Daemon Investment and Asset Management LLC

ITEM 5 | FEES AND COMPENSATION

            Item 5.A.

Daemon Investment Fund (DIF)

DIF pays DIAM a quarterly management fee of US$2,000,000, or up to
US$8,000,000 yearly; and an annual performance fee equal to 10% of the net
profits generated by DIF during the calendar year.

DIF pays additional fees to an administrator under an administration agreement.

The Kratos Funds

The Onshore Fund and Offshore Fund will pay DIAM an annual management fee
for Class B Shares and no management fee for Class C Shares. The management
fee will be paid quarterly in arrears based on the final net asset value of each
calendar quarter. A pro-rated portion of the management fee shall be due upon
the redemption of any participating shares based upon the number of days
elapsed in such quarter.

In addition, for the Onshore Fund and Offshore Fund, the General Partner will be
owed a performance fee for Class B and Class C Shares, of the increase in net
asset value, determined after the management fee and all fund expenses are
taken into account, of each outstanding series of the Master Fund’s shares during
the calendar year, after taking into account any loss carryforwards applicable to
each such series, will be reallocated from the net asset value of each series of the
Master Fund Shares to the new asset value of Class M, which are held by the
General Partner.

The General Partner, in its sole discretion, may redeem its Class M Shares, upon at
least 65 days prior written notice to the Master Fund, as of the last day of any
calendar month. Any unredeemed Class M Shares will remain subject to the risks
of the Master Fund’s portfolio. The net asset value of each series within each class
of Master Fund Shares and, consequently, the net asset value of the
corresponding series within each class of participating shares, will be reduced in
turn as a result of the incentive allocation deducted from the value of the Master
Fund Shares. All or part of the incentive allocation may be waived, reduced or
discounted by the General Partner from time to time in its sole discretion, with
respect to one or more classes of Master Fund Shares. A high-water mark will be
employed so that no incentive allocation will be allocated with respect to any
series of Master Fund Shares until any decline in the net asset value of such series
of Master Fund Shares in any prior calendar year (a “loss carryforward”) is offset
by subsequent increases in the net asset value of such series of Master Fund
Shares. An additional reallocation of the net asset value of the Master Fund’s
shares for purposes of calculating the incentive allocation will be made as of
each date, if any, prior to the close of a calendar year when any Master Fund
Shares are redeemed (as if such date were the close of a calendar year).

For purposes of calculating net capital appreciation or net capital depreciation
and determining allocations, including calculating the incentive allocation, any
investor-related taxes related to a shareholder will be deemed distributed from
the series of Shares related to such person only and will not be deemed to be
expenses of such person or of the Fund generally.

There will be no management or performance fees charged by DIAM to the
Master Fund or the Nous-Kratos Fund.

      Item 5.B.

DIAM will indirectly deduct management fees and performance from the
Clients through the fund administrator.

      Item 5.C.

In addition to the fees above, each Client generally must bear all of its
administration and operating expenses, which may include:

         i.   postage, telephone and facsimile expenses;

        ii.   organizational expenses;

       iii.   the costs of initial and ongoing filing requirements relating to DIF;

       iv.    legal, auditing and accounting fees and expenses (including costs
              of reports to the Client, financial statements, and tax returns);

        v.    director’s fees;

       vi.    travel expenses related to the administration and affairs of the
              Client;

      vii.    bank and custodial fees related to the Client’s accounts;

      viii.   transaction and currency costs related to the management of
              Client’s assets;

       ix.    all extraordinary expenses (such as litigation);

        x.    interest on and fees and expenses arising out of all permitted
              borrowings made on behalf of the Client;

       xi.    any taxes, fees or other governmental charges levied against the
              Client and all expenses incurred in connection with any tax audit,
              investigation, settlement or review of Client’s account; and

      xii.    other administrative expenses associated with the Client that are not
              part of the administration fee.

Clients also incur brokerage and other transaction costs, as discussed more fully
under “Brokerage Practices” in Item 12 below.

      Item 5.D.

DIF’s management fee is payable within 10 business days of the first day of each
calendar quarter. In the event DIF terminates its relationship with DIAM, fees will
be pro-rated for the number of days the account was under management and
DIAM will issue a refund to DIF. Pursuant to the investment management
agreement, 30 days notification is required before the effective date of
termination. No penalty will be charged for termination.

      Item 5.E.

Neither DIAM nor any of DIAM’s supervised persons accept commissions or
markups or other compensation for the sale of investment products that DIAM
recommends to its Clients in addition to its advisory fees.

ITEM 7 | TYPES OF CLIENTS

DIAM currently provides discretionary investment management services to
privately offered pooled investment vehicles as described in Item 4.B. In the
future, DIAM may provide additional discretionary portfolio management services
as an investment adviser or sub-adviser to offshore accounts, private funds,
and/or private accounts for certain institutional clients.

DIAM Fund interests are only offered and sold to Investors who are deemed to be
(i) “accredited investors” as defined under Regulation D of the Securities Act of
1933, as amended and (ii) “qualified clients” as defined under the Advisers Act,
as amended or “qualified purchasers” or other “knowledgeable employees” of
DIAM, as defined under the Investment Company Act of 1940.