Oppenheimer Investment Management LLC

ITEM 5. FEES AND COMPENSATION

Advisory fees may be calculated based upon a different data feed than that used to generate account
statements due to pricing vendors. The data feed differs in its treatment of factors such as accrued
interest and trades pending settlement.

OIM manages fixed income accounts for fees based on the size and nature of the account, the type
of account and type of strategy followed for the account. Advisory fees generally are negotiated
with each client. Factors that may be considered in negotiating fees with a client include the size
of the account, the level of client contact and client reporting, the complexity of the account and
the client’s overall relationship with OIM.

Fee rates may be expressed as a fixed rate applying to all assets in the account, or as a schedule of
rates applying to different asset levels, or “breakpoints.” When the fee is expressed as a schedule
of rates corresponding to different breakpoints, discounts, if any, are negotiated separately for each
breakpoint. As the value of the account assets reaches the various breakpoints, the incremental

assets above each threshold are charged the applicable rates. The effective fee rate for the account
in the program as a whole is then a weighted average of the scheduled rates, and may change with
the account asset level. Fee schedules for the different strategies are:

                Short Duration Cash Management                    Fee
                First $50 Million                                 0.30%
                >$50 million to $100 million                      0.27%
                >$100 million                                     0.25%

                Intermediate Fixed Income                         Fee
                First $10 million                                 0.35%
                >$10 million to $50 million                       0.30%
                >$50 million to $75 million                       0.25%
                >$75 million to $100 million                      0.20%
                >$100 million                                     0.15%

                Intermediate Tax Exempt Fixed Income              Fee
                First $10 million                                 0.35%
                >$10 million to $50 million                       0.30%
                >$50 million to $75 million                       0.25%
                >$75 million to $100 million                      0.20%
                >$100 million                                     0.15%

                Insurance Accounts                                Fee
                First $10 million                                 0.35%
                >$10 million to $25 million                       0.25%
                >$25 million to $50 million                       0.20%
                > $50 million to $100 million                     0.15%
                >$100 million to $250 million                     0.125%
                >$250 million to $500 million                     0.10%
                Over $500 million                                 0.08%

                Core Fixed Income                                 Fee
                First $10 million                                 0.35%
                >$10 million to $50 million                       0.30%
                >$50 million to $75 million                       0.25%
                >$75 million to $100 million                      0.20%
                >$100 million                                     0.15%

                Core Plus Fixed Income
                Corporate Core Plus Fixed Income                  Fee
                First $10 million                                 0.40%
                >$10 million to $50 million                       0.35%
                >$50 million to $75 million                       0.30%
                >$75 million to $100 million                      0.25%
                >$100 million                                     0.20%

                Short Duration High Yield Fixed Income            Fee
                First $25 million                                 0.55%
                >$25 million to $50 million                       0.50%
                >$50 million to $100 million                      0.45%
                >$100 million                                     0.35%

                High Yield Fixed Income                            Fee
                First $25 million                                  0.55%
                >$25 million to $50 million                        0.50%
                >$50 million to $100 million                       0.45%
                >$100 million                                      0.35%

Generally, fees are billed quarterly in arrears based on the market value of the portfolio at quarter
end. However, calculations for particular clients may vary in accordance with the client agreement.
OIM clients may choose to have fees paid in advance.

The market value that forms the basis for each fee calculation will be adjusted to prorate any
contributions and withdrawals that occurred during the billing period.

OIM’s services are terminable by either party upon written notification in accordance with the
applicable contractual notice provision. Upon termination, the fees described above will be
prorated.

Clients will pay all brokerage fees and other transaction costs and may also pay custody fees on
assets that are not held at Oppenheimer & Co. Inc. depending on their own arrangements with such
third party custodians. Please see Item 12 for more information.

ITEM 7. TYPES OF CLIENTS

OIM provides investment management services to pension and profit–sharing plans, corporations,
state or municipal government entities, charitable organizations, insurance companies, foundations
and endowments, trusts and high net worth individuals.

The minimum account size for all OIM accounts is $1 million dollars. (Minimum account size may
be waived at the discretion of OIM.)