Capital Formation Advisers LLC

Fees and Compensation

Generally the fees charged by CFA for portfolio management are on a negotiated fixed fee basis,
usually paid on a quarterly basis. CFA provides other investment advice services with fees for those
services based on an hourly rate or a fixed fee. All fees charged by CFA are negotiable.

All fees paid to CFA are paid by the clients directly. Portfolio management fees are paid to CFA
quarterly on account in advance. In the event CFA is terminated as an adviser during the course
of the year or billing period the client will receive a refund based on a prorated fee for the period
of time that CFA acted as investment adviser, based on the assets under management at the date
of the end of management by CFA.

As CFA does not maintain custody of any clients assets clients will incur brokerage and other
transaction costs incurred in their brokerage accounts in connection with trading activity advised
by CFA.

Types of Clients

CFA generally provides investment advice to high net worth individuals, and estates and trusts.

Methods of Analysis, Investment Strategies and Risk of Loss

Investment strategy used by CFA for each client is specific to the particular client and their portfolio.
Generally, CFA looks to identify securities that the market has undervalued, that have good long
term prospects. Part of this analysis involves a determination of whether the market has correctly
priced in risk of loss or decline in asset value.

Investing in securities involves risk of loss that clients should be prepared to bear.

CFA utilizes two basic investment strategies both of which focus on total return. The primary

strategy is used for individual clients or portfolios that are taxable. This strategy tends to involve
more equities than fixed income, but the actual ratio of those securities in a portfolio depends on
the client’s goals, time frame and the client’s acceptable levels of risk. The other investment
strategy is used for non-taxable or tax deferred accounts. This strategy looks to determine what
the client will need to withdraw from the account over time, and then seeks to provide a total return
that will attempt to meet or exceed the projected amount of withdrawal needed at the time of
withdrawal. As these accounts are nontaxable or tax-deferred that allows for use of certain fixed
income securities that provide a predictable cash flow and cash at maturity covering withdrawals
for the first five or ten years, and giving the equities in the account time to achieve returns in line
with the long term stock market returns. In addition, losses are not allowed to be recognized for tax
purposes in these types of accounts, so even greater attention is given to avoiding loss of principal
in those accounts.

CFA only provides investment advice with respect to listed securities in all clients’ accounts. All
investments in securities have the potential for the risk of loss of all or a part of the principal. In
addition, all investments in securities have the potential for the risk of loss or some or all of any
income derived from such securities.

In order to achieve good inflation-adjusted returns for clients CFA prefers to invest in equities,
particularly if the client has an investment time frame of more than 2 to 3 years. The risks involved
with investments in equities include market fluctuation, loss of principal and lower position in capital
structure than fixed income securities which provides less protection for principal in the event of
bankruptcy.

Other Financial Industry Activities and Affiliations

Richard C. Veith is a lawyer admitted to practice in New York State and maintains a law firm. In
any circumstance that would present a conflict of interest with any client of CFA Mr. Veith would
advise the client to obtain legal counsel other than Mr. Veith.

Code of Ethics, Participation or Interest in Client Transactions and Personal Trading

CFA has a written code of ethics which outlines CFA’s requirements: 1) for dealing with material
nonpublic information, 2) for personal securities trading by employees of CFA, 3) approval
requirements for employees of investing in an initial public offering or private placement offering,
4) of prompt internal reporting of any violations of the CFA’s code of ethics, 5) for distribution of
the CFA’s code of ethics and any amendments to each supervised person at CFA, 6) that the code
of ethics be maintained and enforced, which includes mandatory review of access persons’
securities reports for compliance with CFA’s internal procedures and code of ethics, 7) for record
keeping relating to the code of ethics, records of violations of the code and actions taken as a
result of the violations, and copies of supervised persons’ written acknowledgment of receipt of the
code, 8) to amend CFA’s Form ADV to describe the code of ethics to clients and furnish a copy the
code to clients.

A copy of CFA’s code of ethics will be provided to any client or prospective client upon request.

CFA’s code of ethics provides that employees of CFA may not trade in the same securities or
related securities such as warrants, options or futures that CFA recommends to clients, for their

own account prior to trading the same security or a security that could be effected by the trade
made by the employee for their own account unless the volume of trading is such that in the opinion
of the chief compliance officer it is unlikely to have a material impact on the securities to be traded
for the client.