Woodley Farra Manion Portfolio Management Inc

Fees and Compensation

Woodley Farra is compensated by charging its clients a fee based on the value of each client’s
assets under management with Woodley Farra. The Firm’s standard fee is calculated in
accordance with the following schedule:

Asset Value                                 Annual Fee %
First $500,000.00                           1.25%
Next $500,000.00                            1.00%
Next $2,000,000.00                          0.75%
Next $2,000,000.00                          0.50%

Fees are due and payable in advance of the quarter in which services are rendered. The quarterly
fee is based upon the portfolio balance as of the last trading day of the preceding quarter. If
services are initiated or terminated at any time other than the beginning or end of a calendar
quarter, fees will be pro-rated. Clients who began their relationship with WFM prior to 11/25/96
are generally billed in arrears.

WFM’s minimum fee is generally $250 per quarter; however, WFM may waive this minimum
under certain circumstances.

Woodley Farra’s standard form of investment advisory agreement provides that WFM’s
management fee may be deducted directly from the client’s investment management account at
the custodian and automatically remitted to Woodley Farra. However, clients may request in
writing at any time to change the method of fee deduction/billing and instead pay WFM’s
management fees by check.

However, the following criteria must be met in accordance with the SEC’s Investment Advisers Act
of 1940, when payment is directly deducted by a qualified custodian: (1) The client provides
written authorization permitting the fees to be paid directly from the client’s account held by the
independent custodian and the authorization is limited to withdrawing contractually agreed upon
investment advisory fees; (2) Custodians do not verify advisory fees - therefore clients are
encouraged to direct any questions or concerns regarding fees to Woodley Farra by calling our
office; (3) The frequency of fee withdrawal shall be specified in the written
authorization/agreement; (4) The custodian of the account shall be advised in writing of the
limitation on the adviser’s access to the account; (5) The custodian agrees to send to the client a
statement, at least quarterly, indicating all amounts disbursed from the account including the
amount of advisory fees paid directly to Woodley Farra; (6) The client shall be able to terminate
the written billing authorization or agreement at any time. Since the custodian does not verify the
accuracy of the advisory fee calculation, the Client should verify each statement received by the
custodian and contact WFM if any questions should arise.

Additional Fee Information and Disclosures:
All advisory fees are negotiable between the Firm and a client.

The only compensation Woodley Farra receives is its quarterly fee described above. Clients will
have brokerage commissions charged by the brokerage firm where transactions are directed
along with any other applicable transaction fees, service fees, or taxes. Additionally, if an account
is held at a bank or trust company, that institution will charge fees ranging from custodial to full
trustee fees. Also, mutual funds charge management and expense fees in addition to WFM’s

investment management fees, as outlined in each funds’ prospectus. Both the bank fees and
mutual fund fees can be substantial and should be scrutinized by clients.

Termination of Services:
Advisory services are continuous in nature, but either party may terminate the investment
advisory contract. Should WFM terminate the agreement, it will provide the client with 14 days
written notice to the other party’s last known legal address. During the 14-day notice period,
WFM will act as investment advisor on a non-discretionary basis to assist the client with account
management wrap up with advisory services completely terminating at the end of the notice
period. Generally, should the client terminate the relationship, the Firm will provide written
acknowledgment of the request and cease advisory services on the date of receiving notification.
Fees paid will be pro-rated to the date of termination and any unearned portion of prepaid fees
will be refunded to the client. Clients may terminate their advisory contract without penalty and
with no fees due within five (5) business days of signing the agreement.

Types of Clients

Woodley Farra generally provides investment advice to individuals, pension and profit-sharing
plans, trusts, estates, charitable organizations, and corporations (and other business organizations
such as LLCs, LLPs, etc.).

Woodley Farra generally suggests a minimum initial account size of $250,000, though this
minimum may be waived or adjusted in WFM’s discretion.

                                 Methods of Analysis, Investment
                                   Strategies, and Risk of Loss

Investing in securities of any kind involves risk of loss that clients must be prepared to bear.
Woodley Farra endeavors to alleviate as much risk of permanent loss as possible through diligent
research and portfolio monitoring, but there can never be any guarantee that our clients won’t
suffer a permanent loss.

When providing our advisory services, Woodley Farra analyzes information provided by the client
to identify and evaluate an investor’s goals, risk tolerance and investment time horizon in an effort
to determine an appropriate investment strategy. Therefore, the client’s active participation in
both the initial and on-going review and analysis process is critical. Any change in client
background or financial information, including changes in family structure, marital status, income,
work or retirement status, or other relevant information, must be immediately communicated to
WFM by the client.

Our method of analysis is four pronged:
   • Fundamental - Detailed analysis of a company’s financial and competitive health
   • Quantitative - Analyze a company’s stock valuation utilizing several proprietary formulas
   • Technical - Identify trends in supply and demand for the stock under review
   • Economic - Analyze economic trends and the potential effect on a company’s valuation

Investment strategies used to implement investment advice are generally long-term in nature.
However, investment strategies may include short-term purchases depending upon the individual
needs and objectives of the client and if a particular investment meets the objective in a short time
frame.

Generally, the Firm provides advice on Stocks and Preferred Securities. In some instances, the
Firm may utilize Treasuries or Municipal securities, bank CDs, and Bonds.

For most clients, Woodley Farra builds a portfolio of individual stocks consisting of 25-30
companies in several different industries that provide diversification and exposure to the risks
and benefits of the world economy. Stocks are generally for companies with a market
capitalization (value of outstanding shares) of at least one billion dollars at the time of original
purchase. These companies are selected for their financial strength, larger size, prospect of
growing sales and earnings, and because they appear undervalued given their strength and
prospects. Stocks paying dividends are also emphasized.

WFM offers two main portfolios: the Core Value Portfolio and the Dividend Portfolio.

   -   The Core Value Portfolio seeks to provide clients with a portfolio based on competitive
       total return and reasonable downside risk protection. This portfolio invests in public
       companies that WFM believes are trading at prices below what the firm believes are their
       full, intrinsic values. We observe multiple financial ratios and statistics in search of
       deviations from historic averages.

   -   The Dividend Portfolio seeks to provide clients with higher income than currently offered
       by traditional fixed income alternatives, such as bank deposits and U.S. Treasury Bonds.
       The Dividend Portfolio is comprised of securities issued by a diverse group of public
       companies with higher-than-average dividend yields.

For the fixed income portion of a client’s portfolio, we use investment grade bonds, FDIC-insured
bank CDs and preferred securities of financially solid companies. These securities are laddered so
that there are maturities in most years to guard against rising interest rates, which is one of the
main risks of holding A or better rated fixed income securities. Of course, there is also the chance
that any entity could go bankrupt and not pay off their debt securities.

Stocks, even of larger, well researched companies, fluctuate in price, sometimes substantially.
History has shown that even large companies with seemingly strong financial underpinnings can
have a rapid deterioration of their finances and go bankrupt. A more frequent trading risk is that
some investors merely follow the market, buying a security after it has become overvalued, and

selling after it has declined too much in value. WFM tries to avoid this “buy high” and “sell low”
mentality through use of the above methodologies. The Firm utilizes outside research as a tool
only and not as part of the buy/sell decision making process. However, clients need to be aware
that securities always carry a risk of loss.

Clients should be aware that sales of investments, including transactions that result in maintaining
the client’s desired asset allocation, may result in taxable gain(s) or loss(es) to the client. Clients
are encouraged to consult their personal tax advisor about tax consequences because of
transactions or any particular investment held in their account.