Greenhaven Associates Inc

FEES AND COMPENSATION

       Greenhaven charges its clients (1) a quarterly management fee based on the amount of
assets under management at the start of each quarter and (2) in years when an account has
appreciated by more than 20%, an annual incentive fee.

         The annualized quarterly management fee is .94% of assets under management.

        The annual incentive is based on the annual appreciation, gross of investment management
fees, in the account and is an amount equal to 5% of the appreciation that is in excess of 20% of
the value of the account on January 1 of the year. For example, if an account appreciates 30% in
a given year (before deducting the quarterly investment management fees), the incentive fee for
the year is 5% of 10%, or ½% of the adjusted assets under management at the start of the year 1.                  0F

When the incentive fee is calculated, the appreciation in the account is adjusted for any additions
to or withdrawals from the account during the year.

        The above fee schedule is not negotiable. Fees are not refunded if a client withdraws funds
or closes an account during a quarter.

      Quarterly management fees are payable close to the start of the relevant quarter. Currently,
Greenhaven Associates’ clients may use JP Morgan as a custodian for their securities (or clients
may use a custodian of their choice). JP Morgan charges a nominal fee for this service. Clients

  Assets are adjusted for the time weighted effect that additions or withdrawals had on the funds available for
investment.

who elect to use JP Morgan may, at their option, have their quarterly management fees and
incentive fees withdrawn directly from their account at JP Morgan.

PERFORMANCE-BASED FEES AND SIDE-BY-SIDE MANAGEMENT

         As mentioned above, Greenhaven charges an incentive fee in years when the value (as
defined) of an account appreciates by more than 20%. The SEC is concerned that investment
managers who manage both accounts that are subject to incentive fees and accounts that are not
subject to incentive fees will favor the accounts that are subject to the incentive fees. Since all
Greenhaven’s fee paying accounts are subject to incentive fees, this conflict of interest does not
exist at Greenhaven.

TYPES OF CLIENTS

     Greenhaven’s clients include individuals, trusts, foundations, pension plans, IRAs, and
endowments.

        Very importantly, Greenhaven manages substantial portfolios owned or controlled by Ed
Wachenheim and his immediate family. We call these accounts “Wachenheim Family” accounts.
In addition, Greenhaven manages substantial portfolios owned or controlled by close relatives of
Ed Wachenheim’s wife (Sue Wallach Wachenheim). We call these accounts “Wallach Family”
accounts. Wachenheim Family and Wallach Family accounts include individual accounts, trusts,
corporations, charitable foundations, and ERISA and other retirement plans. The total value of
Wachenheim Family and Wallach Family accounts approximates 60% of the total funds under
Greenhaven’s management. Wachenheim Family accounts are managed by Ed Wachenheim,
Chris Wachenheim, and, to a lesser extent, David Shakirov. Wallach Family accounts are
managed by Ed Wachenheim, Josh Sandbulte, to a lesser extent, Chris Wachenheim. And, non-
family accounts largely are co-managed by Josh Sandbulte and Ed Wachenheim and, to a much
lesser extent, Chris Wachenheim.

         Although the securities owned by Wachenheim Family and Wallach Family accounts
historically largely have been the same as those owned by Greenhaven’s non-family clients,
differences may occur for a variety of reasons, especially because of differing opinions among the
four managers on the attractiveness of a security, but also because of the amount of cash available
for investments, and because of tax and other considerations. Sometimes, Wachenheim Family
accounts are more concentrated (hold larger positions in fewer securities) than non-Wachenheim
accounts. Also, because the Wachenheim and Wallach families have a very large percentage of
their liquid assets and net worth invested with Greenhaven, the families’ accounts sometimes will
include cash reserves (held for liquidity, held to pay taxes, etc.) that the families wish to hold aside
and not be invested in common stocks.

       Securities most often are purchased or sold for Wachenheim Family or Wallach Family
accounts at the same time they are purchased or sold for non-family clients. In such cases,
purchases and sales are made in conformity with Greenhaven’s policies on personal trading (please

refer to the section of this brochure titled “Code of Ethics, Participation or Interest in Client
Transactions, and Personal Trading” for details on Greenhaven’s policies on personal trading).

        It is important that Greenhaven’s clients weigh the advantages and disadvantages
(including potential conflicts of interest) of being a client of a firm where the principal investment
manager and his relatives account for roughly 60% of the funds under management.

        Greenhaven wishes to control the total amount of money under its management and
therefore usually does not accept new accounts, except, under certain circumstances, for existing

METHODS OF ANALYSIS, INVESTMENT STRATEGIES, AND RISK OF LOSS

       Greenhaven performs its own research on every security it purchases for clients. The
research is performed by the three investment managers. Often, all three managers perform
research on the same security. Having all three managers knowledgeable about a particular
company enhances the debates about the investment merits of the company’s shares: the pros and
the cons. The three managers meet often to discuss companies, industries, and, sometimes, the
general climate for equity investments. While Greenhaven does not rely on research by Wall Street
brokerage firms, the three investment managers often read research reports in order to learn about
what others are thinking about a company or industry.

       Greenhaven’s research normally includes the study of public information (Form 10Ks,
annual reports, newspapers, magazines, etc.). In addition, the three investment managers usually
meet with and interview top management and try to obtain knowledge from industry sources,
suppliers, customers, etc.

        Greenhaven’s investment strategy is to purchase undervalued securities and then to sell the
securities when they become fully or overvalued. When Greenhaven appraises the value of a
security, it typically looks two or four years ahead. Many other investors have a much shorter time
horizon than two to four years and will shun, or even sell, a security that appears unattractive in
the shorter run, even if its longer-term potential appears attractive. Therefore, by being willing to
de-emphasize the importance of the short-term performance of a security, or of an entire portfolio,
Greenhaven believes that it often has a good opportunity to purchase out-of-favor securities that
are selling at undervalued prices. The two-year pond is less fished by others - and therefore is a
more likely to yield more and larger fish for Greenhaven.

        Greenhaven normally searches for securities that not only appear materially undervalued
but also that, in Greenhaven’s opinion, have a high probability of appreciating sharply as the result
of one or more positive changes. Examples of positive changes include: the introduction of an
exciting new product, a systemic increase in the demand for an existing product or service, the
hiring of a new capable management to replace a less capable one, or the execution of a major cost
reduction program.

       While Greenhaven usually holds a security for a period longer than one year, occasionally
a security is held for less than a year, especially in cases when the security appreciates sharply

soon after it is purchased, or when an unexpected event detracts from the attractiveness of the
security, or when Greenhaven discovers that it has made an error in judgment.

        Greenhaven normally does not attempt to “time” the stock market. The firm’s prime
strategy is to remain relatively fully invested as long as it can find a sufficient number of attractive
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