Swarthmore Asset Management Ltd

Fees and Compensation

We are compensated based on a percentage of the client’s assets we manage and, in certain
cases, an additional fixed fee. Our annual fee is 1% of the value of the account, measured
quarterly, including accrued interest on bonds. The annual fee for court appointed guardianship
accounts and trusts is above 1% for accounts under $7 million. We have a minimum annual fee
of $5,000. Our fees are generally not negotiable. Where we have waived the minimum annual
fee, we generally charge more than 1% per year. Clients who are members of the immediate
families of Swarthmore employees may pay less than 1% on an annual basis, as does the minor
child of one client, one legacy client, and one client with assets under management over $10
million.

Clients are billed in advance for one quarter of the annual fee at the start of each quarter. This
amount is prorated if an account is opened during a quarter or if new funds or securities are
deposited in the account during a quarter. Clients execute a limited power of attorney which
allows the brokerage firm holding the client’s securities to deduct Swarthmore’s fee from the
client’s account upon the submission of a bill by Swarthmore. A client may terminate his or her
investment advisory agreement with Swarthmore on 60 days’ written notice at any time, and pro-
rated fees paid for the unexpired portion of the quarter will be refunded to the client as of the
date of termination (60 days after written notice).

Clients whose assets are invested in mutual funds, exchange traded funds and/or money market
funds in effect pay an investment management fee to the mutual fund, exchange traded fund
and/or money market fund investment advisor, in addition to the investment management fee

paid to Swarthmore. Clients incur brokerage and other transaction costs when securities are
purchased or sold. These costs are not paid to Swarthmore.

Please see the Brokerage Practices section below.

Neither Swarthmore nor its employees accepts compensation from third parties for the sale of
securities or investment products.

Performance Based Fees and Side-By-Side Management

We do not accept performance-based fees—that is, fees based on a share of capital gains on or
capital appreciation of the assets of a client.

Types of Clients

We generally provide investment advice to the following types of clients: individuals, trusts,
corporations, charitable organizations, and self-directed pension plans. In addition, Swarthmore
provides investment advice to Mr. Levin in his capacity as the court appointed financial guardian
or co-guardian of several incapacitated adults, as well as in his capacity as the trustee or co-
trustee under several irrevocable trusts.

We generally do not accept new accounts under $500,000.

Methods of Analysis, Investment Strategies and Risk of Loss

When we invest client funds in individual company stocks, we examine the company’s earnings
history and balance sheet. We also look at analysts’ projections for future earnings. When we
invest client funds in individual municipal or corporate bonds, we examine the company or
municipality’s financial statements. We look at the bond’s ratings. We also look at the duration
of the bond, its interest rate, and any provisions which permit or require the company or
municipality to buy back the bonds from our client at a fixed price.

When a widely diversified mutual fund or exchange traded fund would be suitable for a client’s
portfolio, we examine the type of stocks and/or bonds it contains and the management fees
charged by the fund company to try where practicable to economize on the total costs for our
client.

In addition to purchasing individual stocks and bonds for our clients, we sometimes sell call
options on stocks in client accounts. We use this “Buy/Write” strategy only in cases where the
client grants us permission to do so.

Clients should understand that investing in mutual funds, stocks and bonds involves risk of loss
that they should be prepared to bear.

Investing in individual stocks or bonds involves the risk of partial or total loss on each such
security. The risk of total loss is generally lower with investments in broadly diversified mutual
funds or exchange traded funds. But even these investments involve the risk of substantial
losses. In cases where we sell call options against a client’s stock, there is the risk of loss if the
stock price falls below the net price we paid for the stock less the amount we received from the
sale of the call options. And, in such cases, if the stock price rises above the price at which the
buyer of the call option has the right to purchase such stock, our client may miss out on potential
gains.