Foundation Resource Management Inc

Item 5 – Fees and Compensation

Client fees are billed quarterly based on the fair market value of the client’s account. FRM’S basic fee
schedule is as follows:

                                                                  Fee as a % of Assets Managed
                       Investment Objective             First $5 million             Second $5 million
                              Equity                          1.00%                         0.85%
                              Fixed Income                    0.35%                         0.30%

The above are general fee schedules, which may be negotiable for clients whose assets exceed $10
million, but the basis for compensation (as a percentage of assets under management for portfolio
management and supervisory services) is not negotiable. FRM bills its fees on a quarterly basis in
arrears. No fees are billed or collected in advance. Clients may elect to be billed directly for fees, or
they may elect to authorize their custodians to directly debit fees from their accounts. Management
fees are prorated for each significant capital contribution and withdrawal (10% of client’s account
value) made during the applicable calendar quarter (except for de minimis contributions and
withdrawals). Accounts initiated or terminated during a calendar quarter will be charged a prorated
fee. Upon termination of any account, any earned, unpaid fees will be due and payable. See
disclosure at Item 7 below.

Note that FRM considers cash to be a managed asset and is therefore included in our fee calculation.
At any specific point in time, depending upon perceived or anticipated market conditions/events
(there being no guarantee that such anticipated market conditions/events will occur), FRM may
maintain cash positions for defensive purposes. In addition, while assets are maintained in cash, such
amounts could miss market advances. At times, fees on cash may exceed the money market yield.

Custodian Charges-Additional Fees As discussed at Item 12 below, when requested to recommend a
broker-dealer/custodian for client accounts, FRM generally recommends that Schwab or Fidelity
serve as the broker-dealer/custodian for client investment management assets. The specific broker-
dealer/custodian recommended could depend upon the scope and nature of the services required by
the client. Broker-dealers such as Schwab or Fidelity charge brokerage commissions, transaction,
and/or other type fees for effecting certain types of securities transactions (i.e., including transaction
fees for certain mutual funds, dealer spreads, and mark-ups and mark-downs charged for fixed
income transactions, etc.). The types of securities for which transaction fees, commissions, and/or
other type fees (as well as the amount of those fees) shall differ depending upon the broker-
dealer/custodian. While certain custodians, including Schwab or Fidelity generally (with exceptions)
do not currently charge fees on individual equity transactions, others do. Please Note: there can be
no assurance that Schwab or Fidelity will not change its transaction fee pricing in the future. Please
Also Note: Schwab and Fidelity may also assess fees to clients who elect to receive trade
confirmations and account statements by regular mail rather than electronically.

When beneficial to the client, individual fixed‐income and/or equity transactions may be effected
through broker‐dealers with whom FRM and/or the client have entered into arrangements for prime
brokerage clearing services, including effecting certain client transactions through other SEC
registered and FINRA member broker‐dealers (in which event, the client generally will incur both the
transaction fee charged by the executing broker‐dealer and a “trade-away” fee charged by Schwab or
Fidelity). The above fees/charges are in addition to FRM’s investment advisory fee. FRM does not
receive any portion of these fees/charges.

Item 12 further describes the factors that FRM considers in selecting or recommending broker-
dealers for client transactions and determining the reasonableness of their compensation (e.g.
commissions).

Conflict of Interest Although FRM will allocate client assets consistent with the client’s designated
investment objective, the fact that FRM earns a higher fee for management of equity versus fixed
income investments presents a conflict of interest since it will present an economic incentive to
allocate more assets to those types of securities from which it will earn a higher advisory fee.

Item 7 – Types of Clients

FRM provides portfolio management services to individuals, high net worth individuals, retirement
plans, charitable institutions, foundations, insurance companies, and hospitals.

FRM’s minimum account requirement is $2,000,000 of assets under initial management for each new
client relationship. FRM may allow exceptions to this requirement depending on the potential client’s
account’s proximity to the minimum requirement and/or their perceived capacity to meet the
minimum account requirement within a reasonable time. FRM, in its sole discretion, may charge a
lesser investment advisory fee or waive its fee entirely based upon certain criteria (i.e., dollar amount
of assets to be managed, account composition, grandfathered fee schedules, employees and family
members, referrals from existing clients, competition, negotiations with client, etc.). As a result of the
above, similarly situated clients could pay different fees.