JC Flowers & Co LLC

Item 5 – Fees and Compensation

   A. JCF&Co’s fee and compensation arrangements vary among the Funds. The specific terms of such
      arrangements are established by JCF&Co, as modified by negotiations with investors in the
      applicable Fund, and as set forth in each Fund’s investment advisory agreement and other
      governing documents, which are received by each investor prior to investment in such Fund.

       As compensation for its services, JCF&Co typically receives a management fee (the “Management
       Fee”) from each Fund. Generally, prior to the earliest of (i) the expiration of a Fund’s commitment
       period, (ii) the date on which capital commitments have been fully drawn down, (iii) the date on
       which a management fee becomes payable by investors in a successor fund and (iv) such earlier
       date as determined by the general partner of a Fund in its sole and absolute discretion, the
       Management Fee is based on a percentage of the aggregate capital commitments of the Fund’s
       third party investors. Thereafter, the Management Fee is generally based on a lower percentage

of the aggregate invested capital of third party investors. The Management Fee is due and payable
from each Fund four (4) times per calendar year, as provided in each Fund’s investment advisory
agreement, as further described below. The terms of the Management Fee vary among the Funds,
as well as among investors in the same Fund.

In addition to the Management Fee, in connection with the affairs of a Fund, JCF&Co, its affiliates
(including JCF Securities (as defined below)) and their respective employees have received and
are expected in the future to receive from actual or prospective portfolio companies, a Fund or
their respective affiliates (i) monitoring fees, organization fees, set-up fees, financial advisory fees,
transaction fees and other similar fees, either in cash or securities, (ii) cash and non-cash directors’
fees and (iii) termination, break-up and topping fees. A Fund’s Management Fee will be offset, or
reduced, by all or a portion of such other fees, as provided in the governing documents of the
applicable Fund. The Management Fee of certain Funds and of certain investors in the same Fund,
has in the past and is expected in the future to be further reduced, waived (in whole or in part) or
rebated, at the sole discretion of JCF&Co.

Certain investors that participate in co-investment opportunities (“co-investors”) will be charged
certain fees, including Management Fees, maintenance or administrative fees and one-time
funding fees. However, not all co-investors will be charged the same fees, and some co-investors
have in the past and are expected in the future to be, charged fees at more favorable rates.
JCF&Co and its affiliates have in the past and are expected in the future to waive (in whole or in
part) or modify, a co-investor’s obligation to pay the fees at the time of admission of such investor
to the co-investment vehicle. Specifically, JCF&Co expects fees to be waived (in whole or in part)
or otherwise reduced for co-investors that are JCF&Co employees and other “friends and family”
of the firm, as well as for co-investors that are deemed “strategic investors” (as described in Item
11 below). In addition, the governing documents of a Fund have in the past and are expected in
the future to provide that the investors in such Fund are not subject to the fees or carried interest
on aggregate co-investment capital commitments alongside such Fund up to the amount of its
capital commitment to such Fund. Fees are payable to JCF&Co or an affiliate thereof, including
JCF Securities.

JCF has a conflict of interest to the extent that it has an opportunity to earn a fee in connection
with an acquisition or disposition of a portfolio investment. However, JCF believes that the
Management Fee offset provisions described above substantially mitigate this potential conflict.

Moreover, JCF and its personnel can be expected to receive certain intangible and/or other
benefits and/or perquisites arising or resulting from their activities on behalf of the Funds which
will not be subject to the Management Fee offset or otherwise shared with the Funds or their
limited partners. For example, airline travel or hotel stays incurred as Fund expenses typically
result in “miles”, “points” or credit in loyalty/status programs, and such benefits and/or amounts
will, whether or not de minimis or difficult to value, inure exclusively to JCF and/or such personnel
(and not the Funds or their limited partners) even though the cost of the underlying service is
borne by the Funds. Furthermore, JCF&Co personnel have in the past, and are expected in the

   future to receive, certain benefits from companies that are not portfolio companies or otherwise
   affiliated with JCF&Co (e.g., former affiliates of portfolio companies) for services provided by
   JCF&Co to the portfolio companies.

B. The general partner of a Fund generally causes the Management Fee to be paid to JCF by or on
   behalf of a Fund by (i) requiring investors in the Fund to make capital contributions, (ii)
   withholding from investment proceeds that would otherwise be distributable to investors in the
   Fund or (iii) causing the Fund to borrow money.

   Consistent with each Fund’s governing documents and applicable law, each Fund typically bears
   and is charged with the costs and expenses of its operations, including without limitation (i) fees
   and expenses of administrators, custodians, attorneys, accountants and other professionals
   (including audit and certification fees and the costs of preparing, printing and distributing financial
   and tax reports to investors and by way of example, costs of related information management
   systems (whether maintained by JCF or otherwise) and processing subscriptions (including
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Item 7 – Types of Clients

JCF’s Clients are generally pooled investment vehicles that are exempt from registration under the
Investment Company Act of 1940, as amended. JCF’s Clients also include vehicles controlled by the
underlying investors. Investment advice is provided to the Funds (subject to the direction and control of
the general partner of each such Fund, if applicable) and not individually to the investors in such Fund.
Investors in the Funds include high net worth individuals, pension plans, endowments, trusts, sovereign
wealth funds, financial institutions and other U.S. and non-U.S. corporations. JCF has in the past formed,
and may in the future form, managed accounts to permit an investor to participate in investments pursued
by a Fund.

In general, the minimum initial investment in a Fund is $10 million, although lesser amounts have in the
past been, and may in the future be, accepted in the discretion of the general partner.