AQS Asset Management LLC

Item 5          Fees and Compensation

         A. Our fees are based upon an agreed percentage of the market value of assets
            managed each month. This market value is determined by a 3rd party
            custodian hired by our clients. These fee percentages are negotiable;
            however, our maximum fee is 25 basis points (0.25%) of the market value
            under management.

         B. We do not deduct fees from client assets. We bill clients for market values
            established by the custodian for the month end 2 months prior. E.G.: July fee
            will be due July 1; calculated by 5/31 custodial value.

         C. We do not charge any other fees for client advisory services. We do not take
            part in custodial fees or transaction fees in the buying and selling of securities.

         D. Clients are invoiced and fee payment requested in advance.

         E. No principal or any supervised persons of AQS Asset Management L.L.C.
            accepts compensation for the sale of securities or other investment products.

Item 7          Types of Clients

         AQS Asset Management L.L.C. deals exclusively with insurance companies.