Palm Valley Capital Management LLC

Item 5: Fees and Compensation

Separate Accounts
Our standard annual fee for investment management services is 1.00% of your total assets under our
management. Our minimum new account size is $5,000,000, although we will consider smaller
accounts under certain circumstances. We can negotiate a lower annual fee rate for accounts that
exceed $10,000,000. Additionally, we reserve the right to negotiate lower fees for accounts less than
$10,000,000. Negotiating factors include the type of client, the potential for additional account
deposits, the relationship of the client with the investment adviser representative, and the total
amount of assets under management for the client.

         Assets Under Management                    Annualized Fee
         $0 to $10,000,000                          1.00%
         Over $10,000,000                           Negotiable but not to exceed 1.00%

Fees charged for our investment management services are based on a percentage of assets under
management, billed in arrears (at the end of the billing period) on a quarterly calendar basis and
calculated based on the fair market value of your account as of the last day of the current billing
period. Fees are prorated (based on the number of days service is provided during the initial billing
period) for your account when opened at any time other than the beginning of the billing period. If
asset management services are commenced in the middle of the billing period, then the prorated fee
for that billing period will be billed in arrears at the end of that billing period.

Services continue until terminated by either party (i.e., Palm Valley Capital Management or you) by
giving thirty (30) days written notice to the other party. Palm Valley Capital Management will
prorate the final fee payment based on the number of days services were provided during the final
period. The amount of client assets on the termination date will be used to determine the final fee
payment.

Investment advisory fees will be deducted from your account and paid directly to our firm by the
qualified custodian of your account. You should review your account statements received from the
qualified custodian and verify that appropriate investment advisory fees are being deducted.

In addition to investment management fees, your account will incur brokerage transaction charges for
buying and selling securities. A description of our policies related to brokerage can be found in Item

Item 7: Types of Clients

Palm Valley Capital Management generally provides investment advice to the following types of
clients:

   •   Individuals
   •   High net worth individuals
   •   Trusts, estates, or charitable organizations
   •   Investment companies
   •   Corporations or business entities other than those listed above

You are required to execute a written discretionary advisory agreement with Palm Valley Capital
Management to establish an account with us.

Palm Valley Capital Management requires a minimum account size of $5,000,000 to open a separate
account. Exceptions may be granted to this minimum based on the expectation of future account
contributions, an evaluation of the total client relationship, and for related-family member accounts.

We serve as the adviser to the Palm Valley Capital Fund, a regulated investment company, which is
considered a client of Palm Valley Capital Management. The Palm Valley Capital Fund has a $2,500
required minimum investment.

Palm Valley Capital Management LLC             Form ADV Part 2A: Firm Brochure                    8