Hendershot Investments Inc

Item 5 – Fees and Compensation

      A. Fees for Advisory Services

Hendershot Investments’ fee for advisory services varies depending on the amount of assets
managed by Hendershot Investments. On an annualized basis, Hendershot Investments’ fees for
portfolio management services are based on the following tiered fee schedule:
Assets Under Management                                                                         Annualized Fee
Assets less than or equal to $2,000,000                                                              1.00%
Assets above $2,000,000                                                                              0.50%

However, Hendershot Investments’ fees for asset management services are negotiable;
therefore, client arrangements may differ from those stated above. Hendershot Investments may
negotiate a lower advisory fee at its sole discretion based upon certain criteria (i.e., anticipated
future earnings capacity, anticipated future additional assets, dollar amount of assets to be
managed, related accounts, pre-existing client relationships, account retention, pro bono
activities, etc.). In addition, the firm may, in limited circumstances and in its sole discretion, offer
its investment management services to clients for a fixed fee. Where the firm charges a fixed fee,
a determination will be made as to the applicable fee and this fee will be directly dependent on
the size of the account, the nature of the services and/or the complexity of the portfolio. The fixed
fee will be agreed upon between both parties and will be outlined in the agreement for services.

Hendershot Investments or the client may terminate the management agreement within five days
of the date of acceptance without penalty to the client. After the five-day period, either party, upon
written notice to the other, may terminate the management agreement. The management fee will
be pro-rated for the quarter in which the cancellation notice was given, and fees will be due and
payable by the client. Refunds are not applicable as fees are payable in arrears.

      B. Fee Billing

The annual fee for portfolio management services is billed quarterly in arrears based on the
market value of the assets on the last day of the quarter. Fees will be assessed pro rata in the
event the portfolio management agreement is executed at any time other than the first day of a
calendar quarter. Hendershot Investments follows this pro rata adjustment practice for all
subsequent deposits or receipt of assets into the account. Client’s quarterly bills are adjusted for

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the pro-rated amount if the adjustment exceeds $25 or at management’s discretion for lesser
amounts. If a client terminates the investment advisory contract during a billing period,
Hendershot Investments will invoice the client for a pro-rated fee based on the number of days
the account was managed during the quarter. The client is responsible to pay for services
rendered up until the termination of the Agreement. The client may choose to have Hendershot
Investments either invoice the client directly for these portfolio management services or authorize
in writing the qualified, independent custodian holding the client’s funds and securities to pay the
fee from the client’s account. In either case, Hendershot Investments will remit an invoice to the
client showing the amount of the fee, the value of the client’s assets on which the fee was based,
and the specific manner in which the fee was calculated. It is the client’s responsibility to verify
the accuracy of the fee calculation as the custodian will not determine whether the fee is properly
calculated. All investment advisory fees debited from the client’s account by the custodian will be
clearly reflected on the client’s brokerage statements that are prepared and sent to the client by
the custodian.

      C. Other Fees and Expenses Clients May Pay

Advice offered by Hendershot Investments may involve investment in mutual funds or exchange-
traded funds. Clients are hereby advised that all fees paid to Hendershot Investments for
investment advisory services are separate and distinct from the fees and expenses charged by
mutual funds (described in each fund’s prospectus) to their shareholders. These fees will
generally include a management fee and other fund expenses. Hendershot Investments does not
receive any portion of the management fees or expenses charged by these funds. Further, there
may be transaction charges involved with purchasing or selling of securities. Hendershot
Investments does not share in any portion of the brokerage fees/transaction charges imposed by
the custodian holding the client funds or securities. The client should review all fees charged by
mutual funds, Hendershot Investments, and others to fully understand the total amount of fees to
be paid by the client. Item 12-Brokerage Practices further describes the factors that Hendershot
Investments considers in selecting or recommending broker-dealers for client transactions and
determining the reasonableness of their compensation (e.g., commissions).

      D. Advance Fees

Hendershot Investments does not bill client fees in advance of services rendered.

      E. Compensation for Sale of Securities

Hendershot Investments’ supervised persons do not accept compensation for the sale of
securities or other investment products, including asset-based sales charges or service fees from
the sale of mutual funds.

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Item 7 – Types of Clients

Hendershot Investments provides services to a variety of client types. Clients may include
individuals, trusts, estates, corporate pension and profit-sharing plans, charitable institutions,
corporations, and other business entities. Client relationships vary in scope and length of service.

Hendershot Investments imposes a minimum account size of $250,000 in cash and/or securities
in order to provide portfolio management services but may waive this minimum at its discretion.