Jess S Morgan & Company Inc

Fees and Compensation
FEE SCHEDULE:

The fee for investment supervisory services is up to 1% of the value of assets under management.

Fees are charged based on the market value of each client’s account on the last business day of each quarter
after adjusting upward or downward for any additions or withdrawals during the quarter in excess of fifty
thousand dollars by instructing, under the client’s authority, banks or trust companies or others having
custody of client’s securities or funds to pay such advisory fee directly to applicant.

Fees are payable when invoiced. Invoices are prepared based on the market value of client’s portfolio on
the last day of each quarter for the following quarter, after statements have been reconciled to client’s
custodial bank statement or broker statement.

A client may secure a refund or terminate an investment advisory contract by written notice in which case
investment advisory fees are apportioned as of the termination date.

Business management fees are charged to clients based on all compensation earned by them in any form;
i.e., salary, bonus, profit participation, corporate stock, stock options, bargain purchases, etc.

The annual fee is either: A) a minimum against 5% of the compensation, paid monthly or B) a minimum
plus 5% of the compensation, paid monthly or C) 5% of the compensation paid monthly. In some
instances, clients are charged a fixed retainer fee on a monthly basis or more frequently. Certain clients are
charged on an hourly basis with fees paid monthly, quarterly or annually.

Additional fees are charged for music publishing administration equal to 2.5% of music publishing income
and 5% of real estate income.

Additional fees may be charged for tax preparation or trustee services.

JSMCO manages several general partnerships. Most are venture capital partnerships that invest in start-up
and mezzanine financings. JSMCO’s clients and JSMCO’s related persons may be solicited to invest in
these partnerships.

JSMCO charges an annual management fee of 2% of valuation for the venture capital partnerships and an
annual management fee of 1% of valuation for public securities partnerships and real estate partnerships.

When venture capital investments can be sold or distributed to partners as a result of a public offering,
applicant makes a determination as to the best course of action and distributes securities or liquidates the
investment and distributes funds to the partners.

Performance Based Fees and Side-by-Side Management
JSMCO does not charge any performance fees.

Types of Clients
JSMCO provides investment supervisory services to individuals, businesses, retirement plans, trusts, and
charitable organizations.

JSMCO generally requires a minimum of $500,000.00 in assets for the establishment of an investment
advisory account but will make exceptions at times to accept smaller accounts.

Methods of Analysis, Investment Strategies and Risk of Loss
JSMCO manages clients’ individual, corporate, and retirement portfolios, which are structured to meet
their investment criteria and objectives. A formal investment policy statement is agreed upon for each
client and accounts are managed accordingly.

At its essence, JSMCO’s investment strategy combines "core," or diversifying asset class investments, with
"satellites" that seek outperformance. Our core/satellite models combine index and active investments
across asset classes, creating a balance between a strong foundation based on diversified asset allocation
and opportunities for risk-controlled, enhanced performance. Asset allocation, one of the most critical steps
in investment planning, translates an investor's wealth goals into a strategic blueprint. As the core of an
investment strategy, it acts as the foundation upon which the rest of the investment process is based. A
strong core captures a range of diversifying opportunities-from traditional asset classes such as domestic
equities and fixed income, to alternative asset classes. By building a base that includes a breadth of unique
risk/return exposures, investors can push out their investment frontier, allowing for the opportunity to
achieve greater return at a given risk level.

The ability to make positive investment decisions is founded on strong research capabilities. Domestic and
international data, fiscal and monetary policy, fundamental research as well as both micro and macro
events are analyzed on a daily basis to form our opinions on security and asset allocation decisions. In
addition to internal analysis, JSMCO receives regular communication from leading research firms.

All investments we select are subject to the risk of loss. Equity investments often fluctuate significantly in
value due to a variety of factors that may impact either individual issuers, larger segments of the markets as
a whole, or both. Debt investments can also fluctuate significantly in value due to changes in interest rates
or events impacting the issuers of the debt. Alternative investments, such as venture capital, may have
reduced liquidity and therefore the client may not be able to redeem their investment when desired. Our
policy for valuing venture capital is outlined below:

Jess S. Morgan & Co., Inc. policy for valuing venture capital fund holdings

The Morgan Investors General Partnerships (The “Partnerships”) invest as Limited Partners in outside
private equity partnerships. The policy for valuing such holdings is to price the market value equal to the
value calculated and presented in the quarterly statements issued by the private equity partnerships.

In cases where outside partnerships do not issue quarterly valuation statements, the Morgan Partnerships
shall value such holdings at the purchase price until advised otherwise by the issuer.

For individual privately held securities held in The Partnerships, the policy is to value such securities at the
price per share of the latest round of the company’s most recent financing.

For privately held securities held in The Partnerships which initiate a public offering and in the case where
The Partnership’s position in such company is restricted from sale due to a lock up, The Partnership’s will
value such securities at the current quoted market price, less a 10% discount for lack of liquidity, a fairly
standard discount rate utilized by private equity funds.

Discount rates are subject to change based on additional information received and based on industry
standard discounts for illiquid securities.