Peconic Partners LLC

ITEM 5 – FEES AND COMPENSATION

Item 5.A   Describe how you are compensated for your advisory services. Provide your fee
           schedule. Disclose whether the fees are negotiable.

           Peconic (or Peconic Asset Managers) is generally compensated for its advisory
           services by charging fees that are based upon a set percentage of assets under
           management and performance. Set forth below are summaries of the fees payable
           by investors in the Peconic Funds and by the Separate Accounts. It should be
           noted that detailed disclosure about the fees and other expenses applicable to an
           investment in the Peconic Funds is provided in the offering documents for the
           applicable Peconic Fund. These documents should be carefully reviewed prior to
           making an investment in the Peconic Funds.

           In consideration of the advisory services provided to the Grenadier Fund, Peconic
           generally receives a Management Fee at the monthly rate of one-twelfth of one
           percent (1%) of fifty percent (50%) of the sum of (a) the net asset value of the
           Fund as of the first day of each month, plus (b) the net asset value of the Fund as
           of the last day of that month. Peconic receives, in consideration of its advisory
           services as general partner to the Insurance Fund, a Management Fee at the
           monthly rate of one-twelfth of one and a half percent (1.5%) of fifty percent
           (50%) of the sum of (a) the net asset value of the Insurance Fund as of the first
           day of each month, plus (b) the net asset value of the Insurance Fund as of the last
           day of that month.

           As provided in the limited partnership agreement of the Grenadier Fund, Peconic
           Asset Managers is credited and charged for allocated net profits and net losses,
           respectively, of the Partnership. Each such Peconic Fund’s net overall profits are
           generally allocated in the ratio of 80% to the limited partners and 20% to Peconic
           Asset Managers, subject to a loss carryforward provision. Each such Peconic
           Fund’s net overall losses are generally allocated in the ratio of 99% to the limited
           partners and 1% to Peconic Asset Managers.

           The Insurance Fund’s net overall profits are generally allocated in the ratio of
           80% to the Limited Partners and 20% to Peconic’s account, subject to a loss
           carryforward provision. The Insurance Fund’s net capital depreciation will be
           debited against its loss recovery account. Peconic will not be allocated any net
           profits until the amounts debited to the loss recovery account have been
           recovered.

           Compensation for advisory services rendered to the Separate Account clients is
           based in part upon a percentage of the net asset value of their account. While
           compensation arrangements may be negotiated and accordingly may vary, the
           usual compensation for services rendered is a base management fee of 1% per
           annum of the value of the account. Additionally, Separate Account clients are
           generally charged based upon a percentage of the net gain in a client’s account
           during a twelve-month period. The fee is structured to comply with Rule 205-3
           under the Advisers Act. The percentage of the overall gain to be received by
           Peconic is negotiable. Generally, Peconic charges 20% of the net gain attributable
           to the account during the applicable period, in addition to the management fee. It
           should be noted that such Separate Accounts are subject to significant account
           minimum investment requirements.

           Fees are negotiable in that Peconic and Peconic Asset Managers, in their sole
           discretion, may reduce or waive their respective compensation for those
           investment accounts held by their officers, members, employees, prior employees
           and their immediate family members, including entities composed of such
           persons. For certain long-term clients of Peconic or its predecessor firm, fees may
           be lowered.

           It is critical that investors refer to their respective Advisory Client’s
           governing documents for a complete understanding of how Peconic is
           compensated for its advisory services. The information contained herein is a
           summary only and is qualified in its entirety by the relevant governing
           documents.

Item 5.B   Describe whether you deduct fees from clients’ assets or bill clients for fees
           incurred. If clients may select either method, disclose this fact. Explain how often
           you bill clients or deduct your fees.

           Peconic (or Peconic Asset Managers) deducts fees from each Peconic Fund’s
           assets. Investors do not have the ability to choose to be billed directly for fees
           incurred.

           The Management Fee with respect to the Peconic Funds is generally payable
           monthly in arrears and will be prorated in the event Peconic does not remain the
           investment adviser of a Peconic Fund for the entire month.

           As described in Item 5.A above, the Peconic Funds also generally charge an
           annual performance-based Incentive Allocation/Fee equal to 20% of the
           appreciation in each investor’s account balance during the year, subject to a loss
           carry forward provision. The Incentive Allocation/Fee is calculated and charged
           separately with respect to each investor and/or class of shares or interests within
           each Peconic Fund. If an investor withdraws/redeems all or a portion of its capital
           account/shares on a date other than a fiscal year end, the Incentive Allocation/Fee
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ITEM 7 – TYPES OF CLIENTS

Describe the types of clients to whom you generally provide investment advice, such as individuals, trusts,
investment companies, or pension plans. If you have any requirements for opening or maintaining an
account, such as a minimum account size, disclose the requirements.

As described in Item 4.A, Peconic provides investment advice to pooled investment vehicles operating as
private investment funds and individual separate accounts. Each investor in the Peconic Funds must meet
the eligibility provisions as outlined in the Peconic Funds’ offering documents. Requirements for making
an initial investment in the Peconic Funds are as follows:

    o   The minimum initial investment in the Grenadier Fund is $1,000,000. Peconic Asset Managers
        may, in its sole discretion, accept initial subscriptions less than $1,000,000; provided, however, that
        in no event will Peconic Asset Managers accept an initial subscription less than $100,000.

    o   The minimum initial investment in the Insurance Fund is $100,000.
As described in Item 4.A, Separate Account arrangements may be set up for certain large and strategic
investors, at Peconic’s sole discretion. Minimum account balances may be imposed on such Separate
Accounts, which may vary. In general, Peconic will prefer clients with total assets of $25 million or more.
Peconic will accept smaller accounts at its discretion.