Capital Prospects LLC

Item 5. Fees and Compensation

Where retained as a discretionary manager-of-managers, the firm receives an annual management fee
based on the market value of account assets. Our annualized fee schedule is 0.20% on the first $50
million of assets, 0.15% on the next $50 million of assets and 0.10% on assets above $100 million. These
fees are negotiable.

Fees are payable quarterly in arrears. The quarterly fee amount is typically calculated by applying one
quarter of the annual fee rate to the average of the month-end market values of the client’s account for
each of the three months in the quarter.

An account initiated or terminated during a calendar quarter is charged a prorated fee.

Where we are retained as a consultant, our fees are quoted on a project basis. Such fees are also
negotiable. Retainer arrangements may be entered into and terms are negotiable among all parties. Fees
for services rendered either on a project or retainer basis are billed and payable quarterly in arrears.

Clients are invoiced for fees.

Additional fees and expenses which may be payable by a client in connection with a manager-of-
managers program include: sub-manager fees, custodial fees to the client’s custodian, and brokerage and
other transaction costs (please see Item 12).

The specific manner in which we charge fees is established in a client’s written agreement with the firm.
As a manager-of-managers, the programs we manage are also subject to the fees of the sub-managers to

which we allocate client assets, in addition to our fees.

Some clients choose to pay a single fee to us, and we are responsible for compensating the sub-managers.
In these cases, we agree the total program management fee with the client, and we are responsible for
negotiating fees with each sub-manager. Our fee is then the residual between the client’s program
management fee and the sum of the underlying sub-managers fees. In such cases, our residual fee may be
different from the fee rates described above.

Other clients choose to pay us our fees separately and pay the sub-manager fees directly to the sub-
managers. In this type of arrangement, our fee is as stated in the first paragraph of this Item 5.

We typically negotiate all sub-manager fees, regardless of whether the sub-manager fees are paid directly
to the sub-managers by the client.

The client makes the decision as to which fee process it prefers to use. No client must pay fees in
advance.

Neither the firm nor any of its supervised persons accepts compensation for the sale of securities or other
investment products.

Item 7. Types of Clients

Capital Prospects generally provides investment management services to institutional pension plans. The
firm’s strategy could also be applicable to individuals and trusts.

We do not have a hard and fast minimum account size, but as a practical matter, a well-diversified
multiple manager program would call for an account size of $40 million or more.