Daruma Capital Management LLC

5. Fees and Compensation

Individual Managed Accounts

Management Fee

Daruma LLC is generally paid a fee as a percentage of assets under management. The standard fee for
individual managed accounts is 1% per annum, charged quarterly in arrears based on the value of the
account at the end of the quarter. If an account terminates other than at the end of the quarter, fees
are prorated. However, we have discretion over the fee we charge any client, and may agree to a
lower fee, a different calculation methodology, or a different schedule for a particular client than we
have agreed with comparable clients in the same investment strategy. We may also agree, in our sole
discretion, to a fee that includes a performance-based fee, but only with clients that meet requisite
eligibility requirements.

We bill our clients for our management fees, although some clients may authorize their custodian or
a third party to pay us upon receipt of an invoice. Daruma LLC does not deduct its fees from
individual managed accounts.

The specific details of any client’s fee, including rate, calculation methodology, payment schedule,
etc. will be set forth in the client’s investment management agreement.

Other Fees and Expenses

Clients will also bear the costs of maintaining and trading in their account, including custodial fees,
brokerage commissions (see Brokerage Practices, below) and other securities transaction costs, wire
transfer and electronic funds charges, and the fees of any third party the client hires, such as an
auditor or consultant.

7. Types of Clients

As described in Advisory Business – Overview, Daruma LLC provides investment advisory services to
public and corporate pension funds, Taft-Hartley accounts, endowments, foundations, other
nonprofit organizations, corporations and high net worth individuals.

Generally, Daruma requires a minimum investment of $10 million for individual managed accounts.
Daruma may waive or modify these minimums in our sole discretion.

For individual managed accounts, Daruma requires a written investment management agreement and
an investment policy statement.         Additional documentation may be required in certain
circumstances, such as agreements with particular custodians. Generally, investors should satisfy
certain eligibility requirements established by the SEC before their investment will be accepted.