Endurance Asset Management LLC

Fees	and	Compensation

       Endurance is compensated for advisory services to the Fund through a management fee
(the “Management Fee”) and a special allocation of profits (the “Incentive Allocation”).
Endurance deducts Management Fees and the Incentive Allocations from the relevant Fund.
Management Fees are deducted monthly. Incentive fees are determined on an annual basis but
accrue monthly for the purpose of reporting an investor’s net asset value (“NAV”).
       For Class A Interests, the Fund ordinarily will debit from each capital account in the Fund,
and pay to Endurance, the monthly Management Fee, in arrears, in an amount equal to 0.083% of
the NAV of such capital account as of the end of each month (approximately 1% annually).
        For Class B Interests, the Fund ordinarily will debit from each capital account in the Fund,
and pay to Endurance, the monthly Management Fee, in arrears, in an amount equal to 0.04167%
of the NAV of such capital account as of the end of each month (approximately 0.5% annually).
        Endurance, in its discretion, may waive or reduce (by way of rebate or otherwise) any or
all of the Management Fee in respect of any capital account, or agree to a Management Fee
arrangement in respect of any capital account that differs from that described above.
        Endurance also receives an Incentive Allocation equal to 10% of any positive difference
between (1) the NAV of each capital account as of each Incentive Allocation Calculation Date
(defined below) (determined prior to determining such Incentive Allocation, and prior to giving
effect to any withdrawal from such account effected as of such Incentive Allocation Calculation
Date, but subsequent to charging any Management Fee against such account as of such Incentive
Allocation Calculation Date), less (2) the greater of the “High Water Mark” (defined below) for
such account or the “Hurdle Level” (defined below) for such account for the period ending on such
Incentive Allocation Calculation Date.
       The “Incentive Allocation Calculation Date” is the end of each calendar year and any
other date on which an investor receives a withdrawal or distribution from a capital account.
       The “High Water Mark” for an account is the NAV of the account immediately after the
assessment of the most recent Incentive Allocation (adjusted for any withdrawals from such
account since such assessment) or, if the account has never been assessed an Incentive Allocation,
the amount of the capital contribution that established such capital account (adjusted for any
withdrawals from such account since such assessment).
        The “Hurdle Level” for a capital account is equal to the sum of (1) the “Adjusted NAV”
(defined below) of the capital account plus (2) the “Hurdle Amount” (defined below) for such
capital account.

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       The “Adjusted NAV” of a capital account is equal to the NAV of the account as of the
beginning of the relevant period adjusted to reflect withdrawals or distributions from the capital
account during such period.
       The “Hurdle Amount” is the product of (1) the Adjusted NAV of an account for the
relevant period, times (2) the lesser of (i) 5% or (ii) the 90-day T-Bill rate as of January 1 of the
relevant year, times (3) a fraction, the numerator of which is the number of days in the relevant
period and the denominator of which is 365(6) (as applicable).
       The determination of the Incentive Allocation is binding and conclusive on the Fund’s
investors. Endurance, in its discretion, may waive any or all of the Incentive Allocation in respect
of any capital account, or agree to an incentive allocation arrangement in respect of any capital
account that is a substitute for that described above.
        Fund investors will incur other types of fees and expenses, including transaction costs. The
Fund’s direct operational costs and expenses are expected to consist primarily of: (i) Management
Fees; (ii) costs and expenses incurred by Endurance in connection with investigating investment
opportunities for the Fund (including Sub-Managers and pooled investment vehicles) and
reviewing the continuing suitability of the Fund’s investments in light of the Fund’s investment
objectives (including related travel, lodging and entertainment expenses and costs and expenses
associated with obtaining systems, research and other information designed to facilitate portfolio
selection or management such as statistics, pricing or quotation services and related hardware and
software); (iii) administrative, legal, accounting, auditing, record-keeping, tax form preparation,
compliance and consulting costs and expenses (including costs and expenses associated with
obtaining systems and other information designed to facilitate Fund accounting or record-keeping,
including related hardware and software); fees, costs and expenses of third-party service providers
that provide such services (including fees, costs and expenses of attorneys retained by Endurance
to represent Endurance in connection with the business and affairs of the Fund, to the extent such
fees, costs and expenses relate to advice provided to Endurance by such attorneys with respect to
such business and affairs); insurance costs and expenses; bank service fees; costs and expenses
associated with preparing investor communications; and printing and mailing costs; and
(iv) governmental licensing, filing and exemption fees. In addition, to the extent Endurance causes
the Fund to open managed accounts with Sub-Managers, the Fund bears the expenses associated
with the management of such accounts, including their administrative and transaction expenses
and the management fees and incentive compensation charged by the Sub-Managers. To the extent
the Fund invests in underlying pooled investment vehicles, it bears its allocable share of the costs
and expenses of such vehicles, including their organizational, offering and operating costs and
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Types	of	Clients

        Endurance provides investment management services to private investment funds that it
sponsors and may also provide investment advice to high net worth individuals, trusts, estates and
charitable organizations.

         The Fund is offered only by the delivery of its Confidential Private Placement
Memorandum (the “Memorandum”) to prospective investors who meet the relevant investor
eligibility requirements. Please see the Memorandum for more information on the investor
eligibility requirements for the Fund.

       Additionally, the Fund is subject to a minimum investment amount. Endurance may raise
or lower the minimum investment amount for the Fund and/or accept an initial capital contribution
below the established minimum in its discretion. Please see the Memorandum for more
information on the minimum investment amount for the Fund.

Methods	of	Analysis,	Investment	Strategies	and	Risk	of	Loss

        Endurance operates the Fund as a multi-strategy, multi-manager “fund of funds” that
allocates, and from time to time reallocates, its assets to the investment discretion of a diverse
group of Sub-Managers that employ a broad range of investment strategies and techniques.

        Endurance performs due diligence on Sub-Managers and evaluates each based on
performance record, investment strategy or trading style, organizational depth and longevity, and
other factors, both quantitative and qualitative. Investing in securities involves risk of loss.

        Set forth below are descriptions of several types of investment strategies that Sub-
Managers selected by Endurance may employ. These descriptions, however, are only examples
of the types of strategies that Sub-Managers may employ on behalf of the Fund. Endurance is free
to select any Sub-Manager if, in Endurance’s judgment, the strategy or strategies employed by

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such Sub-Manager, whether considered singularly or in combination with the strategies employed
by other Sub-Managers used by the Fund, are suited to achieving the Fund’s investment objectives.

        Relative Value Strategies

        In general, relative value strategies seek to profit by exploiting pricing inefficiencies
between securities (some related and some unrelated) while remaining neutral to directional price
movements in any one market. Every relative value strategy consists of an exposure to some
second order aspect of the market, such as implied volatility (or premium) in convertible bonds
and warrants, the yield spread between similar term government bonds, the yield or swap spread
between government and corporate bonds or the price spread between different classes of stock
issued by the same company. The returns from these relative value strategies are derived from
those second order risks. Relative value strategies include the following major sub-strategies:

        Convertible Bonds and Warrants

        Relative value hedging in convertible bonds and warrants primarily involves long positions
in convertibles or warrants and short positions in the underlying stock in an effort to capitalize on
relative pricing inefficiencies. Convertibles and warrants are priced as a function of the price of
the underlying stock, expected future volatility of returns, risk free interest rates and, in the case
of convertibles, the issue-specific corporate/government yield spread. In some cases, these
instruments are not hedged directly with the underlying stock, but rather with an equity index.

        Fixed Income

        Relative value fixed income sub-strategies include a variety of arbitrage strategies that
involve investments in fixed income instruments, weighted in an attempt to eliminate or reduce
exposure to changes in the yield curve. These strategies attempt to exploit relative mispricings
(e.g., anomalous yield differences) between related sets of fixed income securities. The generic
types of fixed income hedging trades include the following: yield curve arbitrage; corporate versus
government yield spread; municipal bond versus government yield spreads; cash versus futures
basis trades; and hedged asset-backed securities.

        Equities

        Relative value equity sub-strategies are long/short stock portfolios based on quantitative
models for selecting specific stocks and measuring market exposure. Based on these models, high
ranking securities are purchased and low-ranking securities are sold short in relative quantities
designed to result in an aggregate portfolio that is neutral to broad equity market movements.
Often, these models rely upon fundamental balance sheet and income statement data such as:
earnings yield; dividend yield; revisions in earnings forecasts; relationship between market
capitalization, revenues and net asset values; earnings forecasts; and price histories. Other
approaches utilize factor analysis to measure risk factors and relative attractiveness. Some
managers focus on specific industry sectors whereas others attempt to balance exposure across
sectors.

        Multiple Strategies

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        This sub-strategy refers to Sub-Managers with the flexibility to invest in several relative
value strategies, including convertible bond and warrant hedging, fixed income arbitrage, relative
value equities, and other arbitrage strategies.

        Global Opportunistic Strategies

        Global opportunistic strategies seek to exploit opportunities in various global markets. The
Sub-Managers who employ these strategies may use a wide variety of securities in implementing
their investment programs. They may use leverage in varying amounts and may take positions
that are directional. Also, they have the flexibility to shift the allocations of their portfolios quickly
in response to changing market conditions and opportunities. Global opportunistic strategies
include the following major sub-strategies:

        Equities
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