Otto & Associates Inc

Item 5 Fees and Compensation

Description
      Otto & Associates, Inc. bases its fees on a percentage of assets under
      management, hourly charges, or fixed fees.
      The annual advisory service fee is based on a percentage of the investable
      assets according to the following schedule:
              1.0% on the first $1,250,000
              0.5% above $1,250,000
              0.25% above $2,500,000

      The minimum annual fee is $3,000; the fee is negotiable. The advisory
      service fee is payable quarterly in advance. Current client relationships may
      exist where the fees are higher or lower than the fee schedule above. A
      credit against the annual advisory service fee may be granted on an

                               Otto & Associates, Inc.

       exception basis at the sole discretion of O&A for cash that O&A does not
       expect to invest during the quarter.
       Financial plans and retirement plans are priced according to the degree of
       complexity associated with the client’s situation.
       Fees are negotiable.

Fee Billing
       Investment management fees are billed quarterly, in advance, meaning that
       we invoice you at the beginning of the three-month billing period. Payment in
       full is expected upon invoice presentation. Fees are usually deducted from a
       designated client account. The client must consent in advance to direct
       debiting of their investment account.
       Fees for financial plans and retirement plans are generally billed upon
       delivery of the financial plan.

Other Fees
       Custodians or discount brokers may charge transaction fees on purchases or
       sales of certain mutual funds, stocks, closed end funds, exchange-traded
       funds, or alternative investments. These transaction charges are usually
       small and incidental to the purchase or sale of a security. The selection of the
       security is more important than the nominal fee that the custodian charges to
       buy or sell the security.

Expense Ratios
       Mutual funds generally charge a management fee for their services as
       investment managers. The management fee is called an expense ratio. For
       example, an expense ratio of 0.50 means that the mutual fund company
       charges 0.5% per year for their services. These fees are in addition to the
       fees paid by you to O&A. Managers of alternative investments generally
       charge a management fee, as well.
       Performance figures quoted by mutual fund companies in various publications
       are after their fees have been deducted.

Past Due Accounts and Termination of Agreement
       Otto & Associates, Inc. reserves the right to stop work on any account that is
       more than 90 days overdue. In addition, O&A reserves the right to terminate
       any financial planning engagement where a client has willfully concealed or
       has refused to provide pertinent information about financial situations when
       necessary and appropriate, in O&A’s judgment, to providing proper financial
       advice. Any unused portion of fees collected in advance will be refunded
       within 30 days.

                                Otto & Associates, Inc.

Item 7 Types of Clients

Description
       Otto & Associates, Inc. generally provides investment advice to individuals,
       charitable organizations, pension and profit sharing plans, trusts, estates, and
       small businesses. Client relationships vary in scope and length of service.

Account Minimums
       The minimum account size is $300,000 of assets under management, which
       equates to an annual fee of $3,000. When an account falls below $300,000
       in value, the minimum annual fee of $3,000 is charged.
       Otto & Associates, Inc., in its sole discretion, may waive the account minimum
       and the minimum fee. Accounts of less than $300,000 may be set up when
       the client and the advisor anticipate the client will add additional funds to the
       accounts, bringing the total to $300,000 within a reasonable time. Other
       exceptions will apply to employees of O&A and their relatives, or relatives of
       existing clients, to cite a few examples.
       Clients receiving ongoing asset management services will be assessed a
       $3,000 minimum annual fee, unless waived by O&A. Clients with assets
       below the minimum account size may pay a higher percentage rate on their
       annual fees than the fees paid by clients with greater assets under
       management.