Knighthead Capital Management LLC

ITEM 5.         FEES AND COMPENSATION

Management Fee and Performance Allocation

         Knighthead and certain of its affiliates receive management fees and performance
compensation, as described below. Knighthead may allocate a portion of its management fees and/or
performance compensations to third parties. Subject to the relevant governing documents,
Knighthead may waive all or any portion of the management fee and/or performance compensation
with respect to any investor in a Client including, but not limited to, Knighthead, its affiliates and
any of their respective current or former principals, members, directors, officers, partners,
employees, the family members of any of the foregoing and any trusts or other vehicles for the benefit
of such persons and any charitable trust, foundation or similar entity established by such persons.
Management fees and performance compensation may vary with each Client and are explained more
fully in each Client’s confidential offering memorandum or investment management agreement. It is
critical that the Clients and prospective investors refer to their respective governing documents for a
complete understanding of how Knighthead is compensated for its advisory services.

       Knighthead Master Feeder Funds

      Knighthead receives from the Knighthead Master Feeder Funds quarterly investment
management fees at an annual rate generally up to 1.75%.

        Knighthead’s affiliate, Knighthead GP, is entitled to receive from the Master Fund an annual
performance-based profit allocation in an amount generally up to 20% of net profits (including net
unrealized gains on investments other than those attributable to Designated Investments and including
net profits or losses attributable to the sale or deemed sale of Designated Investments), if any,
allocable to the pro rata share of such Knighthead Master Feeder Fund’s interest in the Master Fund,
subject to a loss carryforward.

       Knighthead Distressed Opportunities Funds

       Knighthead receives from the Knighthead Distressed Opportunities Funds annual
management fees equal to 1.00%, with respect to the founders’ series, and 1.50%, with respect to the
non-founders’ series, of an investor’s invested capital, paid quarterly in advance and based upon
estimated amounts of the invested capital for the applicable quarter with any difference adjusted at
the end of the quarter.

        Knighthead’s affiliate, Knighthead DOF GP, is entitled to receive from the Knighthead
Distressed Opportunities Funds a performance-based profit allocation equal to 15%, with respect to
the founders’ series, and 20%, with respect to the non-founders’ series, subject to an 8% preferred
return.

       CK Opportunities Funds

        Knighthead or its affiliate splits its management fee and performance allocation with respect
to the CK Opportunities Funds evenly with Certares.

       The CK Opportunities Funds management fees equal 1.5% of an investor’s invested capital
per annum, paid in advance (with certain fee discounts for larger investors).

         The performance-based profit allocation of the CK Opportunities Funds is equal to 20% of
all realized profits subject to a preferred return of 8% per annum compounded annually.

       Knight King CK LP

       Knighthead or its affiliate splits a performance allocation with respect to the Knight King CK
evenly with Certares.

        The performance-based profit allocation of Knight King CK is equal to 5% of all realized
profits subject to a preferred return of 8% per annum compounded annually.

       Knighthead NY Fund

       Knighthead or its affiliates receive a quarterly management fee and a performance allocation
from the Knighthead NY Fund, payable in advance, in accordance with the terms of their relevant
agreements.

       Knighthead Annuity and Knighthead Holdings

       Knighthead Insurance receives a quarterly fee from Knighthead Annuity and Knighthead
Holdings, in respect of the various services provided thereto, valued in advance or in arrears, as
applicable, and payable quarterly in arrears, in accordance with the terms of the relevant agreements.

An affiliate of Knighthead also receives a performance allocation as set forth in that certain joint
venture agreement by and among Knighthead Holdings, Knighthead Annuity, Knighthead Insurance
GP and Knighthead Insurance (the “JV Agreement”).

       KHMO

       Knighthead receives from KHMO an annual management fee equal to 1.00% of an investor’s
invested capital, paid quarterly in advance, based upon estimated amounts of the invested capital for
the applicable quarter with any difference adjusted at the end of the quarter.

        Knighthead is entitled to a performance-based profit allocation for KHMO initially equal to
15% of all realized profits subject to a return of 8% per annum compounded annually. In the event
the preferred return equals 20% per annum compounded annually, the performance-based profit
allocation increases to 30% of all realized profits in excess of a 20% return.

       Knight King LP

       No fees or allocations are associated with Knight King except for expense reimbursements
permitted under the limited partnership agreement.

       KH Homer City Funds

         Knighthead receives an Administrative Fee equaling $500,000 per annum, beginning as of
the first closing. The Administrative Fee shall be payable in annual installments in advance with any
payment of less than a full calendar year adjusted on a pro rata basis.

       Knighthead’s affiliate, KH HC GP, LLC, is entitled to a performance-based allocation equal
to 20% of all realized profits, subject to a return of 8% per annum, compounded annually.

       Managed Account Clients

        Knighthead receives a monthly management fee from the Managed Account Clients payable
quarterly in arrears in accordance with the terms of their relevant investment management agreement.
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ITEM 7.         TYPES OF CLIENTS

        Knighthead provides investment advisory services to the Knighthead Master Feeder Funds,
Knighthead Distressed Opportunities Funds, Knighthead NY Fund, KIH, KHMO, KH Homer City
Funds, Knight King, the Managed Account Clients, the BSOF Funds, WWJr. and the Rated Feeders
and is the sub-advisor to Knighthead Annuity and Knighthead Holdings. Knighthead SMA provides
investment advisory services to BIOV1 Segregated Portfolio. Knighthead Realty provides
investment advisory services to certain clients and other accounts. Knighthead Insurance provides
investment advisory services to Knighthead Annuity and Knighthead Holdings and outsourced chief
investment manager services to Knighthead Annuity and Knighthead Holdings. Knighthead
Opportunities provides co-investment advisory services to the CK Opportunities Funds. Knighthead
provides co-investment advisory services to CK Amarillo and Knight King CK. The Adviser may in
the future provide investment advisory services to additional clients including, but not limited to,
other pooled investment vehicles, corporations, trusts, institutions, high net worth individuals,
investment companies, pension plans, insurance companies, reinsurance companies, sovereign
wealth funds, family offices, foundations and endowments.

       For a further discussion of these and related items, see Item 4 (Advisory Business) and