Capital Asset Management Inc

Fees and Compensation
Compensation for both the Wealth Management Service and the Investment Management Service
is calculated as a percentage of assets under management (AUM). Although fees are negotiable,
CAM recommends the following fee structure:

               Account Size                                   Accruing Fee
           $500,000 to $1,000,000                     1.00% of account value annualized
         $1,000,001 to $2,000,000                     0.75% of account value annualized
         $2,000,000 <                                 0.50% of account value annualized

Asset management fees are blended, so that clients pay 1% up to $1,000,000, 0.75% on additional
amounts not exceeding $2,000,000, and 0.50% on assets over $2,000,000. Management fees are

specifically delineated in an investment management agreement, drafted, and executed by both
the Client and a representative of the Advisor.

Advisor has an aggregated account minimum of $500,000.00 (five hundred thousand dollars),
however, it reserves the right to on-occasion accept accounts for less than the stated minimum
should certain circumstances prevail.

Investment advisory fees are billed one quarter in advance and are based on account values at
market close on the last day of the previous calendar quarter. Clients are asked to grant CAM
permission to debit client’s account(s) for the advisory fee, due and payable on the first day of the
calendar quarter. All fee debits are reflected on the client’s monthly or quarterly statement.

Proration: If CAM begins managing a client’s account during a given calendar quarter (the billing
period), a fee will be assessed on the market value of the assets in the account from the day after
the client’s assets were invested through the end of the quarter. Should a client elect to fully
liquidate or transfer an account during a calendar quarter, CAM will refund the unearned portion
of the fee paid. The proration would be calculated from the date of withdrawal or transfer until the
end of the calendar quarter.

Unless a certain threshold is reached, CAM will not refund or prorate an advisory fee on partial
withdrawals or transfers, If the client elects to take a distribution or withdraws funds in an amount
equal to or exceeding 50% of the account’s market value in any given quarter, the advisory fee will
be prorated from the day of the transfer or withdrawal, and any unearned portion of the fee will be
returned to the client. If the distribution or withdrawal in any given calendar quarter is less than
50% of the account’s market value, no advisory fee proration will be made.

In addition to the advisory fee, a client may incur certain brokerage fees or commissions, assessed
by the broker-dealer. These fees are considered transaction charges and are retained by the
broker-dealer or paid to the distributor of a particular investment. No portion of these fees is ever
shared with CAM.

Over and above the advisory fee received by CAM and charges assessed by the broker-dealer, a
client of the Advisor may also incur mutual fund expenses. These charges are levied by the various
mutual fund companies and are compensatory for the management and distribution services
provided by the fund companies. No portion of any mutual fund expense is every shared with or
paid to CAM.
The only fee CAM will ever receive from rendering its Investment Management service is the
advisory fee. Clients of CAM will acknowledge and agree to this fee in writing, in the Investment
Advisory Management Agreement.

CAM is very committed to minimizing all transactional (broker-dealer) fees and mutual fund
expenses. Although there is no guarantee that a broker-dealer or mutual fund investment
recommended by CAM will have the lowest fees available among respective peers, CAM is very
sensitive to the unwanted effect of high peripheral fees on portfolio performance and always seeks
to reduce these fees, when a similar or better level of service can be realized at a lower cost.

Performance-Based Fees and Side-By-Side Management
CAM seeks to align its interests solely with that of its clients. As a result, Advisor has never sought
to institute performance-based fees. CAM believes that as a fee-only advisor, it is compensated
for performance. Because the advisory fee is calculated as a percentage of the account assets,
growing the account value results in a marginally higher fee being paid to the firm for its services.
Conversely, should the account assets decrease in value, the firm’s management fee would also
decline.

The Advisor believes that instituting performance fees may undermine the trust relationship it
shares with its clients. Performance fees may be perceived by some Clients as inducing the
Advisor to take un-necessary risk with the management of the Client assets. As a result, the
Advisor has no plans to introduce such fees.

CAM’s sole management responsibility is the client accounts which reside on its platform. The firm
does not manage any other investment vehicle, which would create any opportunity for side-by-
side management.

Types of Clients
The Wealth Management services offered by CAM are typically most appropriate for affluent
families and individuals seeking to effectively manage both earned and inherited wealth. Advisor
has an aggregated account minimum of $500,000.00 (five hundred thousand dollars), however,
reserves the right, on occasion, to accept relationships below this threshold, provided the client’s
financial trajectory appears destined to meet or exceed the minimum standard within a relatively
short period of time. CAM may also accept a client who does not meet the account minimum, if the
client is related to or has a personal connection with a current client of the firm, e.g., a son or
daughter of a current client.

Although the firm’s services are primarily directed to families and individuals, CAM may also
provide Investment Management services for retirement plans, trusts, charitable organizations,
religious organizations, and estates. In addition, Advisor may assist businesses and individuals in
evaluating proposed investments, outside the realm of traditional account assets. Such analysis is
fundamental and derived through financial modeling and research. Advisor also may assist the
fiduciaries of non-profit concerns, trusts, and estates in executing their obligations.

Methods of Analysis, Investment Strategies and Risk of Loss
Investment Management: CAM embraces the tenets of value investing. At the core of value
investing is fundamental analysis, which seeks to determine the intrinsic value of a particular
investment by evaluating both quantitative and qualitative factors, such as prevailing economic
conditions, balance sheets, free cash flows and market dominance. The objective is to establish a
value for the investment, allowing the prospective investor to determine whether the security is
priced fairly, underpriced or overpriced. The goal of the value investor is to purchase when the
investment appears to be undervalued and sell when overvalued.

Although all investments are encumbered with some degree of risk, the value investor typically
seeks to mitigate that risk through a margin of safety. The value investor’s objective is to purchase

the investment below its actual intrinsic value, thus creating a possible buffer against further price
declines resulting from market volatility.

Value investors typically believe that markets are significantly influenced by emotions, ranging from
extreme optimism to grave pessimism, rather than logical decisions grounded in fundamental
analysis. As a result, value investors commonly assume that market inefficiencies will periodically
arise. These inefficiencies can often be exploited for gain. Practitioners of this philosophy
characterize value investing as a reasoned approach.

CAM believes that most investors fail to achieve the desired investment results due to ineffective,
inaccurate valuation methods and a failure to stay invested during periods of volatility. As a result,
the investor accepts and acts upon a level of risk which is neither understood nor justified.

Portfolio construction is always guided by the client’s investment policy. Within the framework of a
client-appropriate allocation strategy, CAM applies the principles of asset class diversification and
value investing, in an effort to produce risk-adjusted returns, which meet or exceed appropriate
benchmarks.

Risk: Any return above the risk-free rate—normally considered to be the rate on a three-month
U.S. Treasury bill—is predicated on some level of risk the investor assumes in procuring the
investment. Virtually every investment carries some risk, including but not limited to loss of
purchasing power, because inflation outpaces the rate of return on investment or the total loss of
capital due to business or sovereign failure.

Typically, the level of risk is directly correlated with the expected return. In most situations, the
higher the level of risk the client is willing to assume, the greater the potential return over a
significant period of time.

For many investors, risk is synonymous with volatility or price fluctuations. An asset’s value can
change significantly over certain periods of time, characterized by economic expansion or
contraction, political unrest, rising or falling interest rates, declining credit, obsolescence, or
bankruptcy. Often economic cycles can render certain assets either in or out of favor, boosting
or depressing market valuations.

CAM seeks the highest possible, risk-adjusted returns on behalf of its clients. A client’s ability
to handle risk is central to all investment decisions. A client’s risk tolerance is often dictated by
the client’s time horizon, his or her financial sufficiency, and his or her emotional acceptance of
price fluctuations.

Advisor strives at all times to match clients with appropriate allocation strategies, which accurately
reflect each client’s ability to accept a certain level of inherent risk. The advisor then incorporates
fundamental analysis in an effort to select the investments which appear to offer the greatest return
potential for the client’s portfolio, within certain asset classes.