MD Sass Associates Inc

Fees and Compensation
MDSA generally receives a management fee for providing investment management services.
Management fees are generally payable quarterly, and are payable for any period that is less
than a full quarterly period.

The standard percentage of net assets annual fee for concentrated value equity (“CV”) accounts
is 0.70% on the first $25 million of assets under management, 0.60% on the next $25 million,
0.50% on the next $50 million and negotiable thereafter. The standard percentage of net assets
annual fee for a fixed income (“FI”) account is 0.40% on the first $25 million of assets under
management, 0.35% on the next $25 million, 0.25% on the next $50 million, and negotiable
thereafter. Management fees are billed to the separately managed account.

All Clients will also incur brokerage and other transaction costs. Please review the section
entitled “Brokerage Practices” herein for more information.

MDSA may, at its discretion, negotiate fees which vary from and may be lower than the standard
fee schedule rates for CV and FI accounts. In addition, MDSA may accept accounts below the
minimum standard account size of $5 million, in which case the percentage of net assets annual
fee is generally 1.00% for CV accounts and 0.50% for FI accounts, subject to negotiation at the
discretion of MDSA.

Fees for balanced and other accounts are based on various factors, including the investment
strategy, and their size and asset allocation guidelines; accordingly, the fees are negotiable and
are not subject to any standard fee schedule.

In the case where a Client’s account is invested in money market funds that pay a management
fee to the adviser of the money market fund, the Client is in effect paying two management fees.
Clients indirectly pay an investment management fee to the money market fund manager which
is in addition to the investment management fee paid to MDSA.

Either MDSA or the Client may terminate an investment management agreement per the terms
negotiated therein. Notice of termination must be given to the other party in writing. Each Client
is responsible to pay for services rendered until the termination of its respective investment
management agreement. Management fees are generally payable in arrears, however for certain
Clients management fees are payable in advance. Upon termination, the fees charged for
investment management services will be pro-rated, and a pro rata refund for any unearned fees
will be issued if any fees have been paid in advance.

Performance Based Fees and Side-by-Side Management
MDSA is not compensated based on performance; only management fees as set forth above are
charged to Clients.

Types of Clients
MDSA generally provides investment advice to clients that are jointly trusteed and union,
pension, health, welfare, annuity and other funds through separately managed accounts.

MDSA generally requires a minimum separately managed account size of $5 million. Lower
minimums generally apply in the case of limited partnerships or limited liability companies of
which MDSA’s affiliates is a general partner or managing member, or other MDSA affiliates.
MDSA also may accept lower minimum account sizes in its discretion.

Methods of Analysis, Investment Strategies and Risk of Loss
Methods of Analysis/Investment Strategies

Our investment philosophy is to invest only where and when there is the potential to add value
and where the related risk can be measured and controlled. This approach is applied to asset
allocation decisions, as well as bond and equity selection. Our philosophy has remained constant
over the years and emphasizes rotating between sectors in order to be opportunistic and achieve
high returns with low risk.

Concentrated Value

MDSA’s CV strategy is a relative value approach to investing in equities, which seeks to
outperform relevant equity market indices through positive buy/sell disciplines. MDSA searches
for high-quality companies that it believes are misperceived or out of favor with positive long-
term earnings growth prospects. MDSA looks to buy when the risk-adjusted present value of
estimated future earnings exceeds the market price by at least 25%.

MDSA utilizes a multi-step, fundamental research process, focused on out-of-favor and/or
misperceived companies that meet MDSA’s minimum liquidity and quality standards.
Preliminary MDSA company screening includes diligence on historical growth, competitive
strength, free cash flow, debt leverage and trading liquidity. MDSA analyzes candidates to
understand reasons for price drops, how the market’s perception may lag reality and catalysts
for potential price rebound.

Fixed Income

MDSA’s FI strategy invest primarily in short to longer-term U.S. government agency issued
and/or guaranteed Mortgage Backed Securities (“MBSs”), Collateralized Mortgage Obligations
(“CMOs”) and similar high credit quality securities. Some of MDSA’s FI strategy Clients will
also invest in higher-yielding U.S. government agency, agency non-guaranteed and non-agency
fixed income securities. MDSA seeks to outperform fixed income benchmarks of comparable
term duration on a risk-adjusted basis. MDSA’s investment strategy is long-only. MDSA will
not borrow money to invest in securities.

MDSA invests primarily in U.S. Treasuries, U.S. Agency securities and MBSs and CMOs issued
by government sponsored enterprises (“GSEs”), (e.g., Ginnie Mae (Government National
Mortgage Association), Fannie Mae (Federal National Mortgage Association) and Freddie Mac
(Federal Home Loan Mortgage Corporation)), the payments of which are backed by GSEs. In
addition, U.S. agency non-guaranteed securities include GSE issued Credit Risk Transfer
securities (CRT), Agency Commercial Mortgage-Backed Securities (and similar subcategories)

and non-agency securities include Prime Residential A Mortgage-backed securities, Rated
Reperforming Loan Mortgage-backed securities, Single Family Rental (SFR) (and other similar
subcategories).

MDSA relies on rigorous analytical testing and will target stable Agency MBS and Agency
CMOs which have relatively moderate degrees of cash flow uncertainty, with attractive yields
relative to similar duration securities. MDSA’s fixed-income professionals focus on in-depth
fundamental research and utilize a variety of quantitative analyses to ascertain mortgage
prepayment/extension risk and credit risk.

Risk of Loss

All investing involves a risk of loss to each Client (and their respective investors), and the
investment strategies offered by MDSA could lose money over short or even long periods. No
guarantee or representation is made that MDSA will achieve its investment objective or that
Clients will receive a return of their capital. In addition, the performance of Clients’ investments
is substantially dependent upon the skill, judgment and expertise of MDSA’s primary portfolio
managers. The death, disability or other unavailability of any of MDSA’s primary portfolio
managers could be material and adverse to the performance of Clients’ investments.

Investments may be affected by force majeure events (i.e., events beyond the control of the party
claiming that the event has occurred, including, without limitation, acts of God, fire, flood,
earthquakes, outbreaks of an infectious disease, pandemic or any other serious public health
concern, war, terrorism, labor strikes, major plant breakdowns, pipeline or electricity line
ruptures, failure of technology, defective design and construction, accidents, demographic
changes, government macroeconomic policies, social instability, etc.). Some force majeure
events may adversely affect the ability of a party (including an investment or other service
provider) to perform its obligations until it is able to remedy the force majeure event. Force
majeure events that are incapable of or are too costly to cure may have a material adverse effect
on Clients’ investments. Certain force majeure events (such as war or an outbreak of an
infectious disease) could have a broader negative impact on the world economy and international
business activity generally, or in the United States specifically.

Cybersecurity incidents may allow an unauthorized party to gain access to MDSA Client
account assets, Client data (including private shareholder information), or proprietary
information, or cause MDSA or a Client account and/or one of their service providers (including,
but not limited to, accountants, auditors, custodians, sub- custodians, transfer agents, prime
brokers, administrators, and financial intermediaries) to suffer data breaches, data corruption or
lose operational functionality.
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