Scott & Selber Inc Capital Management

Item 5: Fees and Compensation

Scott & Selber, Inc. manages financial assets on a discretionary basis. The fee schedule applied to the active
supervision of assets under management is on an annual basis, payable quarterly in advance, and is based on a
percentage of the fair market value of those assets:

0.90% on the first $1,000,000
0.70% on the next $1,000,000
0.50% on the next $8,000,000
0.40% on amounts above $10,000,000
Minimum fee $9,000

Related accounts can be aggregated or grouped by households to establish the amount of assets under management
of which fees will be based. The definition of household for billing purposes is generally relation by blood or
marriage, family members living under the same roof and/or hierarchy (grandparents, parents, children,
grandchildren).

While the general policy of Scott & Selber, Inc. is to adhere to the fee schedules, such fees are subject to
adjustment or negotiation in light of special circumstances, such as an account with only fixed income investments,
reduced level of record keeping, the combination of more than one related accounts, or any other special or unusual
situation which may arise.

Our investment contract does not specify a definite term of our employment, and thus a client may terminate our
services at any time. Any fee paid in advance will be promptly refunded on a pro-rata basis. A client may elect
to pay our fees directly or authorize to have them deducted from their account.

In addition, clients will also pay any commissions, transaction fees, or other fees, as applicable, charged by the
custodian of the account. Brokerage practices are discussed in more detail in Item 12.

Scott & Selber, Inc. will generally utilize an interest-bearing money market fund for cash balances. In addition,
it is possible that one or more mutual funds may be used on occasion for specialized investment purposes. In both
cases described above, a client will be subject to a management fee charged by the fund manager in addition to
the fees charged by Scott & Selber, Inc. Scott & Selber, Inc. shall not receive any portion of these fees.

Item 7: Types of Clients

Scott & Selber, Inc. provides portfolio management services to individuals, high net worth individuals, corporate
pension and profit-sharing plans, charitable institutions, foundations, and endowments.

The suggested minimum account size to establish a relationship is $500,000 in assets under management.