Blue Grotto Capital LLC

5: Fees and Compensation). We do not manage any funds or accounts that do not pay
     performance-based compensation, but the differences in performance-based compensation
     creates a potential conflict of interest. We manage this conflict through trade allocation
     policies that generally allocate each trade pro rata among clients based on relative assets
     under management, with certain exceptions as specified in the policy.

7.   Types of Clients

     Blue Grotto provides investment advisory services to certain separately managed accounts
     and to BlueGrotto Master Fund LP, Blue Grotto Capital Partners LP and Blue Grotto
     Capital Cayman Ltd. (collectively, the “Fund”).

     The underlying investors in the Fund typically include:

     •   Individuals;
     •   Trusts and estates;
     •   Endowments and Foundations
     •   Corporations, partnerships or other business entities;
     •   Individual retirement accounts;
     •   401(k) plans;
     •   Pensions; and
     •   Profit-sharing plans.

     The underlying investors in our managed accounts typically include corporations,
     partnerships, endowment foundations, or other business entities.

     Investment Requirements

     To invest in the Fund, we generally require a minimum investment of $1,000,000, although
     at times we may waive this requirement.

     To comply with Securities and Exchange Commission regulations, we require that U.S.
     investors in the Fund qualify as both accredited investors and qualified purchasers.