Salem Partners Wealth Management LLC

Item 5 – Fees and Compensation

Prior to engaging SPWM to provide investment management services, the Client will be
required to enter into a formal Investment Advisory Agreement (the “Agreement”) with
SPWM setting forth the terms and conditions under which SPWM shall manage the Client’s
assets, and a separate agreement with Schwab Institutional (“SI”) or another custodian. SI
will serve as the custodian for the Client Accounts as well as provide execution services for the
underlying money managers.

 For investment supervisory services compensation is derived as fee income based upon the
 percentage of assets under management. The compensation method is explained and
 agreed with the Clients in advance before any services are rendered

The compensation for SPWM’s services, which include developing and implementing an
investment policy and objectives, ongoing portfolio management, monitoring a Client’s
investment results, selecting and monitoring Investment Managers and reporting to the Client
on a quarterly basis, is as follows:

Percentage                               Market Value of Investment Capital under
                                         Investment Advisor’s Management

1.00%                 of   the           First                    $10,000,000
 .90%                 of   the           Next                     $20,000,000
 .75%                 of   the           Next                     $20,000,000
 .50%                 of   the           Amount over              $50,000,000

Fees for Clients are billed quarterly in advance at a rate of one-fourth (1/4th) of the annual
rate based on a percentage of the Client's assets under management at the beginning of the
calendar quarter. The Agreement and/or a separate agreement between SPWM and SI
may authorize SPWM through SI to debit a Client Account for the amount of SPWM’s fee and
any third-party manager fees and to directly remit such fees in accordance with applicable
custody rules. Investment advisory services begin with the effective date of the Agreement,
which is the date the Client signs the Agreement. For the initial calendar quarter, fees will
be adjusted pro rata based upon the number of calendar days in the calendar quarter that the
Agreement was effective.

SPWM reserves the right to adjust the fee schedule for accounts depending on the size and
type of account and the services required. In some cases negotiation of fees may result in
different fees being charged for similar services and may be less than the stated fees.

Additional Fees

In addition to the fees payable to SPWM and the Investment Manager(s), a Client may incur
certain charges imposed by the custodian or other third parties, such as investment
management fees, brokerage fees, transaction fees, expenses imposed by mutual funds such
as short term redemption fees or exchange traded funds placed in the Client Account. Such
charges, fees and commissions are exclusive of and in addition to SPWM’s fee, and
SPWM shall not receive any portion of these commissions, fees, and costs. SPWM will comply
with the requirements of Rule 206(4)-2 of the Advisers Act with regards to custody of
assets of Client Accounts (the “Custody Rule”).

The portfolio manager will discuss the details of transaction fees and expenses with new clients
at the inception of the relationship, including fees and expenses for mutual funds, and then
verbally confirm with clients that they understand. Salem Partners Wealth Management will
not receive any compensation or economic benefit from mutual funds it purchases or sells on
behalf of its clients. The portfolio manager will seek to utilize the most appropriate securities
(including individual stocks and bonds, exchange-traded funds, mutual funds, etc.) to achieve
each client’s investment objectives, after taking into account the expected after-tax total
returns, the impacts of fees and expenses, and the expected holding periods. Stocks and
exchange-traded funds (ETF) that are traded electronically are executed for zero ($0.00) per

trade by Schwab. For transaction fee mutual funds, Schwab charges our clients $25 to buy
and $25 to sell. However, these fees do not apply to automatic reinvestment of dividends and
capital gains distributions. For no-transaction-fee (NTF) mutual funds, Schwab charges our
clients zero to buy and zero to sell if held for more than 90 days after settlement of a purchase,
or zero to buy and $49.95 to sell due to short term redemption fees (STRF) if sold less than
90 days after settlement of the purchase. Depending on the actual holding periods, different
types of mutual funds can have additional transaction costs and expenses.

In certain circumstances, SPWM will also retain responsibility for managing a Client’s non-
liquid assets including, but not limited to, operating private companies, managing private
securities, and overseeing entertainment assets such as royalty streams and copyrights,
and managing real estate, hedge fund and other alternative investments.

SPWM's service may be terminated by either party upon written notification in accordance
with the applicable contractual notice of termination in the Agreement. Upon termination,
any fees paid for advisory services will be refunded on a pro-rated basis, from the date of
the termination notification, and under most circumstances, it shall not exceed beyond
previous quarters fees. The Client can cancel the Agreement without penalty within the first
five (5) days after the signing of the Agreement.

Item 7 – Types of Clients

Salem Partners Wealth Management (SPWM) discretionary investment advisory services
and management services are offered to individuals, high net worth individuals, families,
trusts, partnerships, estates, charitable organizations, corporations and other business
entities. SPWM requires a minimum account size of $10,000,000. However, SPWM maintains
the discretion to waive the account minimum.