Annandale Capital LLC

Fees and Compensation
Compensation and Fee Schedule. Annandale receives compensation according to the
following Fee Schedule:

       Total Investment Management Solutions – Clients who choose to invest in a
       holistic investment allocation of equity, cash, fixed income, or private investments
       should expect to pay a 1.00% annual management fee based on the value of assets
       at the beginning of each quarter.

Since clients pay fees quarterly in advance, Annandale divides the management fee into
quarters and bills the client off of each client’s total assets under management at the
beginning of each quarter. In the event that Annandale begins managing a client’s assets
mid-quarter, it will calculate the management fee according to the fraction of the quarter
for which the assets are under management. Client fees are negotiable and therefore
management fees for each client may vary from the schedule above.

Annandale maintains a relationship with a family office that initially set up a consulting
arrangement, paying a flat fee for consulting services. In line with Annandale’s policy for
negotiable fees, there have been follow-on fee arrangements as the family office began
utilizing some managers on Annandale’s investment platform. These arrangements have
varied from a backend carried interest fee, to an ongoing fee based on invested capital, to
a one-time fee paid by the investment manager. All fee arrangements were selected by the
client after the investment was selected.

                                    Annandale Capital, LLC

Deduction of Fees. Clients have the option of electing to have their fees deducted from
their account assets automatically or to receive a bill for fees incurred that is subsequently
paid via check or wire transfer. Because Annandale bills in advance, the withdrawal or
billing occurs at the beginning of each quarter, four times a year.

Additional Fees. Fees charged by Annandale cover only the portfolio management and
advisory services provided by Annandale. The client can expect to pay custodial fees that
may include brokerage commissions, mark-ups and mark-downs, dealer spreads, and other
costs associated with the purchase and sale of securities; interest on any loans; taxes; or
other account expenses. The client is solely responsible, directly or indirectly, for these
additional expenses should they be incurred. Further, the mutual fund managers, separate
account managers, private investment managers, and all other investment managers who
manage clients’ assets charge a management fee for their services. While no additional
payments are required for manager fees, these manager fees are netted out of the investment
returns that the manager generates for the client. Please see the Brokerage Practices section
of this brochure for additional information regarding brokerage and other transaction costs.

Billing and Refunding Fees upon Termination. Because all clients pay fees quarterly in
advance, clients can expect to receive back unearned management fees upon termination.
Either the client or Annandale may terminate services with 30 days prior written notice. If
the termination of services occurs prior to the end of a quarter, the client will receive a
prorated refund of management fees paid for services unearned rounded to the nearest
month. Annandale determines the refunded amount by the number of months of unearned
management fees and bases it on the date after which the investments are ultimately moved
to an alternate advisor or are liquidated and distributed to the client.

Performance-Based Fees and Side-by-Side Management
As previously mentioned, Annandale has an investment consulting agreement with a
family office client to provide consulting services for investment counsel regarding the
family office’s investments for a flat, monthly fee. Annandale researched various fee
schedules to ascertain which options would result in the fewest possible conflicts of interest
and presented its ideas to the family office. The family chose a backend profit sharing
agreement, based on performance, for two investments as well as a flat, monthly fee going
forward. For another investment, they selected a management fee based on called capital,
and after committing to a fourth investment, the client authorized a payment from the
underlying fund as part of their fee agreement. While there are potential conflicts of interest
that could arise from a performance fee, the family office settled on this agreement (after
the investments were made) for the alignment of interest which we do believe helps to
mitigate potential conflicts.

                                    Annandale Capital, LLC

Types of Clients
Annandale provides investment advice to individuals, family offices, profit sharing plans,
trusts, estates, charitable organizations, and other corporations and types of business
entities. Annandale’s stated minimum account size is $5,000,000; however, it may waive
this minimum at its discretion.

Methods of Analysis, Investment Strategies, and Risk of Loss
Methods of Analysis and Investment Strategies. Annandale’s primary service is to
provide investment advice to its clients. As part of this service, Annandale performs due
diligence on and invests in external funds on behalf of clients. External funds typically
consist of mutual funds and limited partnerships. For a smaller subset of clients, Annandale
also invests in individual stocks and bonds. For external funds, Annandale conducts
bottom-up, fundamental research and divides its research into three areas: quantitative,
qualitative, and operational.

Quantitative analysis consists of analyzing a fund or firm’s track record and statistics about
the current portfolio. Generally speaking, Annandale seeks to invest with funds/firms that
have an established record of success. Furthermore, quantitative analysis helps us better
understand the types of exposure a fund investment might introduce to our portfolio.

Qualitative analysis typically consists of analyzing factors that are not directly measurable
or quantifiable. Annandale’s qualitative analysis of a fund makes judgments regarding the
strength of a fund’s research process and philosophy, incentive structure, risk management
process, and experience. We may also make qualitative judgements about the opportunity
set for each fund. Judgements pertaining to a fund’s opportunity set are often influenced
by factors such valuations and various macroeconomic variables.

Operational analysis varies depending upon the type of investment entity in which
Annandale is considering investing client capital. For most entity types, Annandale
analyzes the terms (liquidity, fees, etc.) of the managers. For private investment vehicles,
Annandale sometimes performs additional operational analysis, which focuses on past
legal and regulatory actions, strength of the underlying business, and use of outside service
providers.

Clients should note that investing in securities involves the risk of loss, which clients
should be prepared to bear. Investing with external funds that Annandale utilizes includes
the following specific, inherent risks:

Underlying Investment Risk. When Annandale invests in external funds, clients assume
all of the risks related to their underlying investment holdings, strategies, and methods of
analysis. Clients are also exposed to risks regarding the financial and operational strength

                                    Annandale Capital, LLC

of an investment manager’s business as well as the risk of the manager engaging in insider
trading.

Risk with Analysis Performed. Annandale’s method of analysis poses three general risks:
making an investment decision based on inaccurate or fraudulent information, making an
investment decision based on incomplete or inaccurate due diligence, or making an
investment decision based on complete and accurate due diligence that still results in poor
investment performance. By investing with Annandale, clients expose themselves to these
risks.

Risk with Concentration. Client accounts may hold a relatively small number of
securities. Losses in such securities could have a significant effect on the account’s overall
value.

Risk with Equity Securities. By investing in equities, Annandale may expose a client
account to a sudden decline in value. Equity investments can be volatile and the account
value will fluctuate daily based on the future earnings of the underlying companies and the
real or perceived health of the overall market and economy. Additionally, small-cap
companies are often considered more volatile and less-liquid investments due to limited
product lines, distribution channels, financing, or managerial resources. Also, international
and emerging market equities tend to be riskier investments due to political instability, the
lack of established currency, the lack of a uniform accounting standard, or a legal tradition
that often minimizes the rights in private property.

Risk with Fixed Income Securities. By investing in fixed income instruments (bonds),
Annandale may expose a client to the risk of the investment losing value when interest
rates rise. Also, with fixed income investments, the value of the security may fall if the
overall creditworthiness of the issuer is called into question, sometimes resulting from
overall market or credit deterioration. High-yield bonds tend to exhibit the greatest
volatility and risk of loss due to creditworthiness and perceived susceptibility of the issuer
not being able to make principal and/or interest payments. Additionally, fixed income
instruments have duration risk, with longer-term securities generally being more
susceptible to price movements than shorter-term securities.

Risk with Stock Option Securities. By investing in options, Annandale may expose a
client to the risk of significant price declines. Options can give investors the right to
purchase the right to buy or sell option contracts (which equate to 100 shares of the
underlying stock). Investors can also opt to sell the option in return for a premium which
initiates an obligation on the seller’s behalf. Options allow investors the potential to have
exposure that outmatches their initial buying power. Said another way, options can give
investors the ability to add leverage to their portfolio, thereby amplifying the risk.
Additionally, because option contracts have expirations, there is inherently a limited
timeframe for the investment thesis to bear out. Volatility is also one of the main drivers
of the price of options and therefore can also magnify the effects of options.
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