Harbor Advisory Corporation

Item 5: Fees and Compensation

A. Investment Management Fee Schedule

Investment management fees are based on a percentage of assets under management, which are
determined using the market value of accounts, including cash or by adding margin balance, if any,
shown in the initial and quarterly appraisals. Investment management fees are calculated according to
the following Fee Schedule:

         ANNUAL FEE SCHEDULE BASED ON ASSETS UNDER MANAGEMENT:

                 Annual Fee Schedule Based on Assets Under Management:

                 Asset Value                                             Annual Fee

                 First $1,000,000                                          1.10%
                 Plus $1,000,000 to $5,000,000                             0.70%
                 Plus $5,000,000 to $10,000,000                            0.60%
                 Plus $10,000,000 to $20,000,000                           0.50%
                 Plus $20,000,000 or more                                Negotiated

Harbor charges a minimum annual fee of $20,000. However, this minimum annual investment
management fee may be waived at Harbor’s discretion in certain circumstances. Some clients have a
fixed fee as a percentage of all assets expressed in basis points charged. Harbor reserves the right to
negotiate a lower fee under certain circumstances.

Our advisory fees are based on several factors including, but not limited to: the services offered to the
Client, the complexity of the services to be provided, the level of Client assets managed by the
Advisor, and/or the overall relationship with the advisor.

B. How Fees are Paid

Fees may be subject to proration if there are multiple accounts. Fees are paid quarterly in advance.
Typically, the quarterly advisory fee is deducted automatically from each client’s account held at a
designated custodian pursuant to standing instructions provided to the custodian by the client.

C. Other Fees (Custody, etc.)

In addition to the investment management fee assessed by Harbor, each client is responsible for any and
all custodial fees as well as brokerage and other transaction costs incurred in connection with Harbor’s
investment management services. To the extent that a client invests in a pooled investment vehicle such
as a mutual fund, an exchange-traded fund or direct investments, the client

will indirectly bear fees and expenses charged by the underlying pooled investment.

In addition, in instances where clients request Harbor, or its related persons, to provide services other
than investment management services, Harbor may charge additional fees. For example, Harbor may
charge additional fees on an hourly basis or a fixed fee basis in instances where it provides consulting
services.

D. Advance Fee Refund Policy

Harbor’s clients are required to pay investment management fees quarterly in advance. If the
advisory agreement between Harbor and any client is terminated prior to the end of the billing
period, any unearned fee shall be refunded pro-rata based on the day of receipt of the written
termination notice.

E. Commissionable Securities Sales

Neither Harbor nor any of its supervised persons accepts compensation for the sale of securities or
other investment products either from sales charges, commissions or service fees.

Item 7: Types of Clients

Harbor serves as an investment advisor to families, individuals, pensions and profit-sharing plans,
trusts, estates, foundations, charitable organizations, and corporations. The great majority of
Harbor’s client base consists of families and related accounts.