Private Capital Management LLC

Item 5         Fees and Compensation

Separate Account Fees and Compensation
PCM charges management fees for value equity and wealth advisory separate accounts based on
the value of an account (including cash, accrued interest and dividends) on the last business day
of the relevant period. Alternatively, Value Focus clients may select a fee structure that includes
a performance fee component along with a base management fee. Management fees are pro-rated
for the first and last quarter an account is under PCM’s management. On a case-by-case basis,
PCM has negotiated management fees for significant relationships. Such determinations are made
by PCM at its sole discretion. PCM also at its discretion accepts accounts at an initial funding
level below the applicable stated minimum.

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PCM and a client may agree that fees will be computed based upon the custodian’s valuation of
the client’s assets rather than the independent pricing service data used by PCM. In limited cases
PCM may agree to receive its base management fee in advance. If a client that pays its
management fee in advance terminates their Portfolio Management Agreement (other than at
quarter end), PCM will refund a pro-rated portion of the management fee paid.

Value Focus Strategy. PCM’s Value Focus Strategy offers two standard advisory fee structures.
The first is 1% per annum, which is charged quarterly in arrears based on the fair market value of
the assets in a client’s account. The second standard option is an advisory fee split between a base
management fee of 0.75% (75 basis points) per annum, charged quarterly in arrears, along with a
performance fee equal to 5% of the amount by which the calendar year return from all sources
exceeds 8% (determined after the base management fee). In the event PCM manages a Value
Focus Strategy account for only a portion of a calendar year, any performance fee will be
determined as if the period PCM managed the account comprised a full calendar year. PCM may
agree to other fee arrangements based upon a number of factors, including a client’s history with
PCM or whether the account is part of a sub-advisory or multiple account relationship with PCM.

Value Equity Strategy. PCM’s standard fee for its Value Equity Strategy is 1% per annum, which
is charged quarterly in arrears based on the fair market value of the assets in a client’s account. In
the event PCM accepts a Value Equity Strategy account with initial funding of less than $1 million,
the management fee charged will not exceed 1.5% per annum and may be lower based upon a
number of factors, including whether the account owner was previously a client of PCM or the
account is part of a larger relationship with assets already under PCM’s management.

Wealth Advisory Accounts. PCM charges wealth advisory clients a flat fee, which is charged
quarterly in arrears based on the fair market value of the assets in a client’s account. This fee
generally does not exceed 1.25% per annum and may vary based on account size, additional assets
managed by PCM, the percentage of assets invested in PCM managed strategies, the nature of the
advisory relationship and specific services requested by the client. Wealth advisory accounts
primarily trade through Carnes at a rate of $20.00 per trade for ETF and mutual fund trades.

PCM’s wealth advisory management fee is in addition to any fees charged by any ETF or third-
party managed strategy or vehicle in which such client’s assets are invested. As a result, PCM
wealth advisory clients pay two levels of fees with respect to assets invested in third-party managed
ETFs, strategies or vehicles. Unless otherwise agreed with the client, wealth advisory clients do
not pay PCM a wealth advisory fee on assets invested in PCM or affiliate managed strategies or
vehicles.

Method of Payment. Clients have the option of allowing PCM to deduct its management fee
directly from their account or having PCM invoice them each quarter. Clients who would like
PCM to deduct management fees from their accounts directly must authorize PCM to do so in
writing.

Minimum Account Size. PCM’s minimum account size for a separately managed Value Focus
Strategy or Value Equity Strategy portfolio is $1 million. PCM reserves the right to negotiate its

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minimum account size. PCM evaluates minimum asset levels for wealth advisory accounts on
an account specific basis.

Mutual Fund Management Fees
The management fees that PCM receives for advising the PCM Value Fund are described in the
fund’s prospectus, which is available upon request or by visiting our website www.private-
cap.com.

Private Fund Management Fees
PCM manages seven private investment funds – the EVF, the Collier Fund, Harmonic Fund I,
Harmonic Equity Income Plus, Harmonic Real Assets Fund, Harmonic Navigator, Harmonic
Hedged Partners and Harmonic Opportunity Partners. The fees that PCM receives for advising its
private funds are set forth in full in each fund’s confidential Private Placement Memorandum
(“PPM”).

EVF and Collier Fund Management Fees. The fee structures for the EVF and the Collier Fund
include both a management fee and an incentive allocation based on fund performance. In
addition, EVF and Collier Fund investors are entitled to “high-water mark” protection. This means
that PCM calculates its incentive allocation against a high-water mark established by prior fund
gains. As a result, investors are not subject to an incentive allocation on investment gains until
they have been made whole for any prior losses they suffered on their fund investment. The EVF
charges a base management fee of 1% per annum and a performance allocation of 20% of fund
gains (realized and unrealized) above the high-water mark. The Collier Fund charges a base
...

Types of Clients
PCM has historically focused on providing discretionary investment management services to
individual and institutional investors through separately managed portfolios. In addition to
managing Value Focus Strategy, Value Equity Strategy and wealth advisory separate accounts,
PCM also serves as:

   • Investment adviser to the Private Capital Management Value Fund (“PCM Value Fund”), a
     registered open-end investment company.

   • Investment adviser to two value equity focused private funds – the EVF, a Delaware limited
     partnership, and the Collier Fund, a Florida limited partnership. The general partners of the
     EVF and the Collier Fund are, respectively, PCM Entrepreneurial GP, LLC, and PCM Collier
     GP, LLC, each of which is an affiliate and a SPV of PCM. See Item 4 — Special Purpose
     Vehicles.

   • Through Harmonic Managing Member, PCM advises Harmonic Fund I, Harmonic Equity
     Income Plus, Harmonic Real Assets Fund, Harmonic Navigator, Harmonic Hedged Partners
     and Harmonic Opportunity Partners. Harmonic Managing Member is a wholly owned and
     controlled SPV of PCM. See Item 4 — Special Purpose Vehicles. PCM also acts as an
     investment sub-adviser to Harmonic Fund I with respect to its concentrated value equity
     strategy allocation.

Each of the pooled vehicles listed above is subject to investment mandates, restrictions, investment
minimums and regulatory requirements that may differ from those applicable to a separate account
for an individual investor. In the event a client maintains a PCM Value Fund or private fund
investment that meets a separate account minimum, they may elect to open a separate account.
Any such transition should be considered in light of an investor’s individual circumstances as it
may, among other things, result in the accelerated realization of capital gains on their pooled
vehicle investment.

Account Initiation Procedures
PCM seeks to commence management of a new account as soon as practicable following its
funding and PCM’s review of all required account documentation (including a fully completed
and signed portfolio management agreement), investment guidelines, and confirmation from the
client’s custodian that the assets are available for investment. The time required to complete these
steps may vary depending on the efficiency of the parties involved in the process and the
completeness and accuracy of the documents received. Consistent with its value-based investment
approach, PCM aims to complete the initial invest-up process for Value Focus Strategy accounts
over a 90 – 120 day period as investment opportunities are identified. Value Equity Strategy

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accounts may be subject to a longer invest-up period depending upon market conditions and other
factors.