Hawthorn Capital Management LLC

Item 5.          Fees and Compensation

Hawthorn’s compensation for investment management services is negotiable and varies, but
typically, it charges an annual fee of from 0.2% to 1.0% of assets under management, which is

payable in quarterly installments at the beginning of each calendar quarter based on the net
market value of each client’s account on the date the fee accrues and becomes payable.

Hawthorn typically deducts management fees directly from client accounts but may bill a client
for such amounts on request.

Hawthorn may select sub-advisers to manage portions of certain clients’ assets. Hawthorn may
waive its investment management fees with respect to client assets that are managed by such
sub-advisers, so that those clients pay only the sub-advisers’ fees. If Hawthorn does not waive
its fees in such cases, clients will pay a double level of fees, to both Hawthorn and the sub-
adviser.

Client accounts that invest in mutual funds also pay, indirectly, investment advisory fees to the
managers of those funds.

Each account is responsible for its own costs and expenses, including custodial fees and trading
costs and expenses (such as brokerage commissions, expenses related to short sales, and clearing
and settlement charges). Hawthorn bears its own operating, general, administrative and
overhead costs and expenses, other than the expenses described above. All or part of these costs
and expenses may be paid, however, by securities brokerage firms that execute clients’ securities
trades, as discussed in Item 12 below.

Hawthorn believes that its investment management fees are competitive with fees charged by
other investment advisers for comparable services. Comparable services may be available,
however, from other sources for lower fees.

Except as may be otherwise negotiated in particular cases, a client may terminate the account by
giving 30 days’ prior written notice. Expenses and the pro rata portion of the management fee
through the date of termination are charged to the account. All prepaid but unearned advisory
fees are refunded on termination of a client’s account.

Item 7.       Types of Clients

Hawthorn provides investment advice to high-net-worth individuals, institutions, trusts,
endowments and pension plans. Hawthorn generally requires a minimum of $10,000,000 to
open an account, but may waive this minimum.