Capital Investment Management LLC

Item 5 FEES AND COMPENSATION

ADVISORY FEES
For its investment management services, The Sullivan Group charges an annual fee based
on a percentage of assets under management. The Sullivan Group’s annual investment
management fee is charged monthly, in advance, based upon the market value of the
assets at the end of the previous month as reflected on the client’s custodian account
statement. All assets in the account are included in the fee assessment unless specifically
identified in writing for exclusion. For new accounts, The Sullivan Group charges a fee based
on the value of assets placed in the account, prorated to the portion of the month during
which the assets were under management by the Firm. The first advisory fee is based on the
value of the account on the first day of management by The Sullivan Group and is payable
upon execution of the agreement.

The Firm’s standard fee schedule is as follows:

  Value of Account Assets                                            Annual Fee Rate
  On the market value up to $500,000                                 1.75% plus
  On the market value between $500,000 and $1,000,000                1.50% plus
  On the market value of Account over $1,000,000                     1.25% plus

The fee for investment management is based on the time weighted value of the account
for the previous month and is payable monthly in advance. The first advisory fee is based on
the value of the account on the first day of management by The Sullivan Group and is
payable upon execution of the agreement. The first advisory fee is assessed on pro-rata
basis taking into account the time for which the account was not managed by The Sullivan
Group and the time left in the month.

Clients customarily authorize The Sullivan Group to deduct its investment advisory fee
directly from their custodial account. This authorization is granted under the terms of the
client’s signed investment management agreement and the client’s instructions to the
custodian. Adviser will invoice Client’s Custodian on a monthly basis and post the invoice
for Client access through the Custodian’s client portal. Adviser’s fee also will be noted as a
transaction on Client’s account statement from the custodian. It is the client’s responsibility
to verify the accuracy of the fee calculation, as Client’s custodian will not determine
whether the fee is properly calculated.

The client’s investment management fee is determined in accordance with the above
standard fee structure, with exceptions negotiated on a case-by-case basis at The Sullivan
Group’s discretion.

The client may make additions to and withdrawals from the client’s custodial account at
any time. If assets are withdrawn from an account after the inception of a billing period,
the fee payable with respect to such assets will not be adjusted or prorated based on the
number of days remaining in the billing period. Clients may withdraw account assets on
notice to The Sullivan Group, subject to the usual and customary securities settlement
procedures. The Sullivan Group designs its portfolios as long-term investments and asset

withdrawals may impair the achievement of a client’s investment objectives. Client
accounts with significant withdrawals that reduce assets below the Firm’s minimum account
size may result in the Firm terminating the relationship with the client.

To the extent that a client authorizes the use of margin, and margin is thereafter employed
by our portfolio managers in the management of the client’s portfolio, the market value of
the client’s account and corresponding fee payable by the client to The Sullivan Group
may be increased. As a result, in addition to understanding and assuming the additional
principal risks associated with the use of margin, clients authorizing margin are advised of
the potential conflict of interest whereby the client’s decision to employ margin may
correspondingly increase the management fee payable to the Firm. Accordingly, the
decision as to whether to employ margin is left to the sole discretion of client.

Fees for 401k Pension Services
The Firm’s standard fee schedule for pension services is as follows:

 Value of Account Assets                                               Annual Fee Rate
 Any Assets                                                            0.50% - 1.50%

Brokerage Commissions on the Sale of Insurance Products
In order to be able to provide insurance products to its clients for which such products are
suitable and appropriate, Mr. Halverstadt, as an individual, is a licensed insurance agent
and registered representative of a broker-dealer. As such, and in addition to the investment
management fees paid by clients to the Firm, they may receive brokerage commission
payments for transactions they effect for The Sullivan Group clients.

GENERAL FEE DISCLOSURE
We believe our investment management fees are competitive with the fees charged by
other investment advisors in the major California metropolitan areas for comparable
services. However, comparable services may be available from other sources for lower fees
than those charged by The Sullivan Group.

Services provided for the above fees are for investment advice and reporting. The Sullivan
Group, in its sole discretion, may negotiate to charge a lesser investment management fee
based upon, among other criteria, anticipated future earning capacity, anticipated future
additional assets, dollar amount of assets to be managed, related accounts, account
composition, pre-existing client relationship, account retention and/or pro bono activities.

CUSTODIAN AND BROKERAGE FEES
Clients incur certain charges imposed by their custodians and other third parties such as
custodial fees, deferred sales charges, odd-lot differentials, transfer taxes, wire transfer and
electronic fund fees, and other fees and taxes on brokerage accounts and securities
...

Item 7 TYPES OF CLIENTS

Our clients include individuals and their trusts and estates, pension and profit-sharing plans,
corporations or other businesses and charitable organizations. We have established a
minimum value of assets of $250,000 for opening an individual client account. As a result,
The Sullivan Group’s services may not be appropriate for everyone. Particularly for smaller
accounts, other investment advisors may provide somewhat similar services for lower
compensation, although still others may charge more for similar services.

Multiple client accounts may be aggregated to meet the Firm’s minimum assets
requirement. Under certain circumstances, and in its sole discretion, The Sullivan Group may
waive or alter the minimum account size requirement. Accounts placed with the Firm prior
to the institution of the minimum account size requirement may be exempted.