Goldman Capital Management Inc

Fees	
  and	
  Compensation

Investment	
  Management	
  Fees

GCMI	
   is	
   generally	
   paid	
   an	
   annual	
   investment	
   management	
   fee	
   equal	
   to	
   1.75	
   percent	
   of	
   the
assets	
   under	
   management	
   in	
   a	
   client	
   account.	
   	
   GCMI	
   charges	
   fees	
   quarterly	
   in	
   advance	
   and
deducts	
  its	
  fees	
  directly	
  from	
  client	
  accounts.	
  	
  A	
  client	
  may	
  choose	
  to	
  be	
  billed	
  for	
  fees	
  rather
than	
  to	
  have	
  fees	
  directly	
  deducted.

Fees	
  may	
  be	
  negotiated	
  based	
  on	
  the	
  size	
  and	
  type	
  of	
  investments	
  involved.	
  	
  A	
  variance	
  in	
  fees
may	
  be	
  appropriate	
  in	
  cases	
  in	
  which	
  a	
  client	
  requests	
  special	
  account	
  structures	
  or	
  has	
  atypical
objectives.	
  	
  GCMI	
  has	
  the	
  flexibility	
  to	
  change,	
  reduce,	
  or	
  waive	
  its	
  fees	
  in	
  its	
  sole	
  discretion.

GCMI	
   computes	
   its	
   fees	
   based	
   on	
   the	
   market	
   value	
   of	
   the	
   assets	
   in	
   the	
   account	
   or,	
   in	
   the
absence	
  of	
  a	
  readily	
  ascertainable	
  market	
  value,	
  based	
  on	
  the	
  fair	
  value	
  of	
  these	
  assets	
  in	
  the
account	
   as	
   GCMI	
   determines	
   fair	
   value	
   in	
   good	
   faith.	
   	
   GCMI	
   may	
   hold	
   cash	
   in	
   accounts	
   for
strategic	
   and	
   other	
   purposes.	
   	
   Assets	
   invested	
   in	
   mutual	
   funds,	
   exchange-­‐traded	
   funds,	
   and
money-­‐market	
   funds	
   are	
   charged	
   fees	
   by	
   the	
   fund	
   managers	
   that	
   are	
   in	
   addition	
   to	
   the	
   fees
charged	
  by	
  GCMI.

Client	
   agreements	
   for	
   managed	
   accounts	
   permit	
   either	
   the	
   client	
   or	
   GCMI	
   to	
   terminate	
   the
investment	
  advisory	
  relationship	
  at	
  any	
  time	
  upon	
  a	
  thirty-­‐day	
  written	
  notice.	
  	
  If	
  a	
  relationship
terminates,	
  GCMI	
  refunds	
  any	
  unearned	
  fees	
  previously	
  paid	
  ratably	
  based	
  on	
  the	
  number	
  of
calendar	
   days	
   remaining	
   after	
   the	
   termination	
   date	
   in	
   the	
   period	
   as	
   to	
   which	
   fees	
   have	
   been
prepaid.

Brokerage	
  and	
  Other	
  Fees

Brokerage	
   firms	
   typically	
   charge	
   transaction	
   fees	
   on	
   purchases	
   or	
   sales	
   of	
   securities,	
   and
account	
   custodians	
   may	
   charge	
   custodial	
   fees.	
   	
   These	
   charges	
   are	
   usually	
   small	
   in	
   relation	
   to
the	
  value	
  of	
  the	
  account.	
  	
  The	
  selection	
  of	
  the	
  security	
  is	
  more	
  important	
  than	
  the	
  fees	
  that	
  a
brokerage	
   firm	
   charges	
   to	
   buy	
   or	
   sell	
   the	
   security.	
   	
   Clients	
   have	
   the	
   option	
   to	
   purchase
securities	
  that	
  GCMI	
  recommends	
  through	
  brokerage	
  firms	
  of	
  their	
  own	
  choosing.	
  	
  Additional
information	
   about	
   transaction	
   expenses	
   is	
   included	
   in	
   the	
   section	
   entitled	
   “Brokerage
Practices.”

                        Performance-­‐Based	
  Fees	
  and	
  Side-­‐by-­‐Side	
  Management

GCMI	
  charges	
  no	
  performance-­‐based	
  fees	
  and	
  does	
  not	
  engage	
  in	
  side-­‐by-­‐side	
  management.

Types	
  of	
  Clients

Description

GCMI	
  furnishes	
  investment	
  management	
  services	
  to	
  individuals,	
  individual	
  retirement	
  accounts,
pensions	
   and	
   profit-­‐sharing	
   plans,	
   trusts,	
   estates,	
   and	
   corporations.	
   	
   Several	
   GCMI	
   clients	
   are
persons	
  and	
  entities	
  controlled	
  or	
  influenced	
  by	
  GCMI	
  personnel	
  or	
  members	
  of	
  their	
  families.

Minimum	
  Account	
  Size

GCMI	
   generally	
   requires	
   a	
   minimum	
   of	
   $250,000	
   for	
   new	
   managed	
   accounts.	
   	
   GCMI	
   reserves
the	
  right	
  to	
  increase	
  or	
  decrease	
  the	
  minimum	
  account	
  size	
  that	
  it	
  accepts.

Know	
  Your	
  Customer

It	
  is	
  GCMI	
  policy	
  to	
  know	
  and	
  understand	
  the	
  identities	
  of	
  clients	
  and	
  prospective	
  clients	
  and
the	
  business	
  reasons	
  for	
  any	
  transactions	
  in	
  which	
  GCMI	
  engages	
  on	
  behalf	
  of	
  its	
  clients.	
  	
  GCMI
does	
   not	
   directly	
   or	
   indirectly	
   conduct	
   any	
   business	
   with	
   any	
   person	
   or	
   entity	
   whose	
   identity
and	
  source	
  of	
  funds	
  have	
  not	
  been	
  verified	
  to	
  the	
  satisfaction	
  of	
  the	
  account	
  custodian.

                    Methods	
  of	
  Analysis,	
  Investment	
  Strategies,	
  and	
  Risk	
  of	
  Loss

Investment	
  Strategy

GCMI	
  recommends	
  exchange-­‐listed	
  securities,	
  securities	
  traded	
  over	
  the	
  counter,	
  securities	
  of
non-­‐United	
   States	
   issuers,	
   municipal	
   securities,	
   and	
   shares	
   of	
   mutual	
   funds,	
   exchange-­‐traded
funds,	
   and	
   money-­‐market	
   funds.	
   	
   GCMI	
   manages	
   client	
   portfolios	
   composed	
   primarily	
   of
common	
   stocks	
   that	
   meet	
   objective	
   criteria	
   established	
   by	
   GCMI.	
   	
   Portfolio	
   securities	
   are
purchased	
  and	
  sold	
  from	
  time	
  to	
  time	
  solely	
  on	
  the	
  basis	
  of	
  meeting	
  or	
  failing	
  to	
  meet	
  these
criteria.

GCMI	
  uses	
  fundamental	
  and	
  technical	
  analysis	
  to	
  attempt	
  to	
  determine	
  accurate	
  valuations	
  and
to	
  identify	
  securities	
  that	
  are	
  perceived	
  to	
  be	
  inefficiently	
  priced	
  but	
  to	
  have	
  the	
  potential	
  for
above-­‐average	
   returns.	
   	
   GCMI	
   is	
   not	
   limited	
   in	
   the	
   specific	
   investment	
   strategies	
   that	
   it	
   may
employ.	
  	
  It	
  may	
  use	
  long-­‐term	
  purchases	
  (securities	
  held	
  at	
  least	
  a	
  year),	
  short-­‐term	
  purchases
(securities	
   sold	
   within	
   a	
   year),	
   trading	
   (securities	
   sold	
   within	
   thirty	
   days),	
   and	
   margin
transactions.

Sources	
  of	
  Information

The	
   main	
   sources	
   of	
   information	
   used	
   by	
   GCMI	
   include	
   financial	
   newspapers	
   and	
   magazines,
inspections	
   of	
   corporate	
   activities,	
   research	
   materials	
   prepared	
   by	
   others,	
   corporate	
   rating
services,	
   annual	
   reports,	
   prospectuses,	
   filings	
   with	
   the	
   Securities	
   and	
   Exchange	
   Commission,
and	
  company	
  press	
  releases.
GCMI	
   uses	
   information,	
   reports,	
   and	
   data	
   from	
   various	
   sources,	
   but	
   the	
   investment	
   decisions
that	
  Mr.	
  Goldman	
  makes	
  on	
  behalf	
  of	
  clients	
  are	
  based	
  primarily	
  on	
  his	
  own	
  internal	
  research
and	
  analysis.	
  	
  Mr.	
  Goldman	
  may	
  obtain	
  advice	
  from	
  attorneys,	
  accountants,	
  and	
  other	
  experts
to	
   assist	
   in	
   his	
   investment	
   analysis.	
   	
   In	
   addition,	
   he	
   may	
   obtain	
   research	
   information	
   from	
   third
parties,	
   including	
   published	
   reports	
   of	
   companies	
   and	
   other	
   issuers,	
   general	
   economic	
   data,
and	
  governmental	
  publications	
  and	
  data	
  compilations.

Managing	
  Risk	
  of	
  Loss

All	
   investment	
   programs	
   have	
   certain	
   risks	
   that	
   are	
   borne	
   by	
   the	
   investor.	
   	
   The	
   investment
approach	
   employed	
   by	
   GCMI	
   constantly	
   keeps	
   the	
   risk	
   of	
   loss	
   in	
   mind.	
   	
   Like	
   other	
   investors,
GCMI	
  clients	
  face	
  the	
  following	
  investment	
  risks:

            Interest-­‐Rate	
   Risk:	
   	
   Fluctuations	
   in	
   interest	
   rates	
   may	
   cause	
   investment	
   prices	
   to
            fluctuate.	
  	
  For	
  example,	
  when	
  interest	
  rates	
  rise,	
  yields	
  on	
  bonds	
  tend	
  to	
  become	
  less
            attractive,	
  which	
  in	
  turn	
  causes	
  their	
  market	
  values	
  to	
  decline.

            Market	
   Risk:	
   	
   The	
   price	
   of	
   a	
   security,	
   bond,	
   or	
   mutual	
   fund	
   may	
   drop	
   in	
   reaction	
   to
            tangible	
   and	
   intangible	
   events	
   and	
   conditions.	
   	
   This	
   type	
   of	
   risk	
   is	
   caused	
   by	
   external
            factors	
   regardless	
   of	
   the	
   particular	
   circumstances	
   affect	
   a	
   security.	
   	
   For	
   example,
            political,	
  economic,	
  and	
  social	
  conditions	
  may	
  influence	
  market	
  conditions.

            Inflation	
  Risk:	
   	
   When	
   inflation	
   is	
   present,	
   a	
   dollar	
   today	
   will	
   not	
   buy	
   as	
   much	
   as	
   a	
   dollar
            next	
  year,	
  because	
  the	
  purchasing	
  power	
  of	
  the	
  dollar	
  is	
  eroding	
  at	
  the	
  rate	
  of	
  inflation.

            Currency	
  Risk:	
  	
  A	
  security	
  that	
  is	
  not	
  denominated	
  in	
  United	
  States	
  dollars	
  is	
  subject	
  to
...