neither Quentec nor any of its supervised persons accept compensation for the
sale of securities or other investment products.