Wallace Capital Management Inc

Item 5 – Fees and Compensation

For certain Clients, WCM manages a distinct, customized portfolio of cash and securities (in
the remainder of this brochure, such accounts will be referred to as “Separate Accounts”
and such Clients will be referred to as “Separate Account Clients”). The WCM Fund will
hereafter be referred to as a “Fund”, or “Fund Client”. Clients generally pay WCM a fee up to
1.00% per year (the “Management Fee”). The Management Fee is paid on a quarterly basis
in arrears and is pro-rated for any period less than a full calendar quarter. Investment

contracts for Separate Account Clients may be terminated by WCM or the Separate Account
Client upon 30 days’ written notice to the other party.

In addition to the Management Fee, Clients may be assessed an incentive fee (the
“Performance Fee”). The Performance Fee is generally equal to 20% of the investment gains
in excess of a compounding annual hurdle rate applicable to a particular Separate Account
or applicable to the capital account of each Fund Client. WCM structures any performance or
incentive fee arrangement pursuant to Section 205(a)(1) of the Investment Advisers Act of
1940 (the “Advisers Act”) in accordance with the available exemptions thereunder,
including the exemption set forth in Rule 205-3. In measuring Clients' assets for the
calculation of performance-based fees, WCM includes realized and unrealized capital gains
and losses.

Performance based fee arrangements may create an incentive for WCM to recommend
investments that may be riskier or more speculative than those which would be
recommended under a different fee arrangement. Such fee arrangements also create an
incentive to favor performance fee-paying accounts over other accounts in the allocation of
investment opportunities. WCM has procedures designed and implemented to ensure that
all Clients are treated fairly and equitably, and to prevent this conflict from influencing the
allocation of investment opportunities among Clients.

All fees are subject to negotiation. Under certain circumstances, the fees a particular Client
pays may be negotiated to a level either higher or lower than the fee schedules described
above. The Management Fee and/or the Performance Fee may be waived for certain Clients
at WCM’s sole discretion. In addition to the Management Fee that will be charged to Clients
by WCM and the Performance Fees that certain Clients may incur, all Clients of WCM will also
incur additional fees charged by non-affiliated firms to transact trades and provide custodial
services, process wire transfers, and other fees and taxes on brokerage accounts and
securities transactions. Mutual funds and exchange-traded funds also charge internal
management fees, which are disclosed in a fund’s prospectus. Such charges, fees and
commissions are exclusive of and in addition to WCM’s fee, and WCM will not receive any
portion of these commissions, fees, and costs.

The specific manner in which fees are charged by WCM is established in a Client’s written
agreement with WCM for Separate Account Clients, and in the Private Placement
Memorandum of the Wallace Capital Management Fund, L.P. (the “WCM Fund Offering
Memorandum”) for those investors who invest in the Fund. For both Separate Account
Clients and investors of the Fund, clients authorize WCM to directly debit fees from the
Client’s Separate Account or capital account, as applicable. Management fees are prorated

for each capital contribution and withdrawal made during the applicable calendar quarter.
Accounts initiated or terminated during a calendar quarter will be charged a prorated fee.
Upon termination of any account, any prepaid, unearned fees will be promptly refunded, and
any earned, unpaid fees will be due and payable.

Generally, all of the normal recurring operating expenses including rent, utilities, telephone,
equipment expenses and administrative salaries are borne by WCM. For the most part, the
only expenses which may be assumed by the WCM Fund in addition to WCM’s compensation
are custody, legal and auditing fees, transaction costs and commissions incurred through
trading, and any other expenses which WCM reasonably determines not to be normal and
recurring operating expenses.

Item 12 below further describes the factors that WCM considers in selecting or
recommending broker-dealers for Client transactions and determining the reasonableness
of their compensation (e.g., commissions).

Item 7 – Types of Clients

As mentioned in Item 4, WCM provides portfolio management services its Clients based on
the investment objectives and strategies described in each Fund offering document.

In addition to managing accounts on behalf of its Separate Account Clients, WCM serves as
the general partner and the investment advisor of the Fund. The Fund is exempt from
registration as an investment company pursuant to Rule 506 of Regulation D Section 4(6) of
the Investment Company Act of 1940, as amended. The investment objective of the Fund is
to produce capital appreciation through investments in a diversified portfolio of U.S. (and in
some cases, non-U.S.) stocks and bonds of various market capitalizations.

At times, the Fund and the Separate Accounts may own many of the same securities.
However, the portfolio of securities held in one or more Separate Accounts, and the portfolio
of securities held in the Fund may be materially different. These differences may include, but
are not limited to: (1) the Fund may own different individual securities than those held in
one or more Separate Accounts; (2) the market capitalization of one or more of the individual
securities (the Fund may own more small capitalization companies than the Separate
Accounts); (3) the overall number of holdings in an account; (4) the position size or
concentration in one or more securities; and (5) the size of the cash position in the Fund vs.
one or more Separate Accounts. As a result of these differences, the investment performance
of the Fund and the investment performance of one or more Separate Accounts may be
materially different. Due to the potential of having a higher position size concentration and
the potential of holding more small capitalization companies, the investment performance
of the Fund may be more volatile than the performance of one or more Separate Accounts.

The minimum account size of a Separate Account is $2,000,000, and the minimum capital
account size of an investment in the WCM Fund is $1,000,000. WCM reserves the right to
waive its minimum account size requirements in its sole discretion. In addition, WCM
reserves the right to raise or lower these minimum account size requirements at its sole
discretion and without prior notice.