Pomelo Capital LLC

Item 5 - Fees and Compensation

       Our fees and compensation will be described in the advisory contracts we enter into with
       our clients. Our current clients are, and we anticipate that our future clients will be,
       “qualified purchasers” (as defined in Section 2(a)(51) of the Investment Company Act of
       1940, as amended (the “1940 Act”).

       We will generally deduct our management fees from client accounts quarterly in advance,
       unless otherwise agreed with the client. Generally, we or our affiliates receive
       performance-based allocations from our private investment fund clients on an annual
       basis in arrears and upon redemptions by investors in such funds.

       The Funds will pay, or reimburse us and/or the General Partner for advancing, the Funds’
       operating expenses, including expenses related to the offering of interests, filings,
       administration and audit expenses, any and all fees for research (including on-line news
       and quotation services, Bloomberg service, etc.), research materials and research-related
       travel and due diligence, interest on margin accounts, legal, accounting and professional
       fees, insurance costs, consulting fees, borrowing charges on securities sold short,

POMELO CAPITAL LLC Form ADV: Part 2A                                                       Page 5

      custodial fees, trustees fees, brokerage commissions, bank service fees, interest on loans
      and debit balances, any taxes applicable to the Funds on account of its operations and/or
      investments, and any and all expenses related to the management and operation of the
      Funds as well as the purchase, sale or transmittal of assets, as we shall determine in our
      discretion. The Funds are responsible for their organizational fees and expenses.

      The expenses that will be charged to separately managed accounts are determined on a
      case by case basis.

      From time to time, we may allocate a portion of certain clients’ capital to money market
      funds, exchange-traded funds or other fee-bearing products. In addition to the fees and
      expenses discussed above, investors will indirectly incur similar fees and expenses if we
      invest client’s capital in such money market funds, exchange traded funds or other fee-
      bearing products, as these funds in turn pay similar fees to their investment managers and
      other service providers. Details regarding our brokerage practices are found in Item 12
      below.

      Generally, management fees will not be refunded if the advisory contract is cancelled
      prior to the end of a payment period, although we may agree otherwise on a case by case
      basis.

Item 7 - Types of Clients

       We provide investment advice to clients who are private investment funds. Investors in
       such private investment funds include high net worth individuals and institutional
       investors that qualify as “accredited investors” (as defined in Rule 501 under the
       Securities Act of 1933, as amended) and “qualified purchasers” (as defined in Section
       2(a)(51) of the Investment Company Act, as amended).

       The private investment funds we advise require a minimum $1 million initial investment
       for new investors, subject to our discretion to accept lesser amounts.

       We also provide investment advice through managed account structures totwo
       institutional investors and may in the future provide investment advice to other separately
       managed accounts. We will determine the minimum investment for managed accounts
       on a case by case basis but it is generally expected to exceed $100 million.