Pennsylvania Capital Management Inc

Item 5. Fees and Compensation

 Investment Consulting Services

 Fees will vary among clients and will be determined by such factors as portfolio manager
 mix, fees being paid by the client to the independent manager(s), the coordination of assets
 required, the frequency with which the client requests performance reports and meetings
 with PCM, the size of the account, and additional compensation anticipated to be received by
 PCM or its related persons related to the management of the account. Fees are calculated
 based upon a percentage of the managed assets or may be a negotiated flat fee. The standard
 used for determining the annual fee would be a range from 1.50% of the asset value down to
 0.75%, for assets up to $5 million. (See Fee Differentials* below) This asset based fee for
 Investment Consulting Services is based on the market value of the managed portfolio as of
 the last business day of the preceding billing period and is payable either quarterly or semi-
 annually, in advance of services rendered.

 Fees payable upon establishment and termination of the Consulting Services will be
 prorated for the portion of the billing period during which PCM is retained by the client.
 Investment Consulting Services may be canceled by either party at any time by written
 notice. If the agreement is canceled within the first five (5) days after the signing of the
 agreement, then the client is entitled to a full refund of any fees paid.

 The client is responsible to pay PCM’s Consulting fee in addition to any fee charged by the
 independent portfolio manager or mutual fund for the investment advisory services
 rendered to the client. Client should refer to the product prospectus or other disclosure
 document for a complete description of all fees. The client is also responsible for the
 transaction and execution costs associated with any transaction effected in the account(s),

unless an agreement stating otherwise is made with the portfolio manager or PCM.

Should the client choose not to accept any of the recommendations of PCM, then the client
will be billed on an hourly basis for the time expended by PCM in developing and
formulating the recommended Investment Program. Such billing will be at an hourly rate
not to exceed $750.00 per hour, or $275 per hour for an associate planner, with
administrative charges not to exceed $125 per hour, plus expenses.

PCM’s asset-based fees are payable quarterly, in advance, immediately following presentation
of an invoice. Clients may also give PCM express written permission to deduct fees from their
custodial account, if a client so chooses. While PCM has established the above referenced fee
schedule, the Firm may negotiate fees under certain, limited circumstances, at its sole
discretion.

Factors considered when determining whether a different fee will be negotiated include,
among other things, the complexity of the client’s financial situation, related accounts under
management, portfolio style, and the provision of other services provided to the client. In
some cases, clients may be subject to a different fee schedule in effect at the time their account
was established and specified in their Advisory Agreement with PCM. These different fee
schedules may be higher or lower than current fee arrangements. PCM may, in its sole
discretion, determine when, if ever, previous fee schedules will or will not apply to existing
clients. Clients will receive advance written notice of any change in their applicable fee
schedules.

Investment Management Services

The annual management fee for investment management services is based on the market
value of the portfolio as of the last business day of the preceding billing period and is payable
quarterly or semi-annually, in advance of services being rendered. The fee may range from
1.35% down to 0.50% of the total value of the assets for accounts up to $5 million. (See Fee
Differentials* below) In certain circumstances, PCM may charge a lower fee at its sole
discretion.

This fee is exclusive of all transaction costs, which client will incur separately. Transactions
will generally be executed through one of the following: Charles Schwab & Co., TIAA, or
National Advisors Trust Co. (see Item 12 later in this brochure). Client will be responsible for
paying all execution and/or transaction costs associated with trade execution and/or account
custody. If mutual funds are purchased, client should refer to the product prospectus for a
complete discussion of the fees associated with the product.

Some mutual fund shares may pay on-going 12b-1 management fees. Neither PCM nor any

representative of PCM will receive or participate in any such 12b-1 fee. The investment
management fee charged is determined based upon such factors as the anticipated custodial
charges, if applicable, the style of management to be employed, and the level of performance
measurement services to be given to the client, as well as any additional services provided to
the client. Fees are negotiable at the sole discretion of PCM. The investment management fee
schedule may be higher or lower than that normally charged in the industry.

Fees payable upon establishment and termination of Investment Management Services will
be prorated for the portion of the billing period during which PCM is retained by the client.
Investment Management Services may be canceled by either party at any time by written
notice. If the agreement is canceled within the first five (5) business days after the signing of
the agreement, then the client is entitled to a full refund of any fees paid.

Tactical Asset Management Services

The annual management fee for tactical investment management services is based on the
market value of the portfolio as of the last business day of the preceding billing period and is
payable quarterly or semi-annually, in advance of services being rendered. The fee may
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Item 7. Types of Clients

PCM provides investment advisory services to individuals, high-net worth individuals,
pension and profit sharing plans, corporations or other businesses, trust, estates and
charitable organizations. PCM typically provides its investment advisory services to clients
with at least $1,000,000 of assets. PCM, in its sole discretion, may reduce or waive its
minimum asset requirement based upon certain criteria (i.e., anticipated future earning
capacity, anticipated future additional assets, dollar amount of assets to be managed,
related accounts, account composition, negotiations with client, etc.).