Breton Financial Inc

Fees and Compensation

Upon entering into a contractual relationship for financial planning/investment advisory
services, the client is quoted an annual fee. That annual fee is based upon one of the following
schedules:
 A. For financial planning services (including investment advisory) the minimum fee is the
    greater of:
   - $5,000
   - 1% of net worth up to $500,000, plus .5% of net worth in excess of $500,000 but less
     than $1 million, plus .35% of net worth above $1 million but less than $3 million, plus
     .3% of net worth above $3 million but less than $6 million, plus .2% of net worth
     above $6 million but less than $11 million, plus .15% of net worth above $11 million but
     less than $20 million, plus .05% of net worth above $20 million.

       For fee calculation purposes, the following components of net worth may be
       excluded in the third contract renewal year and thereafter:
        1. Estimated value of closely-held business interests.
        2. Interests in jointly-held property where only one spouse/partner is a client of
           Breton Financial, Inc.
        3. Present value of annuitized pensions or other retirement vehicles.
 B. For investment advisory services only, minimum fee is the greater of:
    - $5,000
    - 1% of investment portfolio assets.
    - .75% of investment portfolio assets of charitable institutions or trusts where an
      existing client of Breton Financial, Inc. is a key beneficiary.

Client/planner relationships lasting less than one year are discouraged; if, however, Breton
Financial, Inc. agrees to consult on an occasional basis, fees will be billed at the rate of $250 per
hour plus expenses. Lower annual fees may be charged to clients initially contracting prior to
January 1, 1992.

Fees are billed and paid in equal quarterly installments and are not adjusted during the
contract year whether or not the client's net worth increases or decreases. No performance-
based fees are charged. Clients are billed approximately two weeks prior to the three month
period for which they are billed for services. Clients are never billed more than three months in
advance.
If the contract is terminated mid-quarter, fees for that quarter will be refunded on a pro-rata
basis in years following the first contract year. No refunds of quarterly fees will be made during
the first contract year. Fees are not negotiable.
In addition to the fees, transportation and travel expenses for clients located more than 200
miles from Breton offices may be charged.
Breton Financial, Inc.’s advisors are not registered or pending registry as broker-dealers or
registered representatives of broker-dealers. Breton Financial, Inc. has no related persons such
as broker-dealers, accountants, lawyers, insurance companies, banking institutions or other
financial advisors. No compensation whatsoever is received directly or indirectly from other
advisors or business relationships. Conversely, no compensation is made or offered for client
referrals to Breton Financial, Inc.
Note: If mutual funds are recommended to the client, the mutual fund company may charge
fees and expenses that are unrelated to Breton Financial, Inc. Additionally, clients will incur
brokerage and other transaction costs separate from Breton Financial’s fees. See page 9 for
further discussion of Brokerage Practices.

Types of Clients
Breton Financial, Inc. provides financial planning services to individuals and their families. A
smaller percentage of services are also provided to charitable organizations, trusts and estates.
These services include, but are not limited to:

   •   Furnishing investment supervisory services, defined as the giving of continuous advice
       to clients as to the investment of funds on the basis of individual needs of each client.

   •   Furnishing advice to clients on matters not involving securities such as cash flow
       management, retirement planning, and risk management.

Methods of Analysis, Investment Strategies and Risk of Loss
Breton Financial, Inc. employs fundamental, technical and cyclical security analysis. Research
information is obtained from financial periodicals, research material prepared by others,
corporate rating services, filings from the Securities and Exchange Commission, corporate
annual reports and press releases, financial news services, prospectuses and financial industry
publications (both print and electronic).

Our clientele is generally mature and well-to-do, with a moderate risk tolerance. Preservation
of purchasing power over an extended period is of greater concern to them than superior
performance in a given year. For that reason, Breton Financial, Inc. manages balanced
portfolios using domestic equities, domestic fixed income securities, domestic money market
and bank deposits and domestic real estate investment trusts. All of these investments, with
the exception of government-guaranteed bank deposits and CDs, involve some risk of principal
loss which clients should be prepared to bear.

   •   By using mostly large capitalization, domestic equities across at least five industry
       sectors, Breton Financial, Inc. seeks to reduce the risks inherent in equity investing.

   •   By recommending only investment-grade, short – and intermediate – term debt
       instruments, Breton Financial, Inc. seeks to reduce the risks inherent in fixed income
       investing.

   •   By recommending only well capitalized, exchange-traded equity real estate investments
       trusts (REITs) or mutual funds that invest in equity REITs, Breton Financial, Inc. seeks to
       add portfolio diversification while reducing the risks inherent in real estate investing.
No client portfolio is exposed to significant or unusual risk as a result of Breton Financial, Inc.
recommendations. Because clients maintain complete control over their assets, there may be
situations in which a client has a large, concentrated position in a single company, therefore,
bearing an unusual degree of risk. The choice to maintain such a position belongs to the client;
Breton Financial, Inc. will recommend that the position be reduced in order to reduce overall
portfolio risk.