KDI Capital Partners LLC

Item 5 Fees and Compensation

       A.      Compensation and Advisory Services

               1.      Private Funds

With regard to the Private Funds, KDI charges an annual “management fee” based upon the net
asset value of each Private Fund’s assets, which is paid quarterly in arrears. The Private Funds are
only offered for the Core Equities Strategy. KDI’s current management fee for its Private Funds
is generally 1% annually, paid quarterly in arrears. KDI may, at its discretion, waive or reduce the
management fee with respect to certain underlying investors in the Private Funds. Thus, different
underlying investors in the Private Funds may pay different management fees based on the
investment date or waivers/reductions by KDI.

               2.      SMAs

With respect to SMAs, KDI generally charges a management fee based upon the net asset value
of the applicable SMA Account’s assets, which is paid quarterly in arrears. For fixed income
securities, KDI does not charge a fee; however, a sub-advisory fee is generally incurred for
investments in fixed income securities of approximately 0.20% annually, which the SMA Client
pays directly to the applicable sub-adviser. In addition, KDI charges a performance-based fee,
rather than a management fee based upon net asset value, with respect to portions of SMA

Accounts that are invested in KDI’s Hedged Equities Strategy (which is offered to a limited
number of clients).

KDI’s current fees for SMAs are generally as set forth in the table below; however, KDI may, at
its discretion, waive or reduce the management fee with respect to certain SMA Clients. Thus,
different SMA Clients may pay different management fees based on the investment date or
waivers/reductions by KDI.

                Strategy                          Management Fee
                Core Equities                     0.25% of net asset value, paid
                                                  quarterly in arrears.
                Highly Concentrated               0.3125% of net asset value,
                                                  paid quarterly in arrears.
                ETFs                              0.025% of net asset value, paid
                                                  quarterly       in       arrears.
                                                  Additionally, ETFs have an
                                                  expense charge to cover the
                                                  underlying manager fee and
                                                  other expenses. The expense
                                                  charge is expected to range
                                                  from 0.05% to 0.50%.
                Fixed Income                      None. (Clients typically pay a
                                                  0.05% quarterly sub-advisory
                                                  management fee directly to a
                                                  sub-adviser, paid in arrears.)
                Hedged Equities                   15% of the amount by which
                                                  the value of the assets
                                                  increased       during       the
                                                  measurement period agreed
                                                  upon between the client and
                                                  KDI, paid in arrears at the end
                                                  of such measurement period.

               3. Financial Planning Accounts

With respect to Financial Planning clients, KDI will either charge a retainer or one-time project
fee for its advisory services or be compensated through management fees for its various investment
options as discussed above.

       B.      Payment of Fees

KDI, as general partner of the Private Funds, may deduct fees from the Private Funds with respect
to the payment of management fees. KDI may either fax or e-mail a letter to the Private Fund’s
prime broker requesting to have the fees wired to KDI’s account.

Typically, SMA Clients will authorize the custodian to pay the management fee from the
applicable account to KDI. Unless otherwise agreed by SMA Clients, KDI is generally authorized
to invoice the custodian directly for its fees. Each SMA Client agrees to instruct the custodian to
pay such fees directly to KDI unless KDI agrees to another means of payment by the SMA Client.

Financial Planning clients who have a retainer fee one-time project fee contractual arrangement
will be billed by KDI and pay via check, ach or wire transfer.

       C.      Other Fees

In addition to the management and retainer fees discussed above, clients will incur other expenses
and fees, such as investment expenses (e.g., brokerage commissions, clearing and settlement
charges, interest expense) and custodial fees. Clients will be solely responsible for all
commissions, transaction fees and any other charges relating to trading and custody of securities
in the client’s account. Please see the response to Item 12 for additional information about
brokerage expenses. Additional expenses may also be incurred such as bank fees, research related
expenses, government charges, taxes and duties, legal expenses, accounting, auditing and tax
preparation expenses, and sub-advisory fees for fixed income securities.

Certain clients may invest in mutual funds, including money market funds and ETFs. In those
situations, the client will also indirectly bear a proportionate share of the mutual fund’s fees and
expenses. These fees and expenses are in addition to any fees payable to KDI.

Underlying investors in Private Funds will also bear a pro rata share of any expenses charged the
Private Funds. Such expenses may include legal and audit fees, custodial fees and other
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Item 7 Types of Clients

Please see the response to Item 4B above. KDI provides investment advisory services to Private
Funds and to SMAs in accordance with their investment objective, strategies and guidelines. SMA
accounts may include individuals, IRA/SEP IRA’s, other retirement plans, trusts, foundations,
endowments, corporations, family offices, etc. KDI also provides financial planning services to
individuals, trusts, foundations, family offices, and corporations.

KDI generally requires a minimum investment of $250,000 for SMAs. The Highly Concentrated
strategy requires a minimum investment of $1,000,000. The minimum investment for each Private
Fund is set forth in the Private Fund’s offering documents. KDI reserves the right to reduce the
minimum amount for certain underlying investors in the Private Funds and SMA Clients.

This Brochure should not be considered to be an offer of interests in any of the Private Funds or
any other interest in securities. It should not be relied on in determining whether to invest in any
of the Private Funds or any other securities. It is not an offer of, or agreement to provide, advisory
services directly to any recipient of the Brochure. This Brochure is designed solely to provide
compliance information about KDI with regard to obligations under the Advisers Act. It responds
to relevant regulatory requirements under the Advisers Act and may be different from the
information provided in the offering documents for any of the Private Funds or the advisory
agreement for the SMAs. If there are differences between the Brochure and the offering documents
for the funds, the offering documents will govern. Similarly, if there are differences between the
Brochure and any investment advisory agreement between a client and KDI, the terms of the
investment advisory agreement will prevail.

Item 8 Methodologies of Analysis, Investment Strategies and Risk of Loss

       A.     Methods of Analysis and Investment Strategies

KDI primarily employs two investment strategies, which are described in this Brochure. The
strategies are guided by several investment beliefs:

   •   Over the long term, business gains equal investment gains and stocks, over time, tend to
       be priced at intrinsic business value.
   •   Investment returns from equities are a combination of a stock’s current premium or
       discount to intrinsic business value plus future business gains or losses.
   •   Leadership/Management is a major determinant of business gains, and thus investment
       gains.
   •   A company’s ability to earn high returns on capital is essential to achieving above-average
       business gains, and thus above-average investment returns.
   •   Companies that generate larger amounts of free cash flow generally produce greater
       business gains.

The strategies generally implement the following principles:

   •   Invest when it is believed that the risk of loss is limited and the opportunity for long-term
       returns is present.
   •   Reduce the risk of owning equities through gaining an in-depth knowledge of the company
       and the industry.
   •   Adhere to objective, measurable and conservative disciplines when making investment
       decisions.

The detailed due diligence process includes some or all of the following elements:

   •   One-on-one meetings with management.
   •   Pricing models based on historic valuation metrics to establish expected future returns.
   •   Store, warehouse and other site visits.
   •   Company presentations at industry conferences.
   •   Insights from Private Fund investors and SMA Clients with relevant industry background.
   •   Other contacts including competitors, former employees, franchisees, vendors, customers,
       etc.
   •   Sell-side investment research.
   •   Third-party research.
   •   Economic analysis and government policy.
   •   Network of industry experts.

The due diligence process is ongoing and trading decisions may be made at any point during the
process.

Below is a summary of each of KDI’s primary investment strategies:

               1.      Core Equities

KDI’s core investment strategy is the Core Equities strategy. The principal focus is on U.S.
equities, with potential limited investments in equity securities of European and/or Canadian
companies.

The firm employs the Core Equities to manage its unleveraged, long-only Private Funds and its
similarly managed SMAs. This strategy typically holds 20-25 positions. Utilizing the flexibility
to invest across all market caps, the firm seeks to identify attractive risk-reward situations,
concentrating clients’ capital in exceptional opportunities that provide them a good margin of
safety and the opportunity to exceed the returns of index funds over time. KDI offers two
variations on the Core Equities strategy. One variation is generally for taxable accounts and the
other is generally for tax exempt accounts.

               2.      Highly Concentrated

The firm employs the Highly Concentrated strategy to manage SMA’s targeting foundations,
corporations, family offices and endowments. The strategy will hold up to 15 intensely researched
large and highly liquid mid-cap stocks and ADR’s. Highly Concentrated strategy seeks to identify
companies and industries changing due to the impact of technology and to invest in those
companies that will benefit from those changes.

               3.      Other Strategies

As a complement to the primary equities strategies discussed above, KDI offers additional
investment alternatives on a limited basis, including investments in passive equities strategies
through ETFs, investments in fixed income securities, and investments in hedged equities
strategies.

The fixed income strategy is generally conducted through a sub-advisory agreement with a third-
party sub-advisor.

       B.      Material Risks Involved for Significant Strategies and Methods of Analysis
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