Private Capital Management Inc

Item 5   Fees and Compensation

This item gives you information about the fees or other compensation we may receive from you or
from others in connection with or as a result of giving you investment advice.

We charge an annual management fee (“account fee”) starting at 1.25% of Portfolio Value. These account
fees are paid quarterly, in advance, and will be pro-rated if applicable.

If we give you investment advice without providing on-going management or supervisory services, we
normally charge fixed fees that are based on the value, extent and complexity of the service.

These fees are paid quarterly, in advance, with a minimum $3,750 quarterly service fee.

Under certain circumstances, it may be difficult to set a fixed fee based upon the open nature of the
engagement - such as expert witness testimony - and under these circumstances, an hourly fee will be
charged. The hourly fee currently is set at $500 per hour. Hourly fees will require a retainer of $5,000 in
advance and will be billed monthly in arrears. We will refund any unused retainer.

The agreement may be terminated by either party effective upon receipt of written notice to the other
party. If you wish to cancel the Agreement, you may do so free of penalty within 5 business days of
signing and we will refund any pre-paid management fees or other fees to you.

In addition to the above fees that we may charge, other firms charge fees that help defray costs associated
with trade execution. These charges may include Brokerage Fees and Expenses, Custody Fees and
Expenses, various Mutual Fund fees and expenses, insurance fees and expenses, Qualified Retirement Plan
fees and other costs. These transaction charges are deducted automatically by those firms and appear on
your client trade confirmations that they send to you. We do not receive any part of those fees. Further
information regarding charges and fees assessed are available in the appropriate product’s prospectus.

(Also, please see Item 12, Brokerage Practices.)

You do not have to use our advice or the brokers, insurance companies or custodians we suggest but may
use other brokers to purchase products.

The minimum account size is $2,000,000. Under certain circumstances, we may reduce that minimum.

All fees are negotiable.

Billing on Cash Positions: The firm treats cash and cash equivalents as an asset class. Accordingly, unless
otherwise agreed in writing, all cash and cash equivalent positions (e.g., money market funds, etc.) are
included as part of assets under management for purposes of calculating the firm’s advisory fee. At any
specific point in time, depending upon perceived or anticipated market conditions/events (there being no
guarantee that such anticipated market conditions/events will occur), the firm may maintain cash and/or
cash equivalent positions for defensive, liquidity, or other purposes. While assets are maintained in cash or
cash equivalents, such amounts could miss market advances and, depending upon current yields, at any
point in time, the firm’s advisory fee could exceed the interest paid by the client’s cash or cash equivalent
positions.

Billing on Margin: Unless otherwise agreed in writing, the gross amount of assets in the client’s account
are included as part of assets under management for purposes of calculating the firm’s advisory fee and are
not reduced by margin balances. Ordinarily, our firm will not create margin loans, other than for short-
term client cash needs, and will typically clear the loan once trades settle or when the client adds funds to
the account to pay off the margin loan. For varying reasons, however, our firm may use margin for long

periods of time. For example, a client may want to borrow from their account for an extended period to
make another investment outside of their brokerage account, or to finance the purchase of an asset, such as
a home, and/or delay or avoid taxable gains. Clients should note that this practice will increase total assets
under management used to calculate advisory fees that will in turn increase the amount of fees collected by
our firm. This practice creates a conflict of interest in that our firm has an incentive to use margin in order
to increase the amount of billable assets. At all times, the firm and its Associated Persons strive to uphold
their fiduciary duty of fair dealing with clients. Clients are free to restrict the use of margin by our firm.

Periods of Portfolio Inactivity: The firm has a fiduciary duty to provide services consistent with the
client’s best interest. As part of its investment advisory services, the firm will review client portfolios on
an ongoing basis to determine if any changes are necessary based upon various factors, including but not
limited to investment performance, fund manager tenure, style drift, account additions/withdrawals, the
client’s financial circumstances, and changes in the client’s investment objectives. Based upon these and
other factors, there may be extended periods of time when the firm determines that changes to a client’s
portfolio are neither necessary nor prudent. Notwithstanding, unless otherwise agreed in writing, the firm’s
annual investment advisory fee will continue to apply during these periods, and there can be no assurance
that investment decisions made by the firm will be profitable or equal any specific performance level(s)

IRA Rollover Considerations
As a normal extension of financial advice, we provide education or recommendations related to the
rollover of an employer-sponsored retirement plan. A plan participant leaving employment has several
options. Each choice offers advantages and disadvantages, depending on desired investment options and
services, fees and expenses, withdrawal options, required minimum distributions, tax treatment, and the
investor's unique financial needs and retirement plans. The complexity of these choices may lead an
investor to seek assistance from us.
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Item 7   Types of Clients

This item tells you about the types of clients to whom we give investment advice.

In general, we provide investment advice to individuals (primarily high net worth individuals), pension
and profit sharing plans, trusts, estates, charitable organizations, corporations and other business entities.