Axar Capital Management LP

Item 5 - Fees and Compensation

A. Below is a discussion of how the Adviser is generally compensated in connection with
   providing advisory services to its Clients. However, the Adviser may enter into different fee
   arrangements on a Client-by-Client basis. A potential investor in a Fund or any potential Client
   should read and review any and all Governing Documents in their entirety before making any
   investment decisions.

    Management Fees. For its services to its Funds, the Adviser is generally entitled to a
    management fee (the “Management Fee”) which is paid by Fund investors and may vary
    depending on the class of interests held by the applicable Fund investors (at an annual rate that
    generally ranges from 1% to 2%). The Management Fee is paid in advance on a quarterly basis
    and, depending on the Fund, is directly deducted from each investor’s capital account. The
    annual Management Fee may be negotiated by Fund investors. Management Fee structures
    vary across Funds.

    With respect to the services rendered to Managed Accounts and the Insurance Company, the
    Adviser generally receives a quarterly management fee which is based upon a percentage of
    the applicable Managed Account’s net asset value as agreed upon between the Adviser and the
    Managed Account holder and Insurance Company.

    Performance-Based Fees (Incentive Allocation and Carried Interest). We receive
    performance-based fees from certain Clients. As of each December 31 of each year, Clients
    subject to an “incentive allocation,” which is generally equal to 10% to 20% of any New
    Appreciation (as defined below) then attributable to each investor’s capital account
    corresponding to such investor’s interests or shares (the “Performance Allocation) will be
    made, and generally subject to a hurdle rate. The Performance Allocation will be allocated to
    an affiliate of the Adviser. For certain Clients, the Performance-Based Fee is instead paid upon
    liquidation of the relevant portfolio’s assets.

    The “New Appreciation” is equal to the amount by which the Net Asset Value of fund interests
    (calculated after deduction of Management Fees and for all accrued expenses, but prior to the
    Incentive Allocation being calculated) exceeds the High Water Mark and a normally a hurdle
    rate attributable to such interests.

    The “High Water Mark” applicable to each interest is the highest aggregate Net Asset Value of
    such interest as of any preceding December 31, after reduction for the Incentive Allocation then
    made.

    With respect to the Managed Accounts, the Adviser is generally entitled to receive
    performance-based allocation at the end of each applicable performance period (as defined in
    the investment management agreement between the Adviser and the Managed Account holder).

    Fund Organizational Expenses. Funds also bear the expenses of the organization of the Funds.
    The organizational and initial offering costs of the Funds include legal, accounting, printing,
    marketing and comparable expenses (not including any placement fees). The Funds may
    amortize such organizational expenses for Net Asset Value purposes in 60 equal monthly
    installments. The organizational expenses borne by the Funds are described in more detail in
    the Funds’ Offering Documents.

    Operating Expenses. Depending on the Fund, investors can expect to pay operating expenses
    including: legal, auditing, accounting and other professional expenses (for example,

   accounting and tax advisory fees, tax compliance and filing-related costs (including FATCA
   and AEOI compliance), legal fees charged in negotiating, prime brokerage, ISDA Master
   Agreements and related custody and segregation agreements, repurchase agreements or other
   trading or financing agreements); administration expenses and fees including, but not limited
   to, the provision of any investment/management-related reporting and certain mid-office
   services; research expenses (including research-related and due diligence travel); investment
   expenses such as commissions, ticket charges, prime brokerage fees, give up fees, borrow costs,
   interest on margin accounts and other indebtedness and similar charges, costs associated with
   closing bank debt and trade claim trades (including legal fees as well as costs associated with
   delayed settlement risk), as well as other expenses incurred in connection with trading the
   Fund’s account; costs and expenses associated with engaging expert networks and consultants;
   order management systems; custodial fees; bank and wire service and transaction fees;
   regulatory reporting costs (including, for example, Schedule 13D, 13F, 13G and Form PF filing
   costs and expenses, as well as EDGAR formatting and filing costs); compliance costs,
   including, without limitation, costs of compliance programs, third-party compliance
   consultants, actual and “mock” examinations, regulatory and governmental inquiries,
   subpoenas and proceedings (in each case, whether involving the Funds or the Adviser); and
   other expenses and legal fees related to the purchase, sale and maintenance of Fund assets as
   determined by the Adviser (including, but not limited to, withholding, income and other taxes).
   The Funds’ operating expenses also include fund director fees and other legal structuring costs
   including costs associated with issuing interests or shares as well as revising the Funds’ offering
   and operative documents. Also, the Funds’ operating expenses include insurance premiums
   (including errors and omissions insurance for the principals, members, directors, officers and
   employees of the Adviser and its affiliates, and the Funds’ and any master funds’ directors).

   Furthermore, and to the extent operating expenses or other expenses apply to more than one
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Item 7 - Types of Clients

As mentioned in Item 4, the Adviser provides investment advisory services to private funds for
sophisticated, qualified investors, including: high net worth individuals, retirement plans, trusts,
partnerships, corporations, insurance companies, or other businesses. The Adviser also provides
advisory services to separately managed accounts for institutional investors and an insurance
company.

The typical minimum initial investment in a Fund or Managed Account varies by product and is
either $1,000,000 or $20,000,000, although the Adviser may accept investments in a lesser amount
at their sole discretion.