MHR Fund Management LLC

Item 5.        Fees and Compensation

          A.   The Firm, or an affiliate, typically receives compensation from each of our clients
               based on both the percentage of assets, invested capital or commitments managed
               (other than with respect to certain legacy funds pursuant to the terms of their

     partnership agreements) and on performance achieved for each client’s account.
     Detailed information concerning our compensation and fees is contained in the
     private placement memorandum and governing documents and agreements of each
     fund. Our fees are generally not negotiable; however, we have the discretion to
     agree to different fees with investors in the funds (and have done so in some of our
     hedge funds) and waive fees (and have done so for certain of the Firm’s employees
     and their affiliates). In our private equity funds, we elect to forego a portion of our
     fees in exchange for priority profits interest.

B.   We deduct the asset-based fee from our hedge funds quarterly in advance. Any
     performance-based compensation with respect to the hedge funds is deducted
     annually, as of the end of each calendar year, or as of an earlier withdrawal date
     with respect to withdrawn capital.

     The management fees for our private equity funds are generally determined semi-
     annually in advance and deducted quarterly. Management fees for MHR Longevity
     Partners LP are determined and deducted quarterly. Any performance-based
     compensation for our private equity funds is, subject to applicable provisions of
     such funds’ governing documents, deducted upon the liquidation or other
     disposition of assets held by these funds.

C.   Our client funds bear organizational and offering expenses, in certain instances
     subject to limitation. To the extent the funds pay any placement agent fees, our
     management fees are offset by the same amount. The funds bear all costs and
     expenses directly related to portfolio investments or prospective investments in
     portfolio companies, including all costs and expenses incurred in connection with
     the identification, structuring, evaluation, diligence, acquisition, consummation,
     maintaining, holding, insuring, administration, management, sale or proposed sale,
     disposal, financing or refinancing of such investment (whether or not
     consummated). The funds also bear all costs and expenses relating to their
     activities, including legal, accounting and other professional or third-party costs,
     brokerage commissions and other transaction costs, custody fees, borrowing costs,
     fees and/or profit-sharing arrangements of advisors or consultants relating to
     portfolio investments and prospective investments, travel (which may include non-
     commercial flights), specific expenses incurred in obtaining systems, research and
     other information or services utilized with respect to the funds’ investment
     program, including valuations and accounting (e.g., costs of statistics or pricing
     services, contracts for quotation equipment and related hardware and software), and
     any withholding or transfer taxes imposed on the funds. The funds also bear in
     accordance with the relevant funds’ governing documents all out-of-pocket costs of
     their administration (as well as their pro rata share of such expenses incurred by the
     relevant master account or other operating subsidiaries in which multiple clients
     participate), including accounting, audit, administration, legal and compliance
     expenses (including preparation of domestic or foreign regulatory reports and
     filings containing fund information regardless of the identity of the filer and any
     programs and software expenses related to such reporting or filings), costs of
     holding any meetings of investors or the funds’ advisory committees, borrowing

               costs in connection with the fund’s credit facility (if any), costs of any liability
               insurance (including cyber liability insurance and fiduciary bonds) obtained on
               behalf of the funds, MHR or its affiliates, any legal fees and costs (including
               settlement costs) of any litigation or regulatory investigation involving fund
               activities, and costs associated with reporting and providing information to existing
               and prospective investors in the funds, including travel (which may include non-
               commercial flights) in connection with providing such information. We typically
               allocate expenses directly related to a specific investment among all participating
               accounts based on their allocable share of cost of the positions being acquired, held
               or sold, and shared expenses not directly related to a specific investment based on
               the available capital and/or net assets of client accounts. However, we can apply
               other expense allocation formulas and methods at our discretion. We cannot
               guarantee the accuracy of all expense allocations and are not financially responsible
               for incorrect allocations in the absence of a breach of the standard of care set forth
               in the clients’ governing documents.

               Please refer to the funds’ offering documents or other governing agreements for
               further information regarding the fees and expenses of MHR and the relevant funds.
               Also, Item 12 details our broker selection and compensation policies.

          D.   As noted in Item 5.A. and B., the funds pay management fees quarterly in advance.
               Since investors in our private equity funds may not withdraw their capital and
               investors in the hedge funds generally may not make intra-quarter withdrawals of
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Item 7.        Types of Clients

All of our advisory clients are private investment funds that are exempt from registration under
the Investment Company Act of 1940, as amended. Our client funds have a diverse group of global
investors, including leading pension funds, sovereign wealth funds, endowments, foundations,
financial institutions, insurance companies, funds of funds and high-net-worth individuals. MHR
generally requires investors in the funds to be “accredited investors”, “qualified clients” and/or
“qualified purchasers”, as applicable (as defined in relevant federal securities laws and
regulations).