Appaloosa LP

Item 5. Fees and Compensation

A. Advisory Fees.

All investors should review the Governing Documents for each Fund in conjunction with this brochure for
more complete information about the fees and compensation payable to Appaloosa. Investors in Azteca
are not subject to any fees or asset-based compensation.

Asset-Based Compensation

Appaloosa charges non-affiliated investors in Palomino Fund an investment management fee at the rate of
2.0% of net assets annually. Investment management fees are charged each quarter in advance based on
the total market value of the net assets of each Fund (including net unrealized appreciation or depreciation
of investments and cash, cash equivalents and accrued interest) on the first day of the quarter.

Performance-Based Compensation

AMLP receives a performance fee each year from Palomino Fund equal to 20% of the net appreciation of
the investment of each non-affiliated investor in the Fund.

The fees charged by Appaloosa are not negotiable but may be waived or modified in Appaloosa’s sole
discretion. Generally, Appaloosa’s related persons do not pay performance or advisory fees.

B. Payment of Fees. Appaloosa deducts the investment management fee from Client accounts on a
quarterly basis by instructing the Client’s custodian.

C. Other Fees and Expenses. In addition to paying investment management fees and performance-
based fees or allocations, Client accounts will also be subject to other investment expenses such as
custodial charges, brokerage fees, commissions and related costs; costs of research, pricing, data and
similar services; costs of margin accounts and other borrowings; borrowing charges on securities sold short;
interest expense; taxes, duties and other governmental charges; transfer and registration fees or similar
expenses; costs associated with foreign exchange transactions; costs of any outside appraisers,
accountants, attorneys or other experts or consultants engaged in connection with specific investments;
any legal fees and costs arising in connection with any litigation or regulatory investigation; other portfolio
expenses; and costs, expenses and fees (including, investment advisory and other fees charged by
investment advisers with, or funds in, which the Client’s account invests) associated with products or
services that may be necessary or incidental to such investments or accounts. Investors in each Fund will
bear their pro rata share of the Fund’s operating and other expenses including, in addition to those listed
above: legal expenses; audit and tax preparation expenses; fees and expenses of the administrator;
insurance costs; costs of acquiring, licensing or developing accounting, order management and other
computer systems and software used or incurred by Appaloosa in connection with its services to the Client;
costs of preparing required regulatory filings; and other ordinary operating and out-of-pocket expenses of the
Fund. Expenses are allocated among participating accounts in proportion to their participation in a particular
investment, in proportion to their respective net asset values, or in such other manner as Appaloosa
determines to be equitable. Please refer to Item 12 of this brochure for a discussion of Appaloosa’s

Item 7. Types of Clients

Appaloosa provides advice to pooled investment vehicles. The investors in each Fund may include
corporations, endowments, foundations, trusts, estates, individuals and pension and profit sharing plans.
Palomino Fund is offered exclusively to investors that meet both the definition of “accredited investors” as
defined in Regulation D under the Securities Act of 1933, as amended (the “Securities Act”), and “qualified
purchasers” as defined in Section 2(a)(51) of the Investment Company Act of 1940, as amended (the
“Investment Company Act”). Azteca, an investment vehicle primarily for principals and eligible employees
of Appaloosa, is offered to “accredited investors” as defined in Regulation D under the Securities Act.
Palomino Fund is not required to register as an investment company under the Investment Company Act
in reliance upon the exemption under Section 3(c)(7) of the Investment Company Act and Azteca is not
required to register in reliance upon the exemption under Section 3(c)(1) of the Investment Company Act.

The initial and additional subscription minimums, if any, are disclosed in the Governing Documents.